Need an experienced professional's ADVICE

  • Thread starter Thread starter Keith Smith
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Keith Smith

I know this is a little off topic but I hope it is still acceptable to this
forum. Please read this carefully. I am not looking for a quick answer - I
am hoping to find someone who has been in my shoes before...

A somewhat reputable company has contacted me with the intention of having
me develop some software for them. I am very interested in the project,
however, I think I have a problem with being guaranteed payment.

Here is basically how the process would work:
1) I get no money upfront
2) I write the software
3) They put it on their site
4) Whenever a piece of software is sold their system emails the customer an
activation key and (supposedly) automatically sends me an email.
5) Each month I am sent a commission based on a certain percentage of the
sales.

The problem I have is that I am not a full time employee for them and there
is no way of me knowing for sure how much exactly they are selling. Let's
say they sell 100 copies of the software, but only tell me about 50 of them?
How would I ever know?

They are going to put me in touch with their other programmer who has been
working with them for about 15 years. This helps me to trust them a little
more...but at the same time how do I know that this guy wasn't paid off?

The only solution I came up with is this...
1) I get no money upfront
2) I write the software
3) They put it on their site
4) I let MY site create the activation key and MY site will email the key
code to the customer and the seller.

This option would definitely put me more in control. I mean, after all, I
would be guaranteed to know about all the sales and a sale couldn't be made
without my permission.

They don't like this option though because it puts them in a position to be
dependent on myself. I mean, after all, what if I decide to take a 10-year
vacation in the Tropics?

The bottom line is this: They don't want to depend on my existence in order
to make the software run and I don't want to just depend on them to give me
accurate sales numbers.

I kind of feel like a jerk for being so un-trusting, but I have been in an
unrelated situation in which I completed VALID work and the buyer just
walked away without good reason. Also, I realize that I should have them
sign an agreement and have my lawyer look it over, however, let's face
it...if it came down to me suing them - who has the money to pay the
lawyers? Not me that's for sure. This deal would only profit me about
$4000 per year.

Is there a better solution that I am missing?
 
One possible solution could be that the component which generates the
activation key on their system be designed either by you or you should be
aware of its source code, and then have an arrangement similar to the
following:

1. Let the activation key generating component contain some logic to keep a
record of the details (at least the number of keys generated with date, time,
user, etc.). Here ensure that there is only one key generating component on
their (or other)website. You may perhaps devise a mechanism of digitally
signing that component with your private key in some imaginative manner so
that only one copy of the activation key generator is used. If possible, have
audit trails, periodic test data facility to cross-check.

2. This activation key generating component could be hosted on the
company's site, but record of keys generated should be accessible to you as
well. It would be better if this record (of activation keys generated) is
kept / updated automatically on some outside website to which the company and
you both can have access. The logic of the component generating keys should
be such that no key could be generated without such a record being first
created / stored.

3. There can even be some logic built in the key generator to first send
the record / details even to your website before generating / sending the key
to the user.

This idea could be built up further. Hope it helps you. Wish you all the
very best in your dealings with the new company.

Ashok Dhamija
 
What about you do what they want and when your software starts you
anyway send a non-blocking signal to your website with the key details
to double check who has registered it, when, what is the key, etc ?
 
Here is basically how the process would work:
1) I get no money upfront
2) I write the software
3) They put it on their site
4) Whenever a piece of software is sold their system emails the customer
an activation key and (supposedly) automatically sends me an email.
5) Each month I am sent a commission based on a certain percentage of the
sales.
Click to expand...

You have 2 risks:
(1) They may not actually pay you for copies sold. Does the contract
specify accounting methods and a third-party auditor the way a book contract
would?
(2) They may not sell any. This is the bigger risk.

I would say, don't do it. Their "request" issued to you is not costing them
anything, so you have no evidence that they really expect to sell your
program. They don't have any money sunk into it.

Authors of books often get no money up front, only royalties, but in that
case the publisher is sinking *big* bucks into production and distribution.
It looks like, with your project, the "publisher" is making YOU take ALL the
risk.

Clark Howard would have his bombs-and-alarms sound effect here...
 
It sounds as thought the project is more yours than theirs. Tell them that
if they don't want to pay for dev work or make up-front payments that you'll
retain copyright and assign them as the marketers based on performance. If
the performance isn't as expected you will have the option to remove them
from the loop and market it yourself.

You can also protect youself by having the activation done through a website
you control. Perhaps the program should use your private webservice that
bucket-brigades the requests on to theirs for record keeping etc.

The bottom line is do you think the product will sell and do you have faith
in your ability to do the work.

--
Bob Powell [MVP]
Visual C#, System.Drawing

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Michael A. Covington said:
Authors of books often get no money up front, only royalties, but in that
case the publisher is sinking *big* bucks into production and distribution.
It looks like, with your project, the "publisher" is making YOU take ALL the
risk.
Click to expand...

I think authors almost always get advances which are offset against
royalties (i.e. you don't get any "extra" royalties until you've
"earned out your advance"). I've talked to a few publishers about
things, and my wife is an author, and I don't think I've come across
any situations where there's no advance at all. Such situations may
exist, but I don't think they're the norm.
 
Sounds like amazons second hand books sales, they get paid regardless for
your material - actually for doing very little. You dont seem to be getting
much from this at all, why are they even involved if they are selling
software you write and taking a cut, but presently the risk is all yours.

If they expect to own any kind of copyright over it then they should pay up
front on a guarenteed number of sales per year, and shoulder some of the
risk. In publishing a lot of things are done on trust, but advance payment
is usually the norm if your the sole author - so get them to agree to an
upfront fee per year they can recover from sales and perhaps the copyright
goes to them, with royalties to you. They retain licence on the source code
so if you fall out they can get the software enhanced and still pay you for
your origonal material.
--
Regards

John Timney
ASP.NET MVP
Microsoft Regional Director
 
Jon Skeet said:
I think authors almost always get advances which are offset against
royalties (i.e. you don't get any "extra" royalties until you've
"earned out your advance"). I've talked to a few publishers about
things, and my wife is an author, and I don't think I've come across
any situations where there's no advance at all. Such situations may
exist, but I don't think they're the norm.
Click to expand...

They're common if the book is specialized. About half of my books didn't
get advances.
 
One more option not really described here...

Activation key comes from the marketing company, but software registration
comes to you. You have to write a form where the customer will enter the
activation key anyway. Add fields... make it a full registration form.

IOW, Make the buyer fill out the registration form at the same time as they
enter the key. Have the app POST the registration directly to your web
site.

Important: It HAS to work even in the event where there is no network
connection or your site is down. Assure your marketers that you will test
that.

Honestly, I've installed software that does this. It's no big deal for me
as the customer.

--
--- Nick Malik [Microsoft]
MCSD, CFPS, Certified Scrummaster
http://blogs.msdn.com/nickmalik

Disclaimer: Opinions expressed in this forum are my own, and not
representative of my employer.
I do not answer questions on behalf of my employer. I'm just a
programmer helping programmers.
--
 
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