The success of Gallidon rests on the interest and participation of the creative community, so we aimed to structure revenue sharing in a way that would be attractive for Artisans.

Since Artisans retain ownership of their Works even after they have been accepted and posted at Runes of Gallidon, the Artisans can still commercially market and sell their Works (our CC+ licensing includes a non-exclusive license from the Artisan to Brain Candy). This means both Artisans and Brain Candy can sell the Artisans’ Works.

So, there were two parts to the revenue question: (a) how much would Brain Candy share with Artisans if Brain Candy sold their Work, and (b) how much would Artisans be expected to give Brain Candy if they sold their own Work?

The other tricky part about this was that we were encouraging the creation of derivative Works, which would – by definition – include copyrighted materials owned by other Artisans. How could we construct a system of revenue sharing that could realistically and consistently deal with a Work that might have over a hundred Ideas from almost as many different Artisans?

We looked at lots of companies operating in the media space, including ones using CC+ licensing structures, to see what was being done about sharing revenue with Artisans. We found several models, and we kicked around a few internally to see how they “felt.”

Many companies were using a variation of sharing net profits (gross revenue – expenses) with Artisans, but it seemed too easy to game the expense numbers a la Hollywood (“Gee, I know you were promised 5 points of the profits, but wouldn’t you know, the movie somehow magically broke even, so there aren’t any profits to actually share with you…”).

Others were using a flat-fee approach, as is typical with work-for-hires and submissions to ezine and webzine fiction sites. The truth was, as a startup, we didn’t have tons of money to dangle in front of the creative community, so we rejected this idea.

We ended up using the following arrangement: 50/50 sharing of gross revenue if Brain Candy sold/licensed a specific Work, and, if the Artisan(s) who created the Work sold/licensed it, we would ask them to give 10% of their gross revenue to Brain Candy.

It was about as black and white (read: easy to understand) as we could make it, and we felt it helped keep things above-board. If Brain Candy decided to offer an Artisan’s novel as a publish-on-demand book, we would pay the setup expense and not deduct that from the share of revenue given to the Artisan. Likewise, we felt a 10% cut of the Artisan’s revenue (if they sold or licensed their own Work) was a reasonable request given that Brain Candy was maintaining and marketing the Runes of Gallidon site and project, which helped bring attention to the Artisan’s Work.

The really difficult decision about how to share revenue from sales/licensing of derivative Works ended up being one of necessity. We decided the only black and white, simple way to handle this was to share revenue on a Work basis, not an Idea basis. For example, John Smith writes a novel with a lead character named Milburn. Jane Davenport loves Milburn, and decides to write a series of short stories detailing Milburn’s history as a young man. Jane’s short stories are hugely successful, and Brain Candy decides to offer them as a collection (say, “The Milburn Chronicles”) available for sale in print. Revenue from sales of “The Milburn Chronicles” would be shared 50/50 with Jane. Only if John’s novel is sold or licensed by Brain Candy, would he receive any revenue sharing.

I will be the first to admit that this isn’t our preferred system, but it was the best we could come up with without creating a leviathan nightmare of paperwork, accounting, and legalese.

We do expect that John will ultimately benefit from his efforts to create Milburn as a result of Jane’s sales. As readers find and fall in love with the Milburn from Jane’s short stories, it’s likely they would find John’s novel as well. Thus, Jane’s sales would help boost awareness of John’s novel.

This kind of self-referencing marketing reinforcement resonated with us, and it felt like the right revenue sharing system given all the other possibilities.

Up Next: A New Post Series
Well, that covers the basics of how the Brain Candy team went about building what ultimately became the online world, Runes of Gallidon. I may post some updates or new developments in the future, but this is the last installment in this series for now. Look for a new post series exploring free content and shared I.P.!

When we switched to fantasy, we knew it would have to be a multiple-word name, and we played around with different ideas. By April of 2008, we had created a good portion of the world, though we were still searching for a name for the character that would become Emperor Gallidon. We also knew runes would play a pivotal part in the world. As it happened, deciding on the name of the emperor and the name of the world began to converge until we knew they were two sides of the same coin.

We spent a few weeks agonizing or ignoring the issue, until one night the name “Gallidon” popped into my head after a particularly depressing brainstorming session between Tony, Andy, and me. A couple of quick searches revealed almost no hits for this word, and the domain was available for registration. What had been a burden weighing on us for weeks was suddenly solved, and the name resonated with all three of us.

I registered gallidon.com and runesofgallidon.com, set up email accounts for us, and reveled in how surreal it was to have this incredibly important piece of the world fall into place. All we had to do now was finish building the world. And a website. And generate content. And market the site…

Up next: Part 8 – Yours, Mine, Ours

Now, this realization was back in mid-2007, and I’ve been happy to see more and more examples of content being offered digitally as a marketing strategy so that the attention garnered from the free content can be monetized by presenting users with traditional offerings (printed books, t-shirts, etc.).

Chris Anderson’s Wired article from early 2008 distilled this idea, and Mike Masnick at Techdirt continues to highlight example after example after example of content producers who understand the changing nature of (digital) content and the implications of those changes on how to monetize the content.

The short answer is that rather than trying to monetize digital content directly (e.g., charge a fee just to view the content online), producers should use the digital content to accrue attention/users, at which point, non-digital goods can be sold to them. Digital content is now advertising/marketing, not a product, and the revenue becomes possible by leveraging an infinite good (the digital content) into a scarce good (the traditional/analog/physical products or services). [see also Cory Doctorow's article about the using the Internet's inherent nature to your advantage rather than viewing it as something to overcome and why he gives away free digital versions of his novels]

In a somewhat counter-intuitive manner, recent attempts and growing data indicate that revenue from scarce goods can actually grow if the infinite goods are literally given away. Several writers and musicians have found that the increased exposure of their content, when given away digitally for free, offsets the loss of sales by having people only consuming the free digital version of their content (Cory Doctorow and Charles Stross, for example).

Rather than fight the tidal sea change of free content we saw coming, we decided to try and ride it.

Up next: Part 7 – What’s In a Name?

After a bit of research and Tony’s offer to use a future universe he had already worked out as part of a movie script he’d written, we settled on sci-fi. The initial foundation of the universe had been worked out, and I had a personal interest in sci-fi (I had just finished Richard Morgan’s “Altered Carbon” and “Market Forces” and found that both had thoroughly, deliciously eaten my head).

Tony’s interstellar universe had three main areas: a stable, advanced confederation of systems; a more back-water, unexplored area with little central control; and a highly advanced, somewhat xenophobic technological area that was more of an unknown/blackbox. I liked the idea that users could gravitate to the area of the universe that appealed to them, but we could still keep it all under the same branded universe.

Tony and I set about trying to write some of the initial content to prime the pump as well as flesh out more of the universe’s foundation. We didn’t get far.

Neither of us, despite our liking of sci-fi, found it easy or enjoyable to begin writing content. I had the worst case of writer’s block and was reminded (again) why I hadn’t written anything since my undergraduate days. Furthermore, we had a hard time scoping the universe in a way that could be laid out logically to the creative community without becoming so overwhelming that people would be lost. If it was this hard for me to get our arms around it, how would we easily convey it to the creative community?

We debated changing genres, did some more research, and ultimately decided to switch to a fantasy genre. I’m still embarrassed to admit that writing science fiction was too hard for me at that point in my life. To come close to the better writers would require more research, time, and thinking than I possibly had. Holding down a full-time job and being part of a growing family left little time to accomplish our goal. Plus, neither Tony nor I found that we were enjoying what should have been a fantastically fun task.

Even though my fantasy reading had been essentially non-existent for almost twenty years, I found myself eagerly tackling the challenge of laying out a new world and drafting some flash fiction content. The world creation happened fairly quickly and was a joy. The flash fiction proved a nice way to flex long-ignored writing muscles. The simple act of switching genres unlocked a lot of creative ideas we had, and the fun flooded back into the project.

As we crafted the world, we made the conscious decision to not include elves, dwarves, or orcs. While there would be plenty of magic and monsters, we wanted the inhabitants of the world to be predominantly human in nature. The use of non-human creatures/races can easily become a crutch when writing, and we both thought that we could still have a world big enough for the creative community to explore and populate. Our belief was – and still is – that the writing would be better if it focused on “human” characters and good story telling. We also knew this approach would likely alienate some of the fantasy fans, but we opted to sacrifice mass appeal to what we thought was a stronger, more unique world. We’ve received some criticism about this decision, and time will tell if we’re wrong…

Up next: Part 6 – Free Means Free

First, we weren’t comfortable with the branding implications. We wanted *some* kind of minimum bar of quality applied to submissions. This was a decision we waffled on even after development had begun on the site, but I believe we made the right one in regards to providing at least a guiding hand of quality.

Second, we decided to own the responsibility of filtering the content, posting only the best submissions. Besides, we’d have to take down inappropriate content anyway, so why remain reactive in the process?

Third, we consciously were trying to avoid the YouTube model, where the best of the content is buried in a haystack of content. While there are tools and social norms that help the better content bubble to the top (e.g., ratings, word-of-mouth/email from trusted sources, etc.), the reality is that much of YouTube finds a very small audience. I can hear rumblings about Long Tail stirring, so let me clarify that YouTube is a single-media/multiple-subject site, which makes it perfect to analyze under the Long Tail. I imagine that most videos on YouTube have at least one avid fan, even if 99% of the other YouTube viewers hate it. Our site is multiple-media/single-subject, so we’re somewhat self-selecting ourselves out of a large chunk of the Long Tail simply by excluding anything not in fantasy. In fact, it’s even more selective than that: we exclude anything not set in Runes of Gallidon.

This decision also changed the focus and operational nature of the company. We shifted from a user-generated, “anything goes” media site to a more traditional publisher of content as soon as we placed ourselves between the submittors of content and the consumers of that content.

I remain concerned about scalability with such a limited resource to devote to reviewing submissions, but I think the site will benefit in the long term as a result of scoping the submissions.

Next up: Part 5 – Genre

As we surveyed the landscape of ezines and fan fiction sites, however, we quickly realized that we really wanted a very multimedia site, open to as many media formats as the site could technically handle – and balanced by how much development we could afford.

Our vision for the site evolved into one where members of the creative community would inspire each other, regardless of the medium. We hoped that fictional work would inspire artists, graphic novelists, and game designers, while digital works would provide visual inspiration for fictional works, RPG modules, podcasts. Ideally, the media on the site would begin to include mediums we did not or could not envision at launch [note: this is already coming true as we are exploring machinima and video engines as possible ways to encourage more video-related content to find its way into Runes of Gallidon, an option completely off our radar in 2007].

Looking at the multimedia history of some of the most successful franchised worlds (Lord of the Rings, Star Wars, Star Trek, etc.), it was clear that the creative community would naturally and independently explore many creative mediums, even if we didn’t encourage it ourselves. Why not openly embrace this tendency from the beginning and let the creative community help us actively explore the world together?

Next up: Part 3 -  Licensing

I committed to what became Runes of Gallidon while finishing a platter of bimimbap at a Seoul Brothers restaurant in April of 2008. I was having dinner with two friends, Tony Graham and Andy Underwood, and after a few weeks of evaluating our collective skill sets, I decided that our startup idea was ready for funding. More importantly, I had worked up enough courage to face the risk of failure if this idea went down in flames, which seemed distinctly possible given how crazy the idea sounded, even to me.

Tony’s a friend I’ve known for over ten years who makes his living as a professional writer with a passion for sci-fi and fantasy.

In March of 2008, Tony had introduced me to Andy, someone he had known for a long time (in truth, I had quested several times with Andy’s various Azeroth avatars but had never met him in person until a few weeks before that night at Seoul Brothers). Andy’s background was art and design, with a dash of programming thrown in for good measure.

A month later, the three of us formed Brain Candy, LLC, and by June we were building the world and website that would become Runes of Gallidon. These are the legal and obvious milestones of this website, but the more accurate origins go back to March of 2007, when Tony and I sat down to discuss starting a website of collaborative content under a single, branded fictional world.

So, exactly how would this work?

The details of Runes of Gallidon’s beginning will never be known for two reasons: only Tony and I were doing the talking at that time, and neither of us took notes (pretty pathetic given that he’s a writer and I’m a former project manager…).

I do remember that somewhere in early 2007, we began kicking around the idea of creating a collaborative space where writers could share/borrow/integrate each other’s ideas legally and with each other’s permission. I had spent much of 2006 researching the background for a quasi-historical fantasy novel I wanted to write (see Kenji), but as I considered what I wanted to do with the final product, I found I wasn’t all that concerned about “being published” or becoming the next bestselling author. Where might such a story wind up? I began a very unscientific survey of fictional outlets online, and what I found started me on a fascinating look at what happens to content when it’s placed on the Internet (more on that in future posts).

The more I thought about the current state of fictional writing (and sci-fi and fantasy in particular), the more I saw an opportunity to explore a new way of generating and sharing content. I shared my initial ideas with Tony about an artist-friendly, collaborative space were writers were encouraged to share each other’s ideas so that each new work had the potential to draw from the collection of existing content, even if someone else created it. Tony was emphatic that whatever happened to the submitted content, the creators had to retain ownership. As a writer, he was disappointed at how traditional media approached new content from writers (“We bought it, we own it, you’re done, now please go away.” – and I’m led to believe that “please” is optional). Based on that, we haphazardly began thinking about how such a project would work in practice.

Both of us researched various forms of collaborative writing, Tony brought me up to speed on how things currently worked in media for writers, and I delved into the technologies available to support such an endeavor. After several weeks, we sat down to review what we had come up with.

Why hasn’t this been done before?

In March of 2007, Tony and I met on a Sunday afternoon, and I pitched him my first take on how the website would work. As we talked about it, we referenced things we had come across during our research:

• The Grantville Gazette and Baen’s World were great examples of, respectively, collaborative writing in a single world and how offering free online versions of content can generate offline sales.
• The 1980′s Thieves World series (see also; I don’t think I’ll ever forget the cover of the original issue!)
• the explosion of ARG’s (who loves bees?)
• Innumerable webzines, ezines, and fan fiction sites
• The (usually) failed attempts of industries and companies to “protect” (read: control) their “creations” (read: property) when offered in digital format (think music industry, newspapers, etc.)

After a few hours of discussion, the following realizations struck us:

* there were lots of fan fictions sites (mostly based on well-known and copyrighted works such as Star Trek and Lord of the Rings) that could not monetize their content directly since someone else held the rights (the most the site could hope for was ad revenue based on site traffic)

* there were lots of web/ezines out there, but we couldn’t find one enforcing a single-world collection of submissions (instead, the submissions were independent works without sharing/integration between writers/artists or cross-over of ideas); plus there was a lot of churn in these types of sites, with many not lasting more than a year or two

* the big media companies almost universally require all-rights purchases or work-for-hire agreements when buying new content for established properties/franchises they own

* there seemed to be no site trying to leverage the technical capabilities of the Internet with what was quickly becoming a trend towards both user-generated content making its way “up the content” ladder (towards more established works) and a collaborative approach to creating content

DISCLOSURE: I will be the first to admit that we might have easily overlooked hundreds of sites doing exactly what we came up with for Gallidon. I’m not saying we were the first; in fact, to this day, we still walk around mumbling, “Someone HAS to be doing this, we can’t be the first to try this kind of model.” If we overlooked you, our sincerest apologies, since it was due to a lack of resources, not a lack of trying. Please contact me if what I’m describing sounds like what you’re already doing, I’d love to learn more about it; heck, I would probably blog about or link to your site, since I don’t like to think in terms of “competition” when it comes to ideas I believe are cool.

Anyway, I think I finished the conversation with Tony along the lines of, “I wish there was a website/world like Warcraft where the world keeps moving along and things are happening, even when I’m not checking the site. I want it to feel like it’s constantly evolving, so that every time I come back, there’s something new. But it needs to have a cohesive feel to it, not just be a random bunch of posts or art or stories.”

We continued to hammer out how we could build this kind of site, and our first game plan was to build a site where:

1) we would manage it on the side as a hobby

2) we would craft a new universe and seed the site with some initial content

3) the creative community would supply almost all of the new content after launch

4) we wanted the creative community to create content but retain ownership; we would simply license the right to post and sell their work

5) we would share at least half of the money from sales with the artist who had submitted the work

6) we would post new content as quickly as humanly possible (every few hours was our goal)

That was our first serious meeting about what this website would do and how it would function. Clearly, we had a lot of details to work out and far more legal and technical challenges than we foresaw, but it was enough to start with.

Up next: Part 2 – Multimedia