The Hidden Cost of Revenue Share Deals
- Xiao'an Li
- May 25
- 7 min read
Let me preface this with the following: This does not aim to cast those who use revenue share deals as evil - it simply aims to frame the arrangement in a different light to draw attention to its (possibly) unintentionally harmful effects and asymmetric nature. However, should you choose to take any of this as a personal insult, you have my gleeful permission.
Let's get to it.
Revenue share and deferred payment models are common in the game industry, especially for freelance composers and other creative contributors. They are often presented as mutually beneficial partnerships, giving creatives the chance to work on exciting projects while allowing developers to manage tight budgets.
But this has serious implications for equity and access in the industry.
Creatives as Unofficial Financial Institutions
At first glance, a revenue share deal may seem like a clever workaround for budget constraints: the composer provides their services up front, and once the game starts making money, they receive a percentage of the revenue. But this is not a partnership - it is financing.
When a composer takes on this kind of arrangement, they are acting very much like a financial institution extending a loan.
Here’s how it works: the developer needs a product (music, art etc) to move their project forward, but they don’t have the cash to pay for it right now. The composer agrees to defer payment, offering their time, energy, and resources up front in the hope of recouping that investment (and maybe making a profit) later.
That is, by definition, credit.
The only difference is that the composer isn’t lending straight cash; they’re lending valuable labor and the license to intellectual property that is normally paid for, and they are doing it without the collateral, interest, or legal protections typical of a formal lending agreement. Often the music is so customized to the product that there is almost no point including a clawback clause anyway - it probably wouldn't be licensed elsewhere.
Financial institutions take on risk too, but they structure their loans to be assets. Even if the borrower defaults, there are legal… solutions. Loans are secured against collateral, and payments are contractually enforceable by institutions with the ability to hire teams of lawyers. Not to mention that this business of taking on risk is the entire business model of a lender.
Composers and artists are not lenders, or capital owners - we are laborers.
In stark contrast, a revenue share offers no guarantees. The payout is entirely contingent on the commercial success of the product, which is highly uncertain, especially in creative industries like gaming. And even in a successful situation, an unscrupulous client might seek to minimize that payout with some form of Hollywood Accounting.
This means that while banks can classify a loan as an asset on their books - even if repayment is months or years away - a composer’s revenue share agreement is a speculative hope, not a guaranteed return. If the game fails to ship, or doesn’t sell well, or never sees release at all, the composer may receive nothing.
No compensation, no fallback, and no legal leverage to recover lost labor.
So while the developer walks away with a complete asset - i.e. original music that enhances the value and polish of their product, artwork that does the same - the composer walks away with only risk. Unlike a financial institution, they’re unlikely to have the financial buffer to absorb that loss.
Let's take a look at how this compares to traditional financing.
Aspect | Composer (Revenue Share Deal) | Bank (Loan) |
What is provided up front? | Labor, creative service, original music | Cash or capital |
Nature of contribution | Unpaid work with deferred, contingent compensation | Monetary loan with interest |
Risk assumed by provider | Total risk; may never receive payment | Calculated risk; has legal protections and collateral |
Collateral or security? | None – repayment depends entirely on product success | Often secured by assets or legal claims |
Return on investment | Uncertain; contingent on revenue (if any) | Contractually guaranteed interest over time |
Legal protections for nonpayment? | Usually none; nonpayment is not a breach of contract | Full legal recourse for missed payments |
How it's recorded by borrower | No liability shown on balance sheet; appears "debt free" | Liability recorded as debt on financial statements |
Perception of borrower’s finances | Looks lean and investable due to off-the-books labor | Debt obligations clearly listed and accounted for |
Who benefits immediately? | Developer/company: gains asset (music) without cash outlay | Borrower: gains cash, but must plan repayment |
Who is financially exposed? | Composer: unpaid, with uncertain future returns | Bank: protected, with diversified portfolio and legal recourse |
Financial Stability Bias and the “Pay to Play” Dynamic
One critical characteristic of revenue share agreements is that they are only realistically available to composers who have the financial stability to absorb the risk of deferred payment. Not everyone can afford to work for free or delayed compensation for months or even years while hoping for a future payout.
Those with stable savings, secondary income, family financial support, or fewer personal obligations are far more able to take these deals. If you have children to support, ailing parents, expensive rent in the city you have to be in in order to get work, it gets tricky.
This creates a troubling bias in the industry’s hiring practices. Rather than selecting composers purely on talent, style, or suitability for a project, developers may inadvertently select the richest and most willing individuals - those who can afford to take the financial gamble. After all, those who cannot afford it have already been filtered out, skewing the selection process even before creative ability is taken into consideration.
Over time, this creates a “pay to play” dynamic: the opportunity to contribute to high-profile or promising projects increasingly goes to those with the economic privilege to subsidize their own work.
Additionally, the option of zero upfront cost puts downward pressure on the wages studios are prepared to pay even when they do have cash available for this purpose.
The implications are profound:
Talent is sidelined in favor of financial backing. Brilliant composers without a financial safety net may be shut out despite their skills.
Economic privilege becomes a gatekeeper. Creative careers become more about who can survive unpaid risk than who can produce the best work.
Shrinks the pool of eligible creative talent. This model disproportionately excludes people who statistically have less access to economic resources.
This “pay to play” culture not only undermines fairness but also impoverishes the industry’s creative potential by narrowing the pool of voices and styles.
Subsidizing The Industry
This is not just an issue of individual choice; it is a systemic problem. When revenue share becomes the default or unspoken expectation for new entrants in the industry, especially in the indie sector, it becomes a barrier to access. It effectively asks people to subsidize the industry with their labor in hopes of a possible payout down the road.
It can also create the unspoken expectation that only those who can afford to go unpaid for months or years are truly "passionate" or "dedicated," which is frankly, a load of shit.
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