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Question On Royalty Fee

So I understand that there is a 5% Royalty Fee after the first $3000 per product per quarter. I apologize if this has already been asked and answered, I could not find any related questions.

My question is: Hypothetically speaking if I were to have built a full on video game of my own creation, and say wanted $50,00 per copy and sold say 300,000 Copies the first Quarter, I understand that the Royalty Fee would be $750,000 and say that's ALL I sold for the next 3 quarters. Does the 5% Royalty Fee apply to quarterly statements that have turned no profit? Is it a continual Royalty Fee because I made over $3000 from it?

Also, asking about this brings another question in mind, I believe the answer is no, but does the Royalty Fee apply to say Kickstarter Donations for funding?

Product Version: UE 4.10
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asked Nov 17 '15 at 03:26 PM in Legal & Licensing

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Alpha56
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In the example you listed, $50 x 300K is $15M. But you get to ignore royalties on the first $3K, so you need to calculate royalties on $14,997,000. 5% of that is $749,850.

I think you're asking whether you need to submit royalty reports when there is no product revenue. Per the EULA,

Within 45 days after the end of each calendar quarter in which a Product earns revenue

In other words, no revenue means no reporting.

Your final question is about crowdfunding. You say crowdfunding donations, but to be clear here is what the EULA says about crowdfunding generally. Royalties are owed on the following:

Gross revenue from any Kickstarter or other crowdfunding campaign which is directly associated with Product access or in-Product benefit (e.g., in a multi-tiered campaign, if an amount is established in an early tier solely for Product access, your royalty obligation will apply to that amount for each backer with the same access, but not on additional amounts in higher tiers based on ancillary benefits);

So if it's truly a donation, there's no royalty.

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answered Nov 17 '15 at 03:51 PM

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atypic STAFF
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avatar image Alpha56 Nov 17 '15 at 04:07 PM

I get the first part of the answer. A new question arose from the 2nd part. So I can't say "If you pledge to help fund the project we'll give you a strict walk-around demo of the first level." ? I'd have to basically go in on a strict donation only with say a teaser video of a walk-around demo?

So basically it's a "Please donate to see our vision come true." but you don't get anything in return for it or we'll have to pay a royalty fee on it?

avatar image atypic STAFF Nov 17 '15 at 04:09 PM

That kind of pledge would be royalty bearing because it gets you some in-product access.

avatar image Alpha56 Nov 17 '15 at 04:12 PM

Ah so basically I would build the first level, make a demo video displaying the level, walk around, and perhaps spice it up by saying what I want to accomplish with it in hopes people will want to see it come to light one day? Only then I assume, no product access, so no royalty fee obligation?

avatar image atypic STAFF Nov 17 '15 at 04:54 PM

Yeah if they're not getting (now or later) access or in-product benefit, no royalty.

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