Legally Odd: OGL Section 9

Recently, Wizards of the Coast announced that they would be releasing version 1.1 of their famous Open Gaming License, the OGL. What does this mean, and how does the deeply weird Section 9 affect their plans?

The OGL is a legal agreement that WOTC developed in 2000 to encourage third parties to develop content for Dungeons & Dragons. When a gaming text includes it, the open gaming content portions of that document can be republished by other parties, open source style.

Now, two decades later, on the threshold of 6th edition ("One D&D"), WOTC has announced it's overhauling the OGL to clarify their intentions.

Section 9

As I hinted, the most fascinating thing about all of this to me is a particular clause lurking in version 1.1A of the OGL, 'section 9'. It reads as follows:

9. Updating the License: Wizards or its designated Agents may publish updated versions of this License. You may use any authorized version of this License to copy, modify and distribute any Open Game Content originally distributed under any version of this License.

To get the obvious out of the way, WOTC doesn't need anyone's permission to create a new, separate license to release new material under. Section 9 is about creating specific avenues to retroactively change the meaning of the OGL. But what?

The Permissive Interpretation

My first, most literal interpretation of Section 9 is that if you're reading a document released under OGL version X, you can reuse the open gaming content in it under any version of the OGL you like.

I call this the permissive interpretation because it gives maximum choice to a downstream republisher. They're free to use the least restrictive version of the OGL, at their discretion.

The strongest evidence I have that this is WOTC's original intention for the OGL is in this gem, courtesy of Margaret (@EtoEWanders on Twitter):

Q: Can't Wizards of the Coast change the License in a way that I wouldn't like?

A: Yes, it could. However, the License already defines what will happen to content that has been previously distributed using an earlier version, in Section 9. As a result, even if Wizards made a change you disagreed with, you could continue to use an earlier, acceptable version at your option. In other words, there's no reason for Wizards to ever make a change that the community of people using the Open Gaming License would object to, because the community would just ignore the change anyway.

This is very much in the spirit of the open source software movement, as it gives WOTC "no take backs." Even so, there's some weird edge cases with it!

Permissive Oddities

This permissive interpretation sounds great when you're thinking of reusing somebody's OGC, but it's pretty lousy at protecting your own. As written, it seems that when WOTC releases a new version of the OGL, suddenly everyone who is considering reusing your open content now has their pick of license versions. This means that WOTC can grant itself or your licensees new rights, just by updating the OGL. Pretty weird!

The situation is especially strange for companies that used the OGL 1.0A to release their own wholly original SRDs. They weren't republishing anything written by WOTC, they just liked the terms of the OGL.. but now WOTC can modify the terms on their behalf!

Free League, for example, released a Year Zero Engine SRD under the OGL 1.0A. Once WOTC releases OGL 1.1, anyone who wants to can suddenly elect to use the YZE SRD under those new terms, terms that Free League has never seen!

What WOTC Thinks

In their Dec 21 blog post, WOTC makes it clear that the whole point of the OGL update is to add new restrictions to the OGL.

The new restrictions:

• No NFTs
• OGL only covers print materials and static electronic documents
• Terms must be explicitly accepted via a web portal
• OGL products must display a badge
• Revenue reporting for $50k+ annually
• Royalties for $750k+ annually

If WOTC believed in the Permissive interpretation, this would all be pointless: in that model, WOTC can't meaningfully add restrictions to the OGL. Anyone who wanted to make NFTs or a video game would simply take WOTC's the new OGL 1.1 content and republish it under the OGL 1.0A, then do whatever they liked.

This makes me think that WOTC has a different, much scarier interpretation of section 9, the Retroactive Interpretation.

The Retroactive Interpretation

There's another way to look at this, which I think would have an even bigger impact. In this view, the OGL is a living document that you agree the WOTC can update from time to time. When they do that, the new terms apply to everyone's use of the OGL, immediately.

In this interpretation, the last half of section 9 simply means that any version of the OGL you copy into your document is an equally valid attestation that you agree to the latest version of the OGL.

Now, the objections to this view are several:

O1: What's the point of a perpetual, royalty free license if they can update it to be a non-perpetual, royalties required license?

Sadly, I think the answer is, "None. OGL 1.0A and Section 9 sucks for publishers that used it."

O2: This is massive overreach!

Yes, probably—but I think it's worth thinking about who WOTC intends to target. They probably aren't hunting for sofa change from copper OBS sellers, they want a cut of the bigger operations.

WOTC will be fine with the small fry having to put up with an ambiguous legal context, if that ambiguity forces the the larger third-party publishers to negotiate with them directly.

Corporations are perfectly happy making everyone sign, "We can take your organs," style agreements that give them all the leverage, while saying, "Oh well, we would never take YOUR organs, we don't mean you!" in blog posts that aren't legally binding.

As an example, just look at the DMs Guild agreement. If you've agreed to that, you've authorized OBS to sign legal contracts on your behalf 'to clarify their rights'. Fun!

O3: That's not what OGL 1.0A | Section 9 says!

I think that may be true.. but perhaps irrelevant. The OGL 1.0A is 22 years old—the people doing OGL 1.1 are completely different, with wholly different goals. The OGL isn't sacred to them, it's a tool, a revenue opportunity.

WOTC will be 100% fine with an ambiguous legal environment as long as they achieve those goals: making the bigger players talk to WOTC to report their income, pay up, and/or negotiate separate agreements. 

Clawing History

The permissive interpretation is weird, but the retroactive interpretation is truly bad news for third parties. It not only means that WOTC starts taking a cut of new products based on One D&D, but that it potentially can claw into the revenues of existing products. If that wasn't what they were thinking, why would they declare 2023 a royalty grace period? If royalties only applied to new, OGL 1.1 products, royalties could apply right away because everyone publishing under it would know the deal during planning time.

Go Carefully

We will see how the chips fall when the OGL 1.1 is released, but I stand by my previous feelings that the OGL should be used extremely carefully, and only when you're actually using the specific rights it grants you.

A Full-Time RPG Income

What does it take to earn a full-time income from RPGs? This is a back-of-the-envelope calculation to illustrate one way of looking at this.

The RPG market is growing (rapidly, apparently!) Every year, more and more RPG gamer dollars are spent on new and classic products.

At the same time, the barrier to entry to make RPG products has never been lower. There are countless free SRDs to use as the spine of the game, the tools to produce are cheaper than ever, the publishing routes (e.g. POD) are wide open, and the knowledge to use all of this stuff is splattered all over the internet.

What was once a sheaf of hand-typed homegrown rules can now become a 'product', and tens of thousands do every year. The money brought in by the growing RPG audience is spread across more and more products all the time.

So, for a designer to go full time, they need to capture enough of that audience to support them. This brings me to the key point of this little model:

How many RPG fans does it take to support one designer?

Let's say, for you, a full-time income in RPGs means $50,000 annually. (Like all the other numbers in this model, we can tweak this to be whatever we want.)

Now, how many RPG buyers does this money come from?

Let's say the typical RPG buyers spend $100 on RPG-related products each year. This means it takes the combined purchases of 500 buyers to produce the $50,000/yr income. That's fine, except for a few assumptions that we can adjust for:

• Those buyers don't only buy your stuff
• You probably need help making the products, so the revenue is shared among a group of designers, illustrators, and so on
• You certainly need help printing and shipping the products to people

Adjusting for these assumptions increases the number of RPG buyers required to make up that income. Let's assume that:

• Each buyer buys 6 products from different indie publishers annually, dividing that $100 among six indie publishers
• Half the retail price goes to printing, shipping, logistics, and processing fees that have nothing to do with the creative team, dividing the creative team's share in half
• You're doing a fifth of the work of the product team (design, writing, illustration, editing, layout, marketing), so you get a fifth of the remaining proceeds

This means it actually takes 60 buyers (6 x 2 x 5) to make up each $100 that makes it into your pocket, or 30,000 buyers overall.

So, there's your target: you need to get a 20% profit share* of one or more RPG products that collectively reach 30,000 buyers every year.

* * *

For perspective, the Trilemma Compendium had 2,248 backers on Kickstarter, and is on track to become a Mithral-selling product (2501+ sales) on DriveThruRPG by the end of this year, about 1400 sales/year. In isolation, that sounds great, but it's not even remotely close to the target this model requires.

Going by this model, for a full-time income in RPGs, I'd need to:

• Make several such books every year 
• Vastly increase the audience that each one reaches

This still doesn't get me anywhere near the target in year 1, but in a few years, the majority of sales are actually out of the back catalog.

* * *

I don't have any special wisdom about this, but a few observations:

More buyers means higher $/hr. This might be obvious, but the more people that benefit from the time you put in, the easier it is to make some money at it. Making something for a hundred people isn't remotely as useful as making something for a thousand if they both take you the same time.

Having said that, more buyers is only better if the rest of the factors hold up. Projects that do truly vast numbers (e.g. WOTC hard covers) may be the big leagues, but they might not be the sweet spot. The product revenue is shared among a big team, and I think a lot of it is work for hire. My unsubstantiated hunch is that Kevin Crawford of Sine Nomine is doing better than the typical WOTC hardcover contributor: very small team, majority profit share, substantial back catalog sales.

Getting a share of profits looks even more important now. Most of a product's sales are in years 2+. Kickstarters are flashy and great, but by year three, the compendium will have sold more on DTRPG than it did during its Kickstarter. The only way to benefit from those sales is to have a share of the ongoing profits.

Realistic Kickstarter Goals

Using your entire project budget to set your Kickstarter funding goal will make your goal too high. The financially responsible funding goal only covers your remaining costs.

With The One Ring making a big splash on Kickstarter this month, there's been renewed talk of fair funding goals. Free League set its funding goal at 100K SEK (about $12,000 USD), which is unlikely to be enough to cover the costs of producing a full-color, 300+ page book full of art.

Is this too low? Are they gaming the system?

Maybe not.

Kickstarter (or perhaps just Kickstarter culture) rewards projects that make their funding goals quickly, which encourages low goals. Funding on the first day (or hour!) is particularly celebrated. It's tempting to set a funding goal that's much lower than the project's budget in order to be able to hit this funding goal very quickly. That success can be used for marketing oomph, building more buzz and sales in a virtuous cycle.

That is.. if you get enough backers. If you don't, have you basically gambled financial disaster to buy some marketing juice?

Two Crucial Funding Levels

There are two crucial funding levels, one of which we talk about all the time: break-even point. This is the point a which your project earns enough to cover its costs, and makes its first dollar of profit.

The other funding level is one I don't hear about much, and that's the "go/no-go" funding level. How many sales do you need from your Kickstarter to make continuing to production a good idea?

Intuitively, these are the same amount. Why would you go forward with a project that's going to lose money? Unfortunately, this assumption will make you pick the wrong funding level, one that increases your risks.

Sunk Costs

The flaw in this thinking is that by the time you Kickstarter, you've already invested a lot. You've probably at least got a first draft, you've put time into play testing, you've spent time lining up the production team, working out some of your logistics, and you've bought enough art to at least give your Kickstarter a chance.

On Kickstarter launch day, there's no way to "unspend" this money.

If your project is unprofitable, you can't go back in time and not do all that pre-work. This has a huge effect on how you set a financially responsible funding level.

What you need to look at is the various scenarios going forward from that point in time, and setting a funding level that guarantees you'll be in better financial shape than you are now. That funding level only covers your remaining costs! Why is this?

Scenarios

To answer that, let's look at hypothetical indie RPG project. I've picked March 1st as my KS launch date, and by that time I estimate that I will have sunk $5,000 into the project. (Let's say this is three weeks of full-time work at a 'livable wage' of $30/hr, plus $1,000 in assorted freelance help such as KS banner art.)

Having carefully thought out my remaining costs in time and freelance work, I project I'll need another $5,000 to finish the project. (Art, layout, copy-editing, time spent finalizing shipping logistics, coordinating freelancers, etc.)

I've priced the book at $30 (including shipping), and it costs me $20 per book to print, package, and ship to backers. The per-book margin is therefore $10.

This means that my break-even point is 1000 sales. That raises $30,000, which covers the $10,000 in fixed costs, plus the $20,000 in variable costs of delivering 1000 books.

However, my go/no-go point is much less, only 500 sales. Why is this?

Several Disasters

Let's consider several crappy outcomes. One is that I don't get a single backer. If this happens, I won't fund, and I don't go to production. I pull the plug on the project, and (crucially), I don't spend the additional $5,000 to complete the book.

This means that my total costs are the $5,000 I already put in (and a broken heart).

Now let's imagine that I got 900 backers. That's not enough to break even, because my total costs are $28,000. However, my revenue is $27,000, which means my final position is $1,000 in the hole. That's considerably better than $5,000 in the hole, which is where I'd be if I set my target above 900 backers. I'm $4,000 better off by going to production with 900 backers.

Clearly, 1000 is not the optimal funding goal.

With a funding goal of 500, as soon as I get 500 backers, my additional fixed spend on art to complete the project ($5,000) is exactly covered by the margin of my book sales (500 x $10). I'm no better or worse off than pulling the plug. At 499 backers, I'm slightly worse off ($5010 in the hole), at 501 backers, slightly better ($4990).

This is the balance point that matters, when my per-book margin equals my remaining fixed costs.

One way to look at this is to plot my project's final profit based on various funding goals and actual backer levels.

Here is the ideal profit line.

With a funding goal of 500 backers, there is never a point where I'm more exposed than my sunk costs of $5,000. $5,000 in the hole is as bad as it gets. At the same time, as soon as I get even one extra backer past my funding goal, my position is improving.

Let's compare that with other funding goals:

With a funding goal of zero (dark blue line), I've made the choice to spend the additional $5,000 in art costs whether or not I get any sales. This exposes me to some additional downside, as much as $10,000 in the hole if I get no backers.

With a funding goal of 250 backers (red line), I have some protection against the worst, but going into production with 250 sales means my final position is $7500 in the hole, considerably worse than 500 backers.

Now look at funding goals above 500 (e.g. green, orange, teal). Those goals protect me from deepening the hole, but they make it harder to start recouping my costs: it takes many more backers before my project lifts off that -$5,000 profit line. If my funding goal is 1000 and I only get 750 backers, my project doesn't fund. If my goal had been lower, I could have recouped some of my sunk debts, even though my project wasn't profitable overall.

Unconscious Signals

What's interesting about this is that it matches my own gut feel choices while planning my own Kickstarters. I had funding levels that were considerably below the total project budget, because I knew I was going ahead regardless.

With plans to use print on demand, once the book was actually written, there was very little reason not to go ahead with production, especially since post-Kickstarter sales also become available.

Of course, if you have a series of unprofitable books, you need to look at your operation pretty carefully. The time to consider the possibility of turning a profit is before you start sinking time and money into something. When you're hovering over the Launch Kickstarter button, however, very different calculations rule the day.

Sci-Fi Where Art Thou?

Recently, I wondered to myself, "What's the 5E of sci-fi?" If one was going to create science fiction adventure content to supplement the most popular system, what would it be?

Class A Modular Ship by Galen Pejeau

Surely there's something d20-based floating around, but it took me a while to remember Stars Without Number. Why is that?

I grabbed the Q1 2020 Orr Report from Roll20's blog to see what their stats said. I did a quick classification of the top ~95% of campaigns (there's a pretty long tail), and here's what I got:

Here it's pretty clear—fantasy rules the roost by an astonishing margin. More than 60% of all campaigns were fantasy. There are plenty of campaigns that don't declare a system, but after that there's a solid chunk of Call of Chthulhu.

Sci fi is 1.9% of campaigns?!

Talking about this on Twitter, a number of people wondered:

• It this just because of the 5E effect?
• Is there a bunch of sci-fi gaming classified as horror? (e.g. ALIEN)

The answer to both questions is no. Here's 5E and all Uncategorized campaigns removed. Horror (as I said) is basically all various edition of Call of Cthulhu (with a homeopathic quantity of something called inSANe).

When I look across sci-fi, cyberpunk, and science fantasy (e.g. Numera), it's no surprise that the top systems are Star Wars (various), Starfinder, and Shadowrun. What's more surprising is those three heavyweights don't even account for 20 games out of 1000 on Roll20.

Caveats:

• A number of definitely sci-fi systems like ALIEN and Coriolis, are lumped into system categories like "Year Zero". Other systems presumably have some sci-fi component, like FATE, Savage Worlds, and all of PbtA are lumped into system categories. Even so, that's only 2% of Roll20 campaigns in total, much of which is other genres besides sci-fi.
• Roll20 campaign data may not be representative of overall gaming patterns. Anything that doesn't really benefit from maps and tokens may simply be using Zoom and Google Sheets, and not messing with VTTs at all.

If you're looking for sci-fi, Zine Quest 2021 is going now, and has several great-looking Mothership supplements!

Compatible with Dungeons & Dragons

This blog post is compatible with Dungeons & Dragons™ fifth edition. :)

* * *

I'm now in the world of feeling my way through creating various system-specific versions of the Trilemma bestiary, en route to publishing them.

My thought at this point is that there is a lot of murky thinking about what you can and can't publish, and this murkiness is a) deliberately created, and b) mostly helps the big players, like WOTC.

I'm not a lawyer, but this is what I've been able to piece together.

1. Large IP holders want you to believe that their official programs are the only way to produce compatible products

If you want to make a D&D-compatible product, prevailing wisdom is that you have two choices: use the OGL, or use the DMs Guild. (Why is there no apostrophe in that?)

I can understand why the WOTCs of the world would want you to think this. People have a very hazy grasp on copyright law and trademark law, and if they just used their intuition all sorts of IP violations would occur. There's a very common idea, for example, that derivative works are fine to create and publish if you're not making money on them. (They're not.)

Official programs are a way of being really clear about what the IP holder is willing to allow people to do.

2. Licensing agreements describe an exchange

Licensing agreements give you something in exchange for something. For example, if you look at Paizo's compatibility license, it describes an exchange between you and Paizo:

• You can use Paizo's trademarked "Pathfinder compatible" logo, and the associated font in your products
• Paizo gets your agreement that you'll only make 2e-compatible stuff, they get a copy of compatible products from you, and you agree not to refer to page numbers in their books.

Both of these things are new rights that each party didn't have previously. You didn't previously have permission to use Pathfinder's trademarked logo, and (of course) Paizo can't prevent random people from referring to Paizo page numbers.

Briefly, I've noticed a few things are common in licensing agreements:

• You're given permission to use copyrighted text (as in the OGL)
• You're given permission to use trademark logos
• You're given permission to use trade dress, fonts, or stylings

The D&D 5e SRD, for example, is licensed under the OGL (which grants permission to use copyrighted text) because they expect people to take chunks of that text and use it their publications. It gives the new right to republish copyrighted material.

3. Creating a licensing program doesn't remove any rights that you already had

This seems like a straight forward idea, but it's worth dwelling on.

Let's say WOTC created a new program called the Reviewing Wizards program. By agreeing to their license, you're allowed to call yourself a Review Wizard™ and use a special little -(RW)- logo when you do so, and in return you agree never to publish a negative review of a WOTC product. Fine.

Is this the only circumstances that you're allowed to publish reviews of WOTC products? No, of course not! WOTC creating this program doesn't suddenly give them control over all negative reviews. It only applies to participants in the Reviewing Wizards program.

If I'm publishing negative reviews of WOTC products, I can't use the Review Wizard™ trademark, because I didn't license it, but if I don't join that program and take the new rights it grants me, I don't have to abide by its restrictions. I can still do what I could do before.

So.. what can I do without permission?

4. Fair use of trademarks

Before I get into that, there's a difference between compatibility and statements about compatibility:

• A book with 5e stats in it is (in a lay sense) compatible (usable) with 5e.
• A book that says it's "compatible with Dungeons & Dragons™" on the cover is using a WOTC trademark to describe itself.

These are independent things. Okay, back to trademarks.

The International Trademark Association's page on the fair use of trademarks is fascinating, because you can actually do quite a lot more than you might expect. The examples are useful, because there's a whole bunch of, "Oh yeah.." recognition moments. Think of:

• Third-party replacement blades for Gillette™ razors
• Repair shops that advertise being able to fix BMW™ cars
• Third-party sellers of iPhone™ 6 phone cases or chargers
• Unofficial guides to AAA video games

All of these are services or products that are compatible, but which also use another company's trademarked terms to describe themselves.

* * *

Why does all this matter? Frankly, because some of the popular licensing programs out there are batshit insane. So now, let me put on my Review Wizard™ hat and review some licensing programs.


Legal Lunacy: OBS Community Programs

The DMs Guild (why is there no apostrophe?) was the template for a number of OBS (DriveThruRPG) community content programs, and to use them, you give up some remarkable things:

• You can never publish the work anywhere else—not in print, not via Kickstarter, not on itch.io, not on your blog, not anywhere. If they delist your product or the whole community content program shuts down, your content is then simply unpublishable.
  
• You can't publish works derived from it anywhere else, either.
  
• The publisher gets a permanent, irrevocable right to republish your work, including creating and selling derivative works. They can translate it, slice and dice it and put it in compilations, without paying you a dime or even telling you.
  
• OBS can sign legal documents on your behalf, operating as your 'attorney-in-fact' if they need new contracts to clarify or affirm their rights, as they see them.

That last one is so mind-bendingly overreaching that it's comical. You're giving them permission to negotiate for you, with themselves. It's like the devil wrote it.

As far as I can tell, the only reason to use this is if you're so smitten by the D&D brand that you want to rub that cachet on yourself, and/or blow hundreds of hours of hard work on a desperate notice me sempai play.

If you're going to market the hell out of your product (or cash in on your good name), then it makes a kind of sense: the median DMs Guild product makes 10% more revenue than the median DriveThruRPG product (sales are higher, but the WOTC clawback is almost aggressive enough to make up for it), but at the cost of giving away all rights that matter.

Alternately, if you have no marketing impulse whatsoever all and 50 sales sounds good to you, then these programs makes a kind of sense because at least you can play with WOTC IP while you're doing it.

For non-WOTC publishers who are too small to boost your sales or give you much IP to play with, I can't fathom why you'd touch an OBS community content program. This is the infectious green slime of licensing programs.

OGL

This is a funny one. As far as I can tell, the only reason you need to use the OGL is to republish OGC content. If your content is all new, there's no need to use the OGL whatsoever—in fact, you're explicitly giving up some fair use rights unnecessarily, since the OGL prohibits you from using Product Identity trademarks to declare compatibility.

In other words, if you reuse 5e SRD to make a 5E-compatible product, you're explicitly giving up the right to say it's D&D compatible.

If you're not actually republishing someone's OGC material, using the OGL looks like you've given up some rights for nothing.

Pathfinder Compatibility

In contrast, this actually looks pretty reasonable. You're forced to use the Paizo OGL, but the compatibility license gets rid of OGL's major restriction on the fair use of trademarks for compatibility statements, by letting you use their Paizo Compatible™ logo.

Also, it should be worth mentioning that Paizo doesn't take a cut. They haven't created a garden prison like WOTC, they just want to make sure that people are writing for the latest edition of Pathfinder.

* * *

D&D™ Compatible

In conclusion, contrary to popular wisdom, D&D™-compatible products which say, Compatible with D&D™ on the cover seem to be completely legal. As long as:

• You're not using any WOTC-copyrighted content that would require you to use the OGL
• You use the trade marks in a minimal way (e.g. no giant logo reuse, just naming them)
• No brand confusion is created, and no business relationship or endorsement is implied

Pay To Win

The sad fact is that, despite all this, having a heavyweight legal team lets you send scary-sounding cease-and-desist letters, and fighting them is too stressful and expensive for little publishers. Most (all?) of the fair use of trademarks examples I cited above were established by litigation, which is horrendously expensive.

One depressing but useful benefit of participating in an official license scheme is as a declaration of what the publisher won't try to bully you for doing.