Dear Mike,

While I have withdrawn from the thread with respect to debating with Terry, the fact that you addressed your post to me warrants a reply.

There is a range of problems with the model. I feel that I have discussed them in enough depth that there is no need to go through it again. 

But you propose a specific situation in which you think the model will work. If the designer is also the author-publisher, or a closely involved colleague, then the model might work. In that case, however, the designer-as-author benefits from sales and pays the penalty in losses as an investor.

Terry’s proposed his model for contract relations between graphic designers and commercial publishers. Terry does not seem to propose that the designer gets percentage of sales growth as a partner in the project. The designer merely gets paid if book sales achieve the predicted growth rate, while paying the publisher for any losses if the book fails to achieve predicted growth. 

In any project small enough to make the model feasible for a designer to take market responsibility, the project will probably be so small that the designer cannot accurately predict sales. While the designer might share the risk, any designer who is willing to guarantee sales performance would likely be so ignorant of economics and market factors that the designer would be likely to make a bad sales prediction. In most projects where a designer is paid based on accurate market predictions and penalised when market predictions are off, the designer will take a financial hit. If the goal of the model is to penalise competent graphic designers for economic ignorance and bad market predictions, this is a good mechanism.

This is very much like contracts in which publishers require an author to guarantee that the author will pay any legal fees and settlement costs in the case of a lawsuit over the content of a book — with no right to decide whether or not the publisher will defend. This kind of contract traps authors when it is easier for a publisher to settle a nuisance suit without respect to the merits of the case. In large publishing firms where executive time is valuable, it is easiest to settle nuisance suits for “go-away” settlement fees for any amount that makes sense to the plaintiff and the plaintiff's lawyer. There really are such contracts. I withdrew a book from a major publisher over such a clause. Even a technically small settlement is enough to ruin an author’s life — say $50,000 or $100,000 — but some people are desperate enough to sign them — or ignorant enough to sign such a contract without understanding what the clause can mean.

If we also want to ruin designers financially, this model is a great way forward.

This may also be the way forward to a new model for publishing. Publishers can sign contracts with designers, authors, and others in which all parties external to the publishing firm get paid if and only if a project reaches sales figures that each of them must specify in the contract. If the sales come in beneath the predicted growth rate, the external party must pay the publisher for the loss. Each contract can pay a specified fee to the external party while requiring the external party to pay the publisher for any for losses. Some Hollywood film contracts manage accounting so that film companies make money while allocating paper losses to investors in such a way that they never see royalties or profits. Hedge funds, investment banks, and finance companies reward insiders with salaries and bonuses whether markets go up or down — and fleece investors for the loss of funds when markets go down. Why not publishing firms?

A contract in which publishers pay designers if and only if projects reach predicted sales goals while designers pay publishers for any losses or costs if sales do not reach predicted goals is a case of perverse incentives. This model gives designers a chance to participate in the market economy in much the same way that ordinary investors took part in the Global Financial Crisis.

Yours,

Ken

—

Mike Zender wrote:

—snip—

Ken and list:

I don't think the the recent twist in this conversation accounts sufficiently for graphic design practice as a communication service necessarily connecting several parties (the nature of communication is connecting) with the graphic designer in this communication-between-parties making one communication contribution to a process that contributes some benefit to society. 

There is a designer as author movement and in that case Terry's model of compensation would work fine: the designer conceives the work, writes or otherwise forms the content of the work, designs the form of the work, and distributes the work. Ed Tufte did this with his books (he initially had design help from his designer wife Inge Druckrey and a book designer Howard Gralla) and I believe he was pleased with the financial outcome. In the information age there are an increasing number of projects where the graphic designer also has control over the content's impact in an author-like way but even so information is currently so dense and valuable that the communication designer is often part of a diverse team. Google is coming to UC tomorrow and Thursday to talk and conduct workshops (several of their lead designers are UC alumni) and they and Facebook (also staffed with several UC alumni) are two examples of what I have in mind where communication design makes a very significant contribution as content author but as part of a vast team. 

Reflecting back on what I just have written, perhaps only small projects where the communication designer is author - more like craft than professional design - would Terry's model work.

Not a nobel prize winning contribution but my two cents worth.

—snip—


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