For Want of a Cash Stream - Chiaki & Tobiko

[FreestylePoet]

"Seltzer, then." Tobiko went back behind her desk and cracked open her private mini-fridge. Out came two green glass bottles, the finest brand in mineral water emblazoned across the front. "Good choice. I think I'll enjoy one too." She popped both bottles' caps and handed one to Chiaki before taking a swig herself.

Then she slid her desk phone across the table to Chiaki and pointed at a rectangular yellow button. "If there is anything else you need -- refreshments, a portable charger, truly anything -- please don't hesitate to page my secretary. This button should bring you right to him." She gave Chiaki a quick bow. "Again, I'm sorry to leave you like this, but hopefully Legal doesn't tie me up for too long." With that, she left her office.

As promised, it hardly took any time at all for Legal to draw up a contract. All Tobiko had to do was recount the terms they'd agreed upon, complete with a few mathematical details of her own design. A few clacks of a keyboard later, the pact was complete. The text was all provisional, of course, and Tobiko had enough legal knowledge to properly annotate edits to be made in future iterations. But it was an important step. Just having a formal document, even one littered with draft copy, was a comfort.

Not that Tobiko would deliver it too easily. Time was on her side, after all, and what sort of a negotiator would she be if she didn't use every tool to her advantage? Rather than waltz back in the room mere minutes after setting off, she waited. Contract in hand, she went to go refill her coffee before taking a trip to see Finance's latest batch of interns. (At least one of them had the potential to work for LAW... as a janitor, perhaps.) Then, just to make sure she got her steps in, Tobiko took a few laps around the building's many floors.

She only delayed by about half an hour -- just on the edge of acceptability, but just long enough to weigh on most people. Eventually, she returned. "My deepest apologies, Chiaki," she said with as good a huff as she could muster. It wasn't hard to summon annoyance, given what she'd seen of her interns. "You know how lawyers can be sometimes. We only hire the best, but the law often requires unexpected meticulousness. I hope I didn't leave you waiting too long?"

[deezcastforms]

Chiaki was a bit relieved when Tobiko just gave her seltzer and didn't try to push the alcohol or anything like that. The gamer girl's guard would go down, but perhaps it was just an innocent offer. If nothing else, the seltzer was quite nice. She didn't know the brand, but Chiaki could only assume that it was high end if it was in a CFO's office.

Chiaki also appreciated Tobiko's gesture of offering her desk phone. She probably wouldn't use it unless something serious came up, since she didn't want to bother a secretary who would probably be very confused about why an unknown voice was calling and ordering things from her. But it was still thoughtful of the greenette to do regardless.

"Please, take all the time you need," Chiaki said as Tobiko walked out the door. As soon as she left, the gamer girl had pulled out a portable console, and got to killing time. Not that the streamer had any knowledge of the CFO's delaying tactics, but they were ineffective. Tobiko would have needed to stall for far longer before Chiaki got worried as long as she had a game to play while she waited. She put it away once she heard the door start to move behind her. "You're fine," she said. "The wait wasn't a problem at all."

[FreestylePoet]

"Very good." Of course the girl had brought a gaming system. That was her entire... thing, now, wasn't it? Perhaps her stall tactics were doomed to fail from the start. Tobiko hummed. No matter. At least she got her steps in.

"Back to business, then." The CFO sat down and unfurled the contract. Five letter-sized pages of copy paper spread out across Tobiko's mahogany desk. "As I said, you'll be able to review this with any agent or representation you may have. This is just for our purposes. Shall we begin with what we already discussed?" Her fingers tapped on each paragraph in turn, showing how the text reflected their earlier conversations.

LAW may, at their discretion, offer support services including but not limited to: (1) Graphic design; (2) Marketing; (3) ...

No clause in this contract should be understood as compelling Talent to produce any specific Content. Addenda to this Contract may be negotiated to...

Whenever Talent is producing LAW content, LAW intellectual property (e.g. logos) must be prominently displayed. Applicable copyright permissions must be procured at Talent's expense, and...

"There are also a few paragraphs here at the end discussing how you can bill for hours of content produced, how you can reach out to our Press team for those pesky logo permissions, things like that. Boring stuff, but thankfully not relevant to our negotiation. More informative than anything." Finally, her finger slid back to a rather thick set of clauses in the middle of the contract. "This is the next step. We've outlined our initial proposal for a compensation package. I emphasize that this was some back-of-the-napkin math, but we've estimated a lump-sum payment that you will have to pay to LAW -- representing our 'cut' of the revenue, of course, and covering our own costs of content production and rebroadcasting."

The number was no huge amount, but the IP and copyright fees would be sizable as well. Chiaki, then, would have to produce quite a bit of LAW content to break even; if she'd estimated her workload based solely on the contractual revenue split, Chiaki might believe the opposite. In a way, it was a trap. Even once Chiaki realized that she was bleeding money, she might not choose to end the partnership outright. Further negotiations meant further leverage points.

Of course, this was a raw deal by design. The time for compromise was over. Now was the time for victory.

"Naturally, I'm not allowed to divulge the particulars of other partners' finances, but suffice it to say that Allison Lee has increased her revenue substantially after signing a similar deal with us." That was the rub: Allie was more than happy to produce as much LAW content as possible, even going so far as to cut advertisement deals for her routine streams. She could afford the lump-sum cut.

[deezcastforms]

"Yes, let's," Chiaki said as Tobiko began to go over the contract. Everything in the terms and clauses looked like what had been discussed. There was no trick language or conveniently omitted words that the streamer noticed. In terms of what each side of this deal was agreeing to do for the other, things looked above board.

Then Chiaki moved onto the numbers, where she knew things were most likely to go awry. Her eyes looked up and shifted back and forth as she ran some basic arithmetic in her head. "I stream about 25-30 hours a week for most of the year," she began. "If the projections are accurate, then I'd need to do about. . . 5 hours of wrestling based content a week to break even. So 16-20% of my streams would become LAW." Chiaki paused a bit, looking satisfied. "That's around what I was expecting, I can work with that. I should probably call Allie and see if she'll tell me what her numbers look like."

But as Chiaki continued to look over the text of the contract, she noticed something. "Hey hey, so on top of the revenue split, I also have to pay to use the LAW copyright for the wrestling content. Is that included in the revenue split, or is that a separate fee? Because I don't see anything about what licensing the branding will actually cost me. If that isn't included in what I'm paying with the partnership split, than that might push the costs a bit higher than I'm comfortable with, I think."

[FreestylePoet]

Tobiko frowned as Chiaki expressed her doubts about the numbers. She knew they were far less than generous, of course, but there were ways to slow-play this. Gradually negotiate down to her true goal. Establish a rapport. Offer to work together... as much as was convenient. She sighed in sympathy. "Unfortunately, those will be separate costs. That's out of our control. Logos, event footage, and even stage names are the exclusive creative copyright of LAW. There is separate paperwork for that, managed by our Legal and Creative teams, and though we could prepare a blanket permission as part of this package of forms, it's a lot easier for you to apply for and purchase those reproduction permissions as you need them. Much cheaper, too, compared to the blanket agreement."

Again, a truth that went hand-in-hand with Tobiko's goals. That was her favorite kind of truth.

Then, her brow furrowed in genuine annoyance. "The most... annoying reason, as I'm sure you're aware, is music." If there was a business large and monied enough to be more annoying than all the rest, it was music. Record labels and producers and even independent artists were a thorn in otherwise perfectly normal business operations. "Themes and background music originally composed by LAW are just like the rest of our intellectual property. Again, in theory, we could grant you that as part of our contract. However, many of our wrestlers use entrance music created by other artists. LAW has exclusive license to play those at our shows, and we don't want your content to be caught up in automatic copyright strike software. The only way to prevent that is for you to pay through them. The record labels, I mean. Or, more accurately, for you to be added to our permissions with all appropriate fees. We'll help you, of course, but that can't be included here."

"We can go away for a bit if you'd like to run the numbers." That was standard business practice, of course. "But stepping away from the media licenses for a moment... Regarding our cut of the money, suffice it to say that working it as a lump sum is an investment in you. Perhaps more of a bet, even. If our content is as good a fit for your brand as a streamer as we both think it will be, then you'll reach new audiences and draw deeper interest from existing ones." She nudged her head from side to side as if chewing over her next words. "If, on the other hand, it ends up not being such a great fit, I can see how the fees might stack up against you."

Then she looked Chiaki in the eyes with a smile. "Ultimately, we're confident in your abilities and in your audience. Confident enough to make that bet -- of course, we make out somewhat fine if it doesn't pay off. We collect our fees one way or another, then break off the agreement. But we still lose time and money, just as you do." Then came the bait. "There are, of course, ways to reduce the risk for both parties. Different fee structures, so to speak, if you're interested."

[deezcastforms]

Chiaki was really starting to not like what she was hearing. With all these separate costs and fees under every rock and around every corner, she wondered if those alone might make the costs untenable even before the revenue cut even came into play. Especially when Tobiko mentioned how LAW was getting theirs regardless of how this worked out. It felt cold to Chiaki.

There was one potential saving grace that Chiaki saw that she decided to go for. "How necessary is each different thing that there is to license? Because I don't need all of it, I think," Chiaki said. "I know how Allie does it is that she basically makes LAW news and reaction content. So she needs to have all the footage and everything else that goes with it."

"But that's not the type of LAW content I want to do," Chiaki continued. "My content would be more about myself wrestling. Things like my workouts and sparring matches with my friends. The only thing that I really need is the Twitch TOS bypass. Anything else for me is extra that I'm not really looking for. I understand that there are other things that would come with any partnership, but I shouldn't need everything. Would it be possible to reorganize the contract to reflect that? Trim some of the stuff that I don't really need to keep the operation costs down?"

[FreestylePoet]

"That would be the other fee structure I mentioned. It's as you say, there are certain core fees that have to be paid no matter how we split the rest. The simpler things, the ones we talked about before I stepped out: Logos and basic promotional packages. That's a standard lump-sum fee for all of our partners, including Allison Lee and Julie Dykstra-Liao." Tobiko held up a finger. "But! As I alluded to, not every model of revenue-sharing would have to build in extraneous costs."

"What if, instead of posing the rest of LAW's 'cut' as a second lump sum, covering secondary licensing fees and our own piece of the profit, we just took a percent of your per-stream ad and subscription revenue for wrestling content?" She pointed towards another section in the center of the contract, where details and a basic financial breakdown of this second plan were listed. Tobiko had anticipated this, of course, and was aiming to drive the conversation to this point all along. "Sort of a reversal of ecommerce sponsorships, where transactions using your referral code might earn you some money. Instead, a purchased subscription, tip, or ad-watch during your wrestling content would send a piece of that revenue to LAW." That, at least, was something she was familiar with, thanks to a distant cousin of hers who operated online storefronts.

She nodded towards Chiaki. "There are some downsides, of course. The ceiling for your earnings is lower than under the lump-sum plan, since there's no real break-even point to beat. It might also be more difficult for you to obtain larger pieces of our intellectual property, such as restreams of major events, in the -- as you say -- rarer event that you need it." These concessions were small and hopefully wouldn't scare Chiaki off. Of course, Tobiko left out the major downside: Even though the core licensing fees would be far smaller, if Tobiko negotiated a large enough percent-rate for LAW's cut, Chiaki would have to either get major traffic to her wrestling content or produce a lot of it!

But before Chiaki could have too much time to run the math on that, Tobiko brought things back to the gamer girl's most recent concern. "Even with that copyright question, though, this is still simpler from a logistic standpoint. All we'd need from you is advance notice of when you plan to put out new wrestling content, just like a sponsored stream might. And it would cut down heavily on the operational costs, which strikes me as a concern of yours."

[deezcastforms]

Chiaki listened as Tobiko outlined this second plan of action. It seemed to fit the gamer girl's needs more, so she was definitely intrigued by what the greenette was saying. "A lower ceiling is fine. I just need to be able to keep gaming as the main focus of my channel without losing money because I'm not doing wrestling all the time," Chiaki said as she looked over the sections of the contract which were being pointed out and explained to her.

"This seems like it can work, the only question is what the numbers are," Chiaki said. "If we're doing a cut of my revenue instead of a lump sum, then how big is the cut going to be? What percentage will you be taking?" Something any streamer will tell you is that revenue sharing can be very dangerous if you are not careful. The gamer girl was going to be extra attentive to any numbers that Tobiko was going to try to put in front of her.