Okay so let's talk about this whole Steam Workshop paid mods thing, the internet freakout, and its subsequent reversal.

Some very good points have been brought up by the "against" crowd, among them:

No try-before-you-buy

No strong assurance of refunds or support

Mods are often interdependent, fear of fracture

Now everyone needs permission for everything

People are ripping off other people's work for money

25% revenue share is tiny

Those are some great points and have been discussed in detail by people much smarter than I. Hopefully Valve and Bethesda will take some time to mull them over and come up with a better solution when they inevitably give this initiative another go.

That said, there are also some very dumb points brought up by this same crowd, which we'll get into later.

But first let's talk about this:

Salutary Neglect

Once upon a time, the sun never set on the British empire and they had all these productive colonies. The leading economic theory was Mercantilism, which said colonies should only trade with Britain. Why settle the New World only to enrich the French and the Spanish?

Of course, the colonists didn't see it that way -- there was an ocean between them and Britain, they were stubborn and self-sufficienct, and look! These productive trading partners are right over there. Pressing the issue might lead to rebellion, and the colonies were still productive. So the British government, with a wink and a nod, kept the official policy on the books, but looked the other way.

This is Salutary Neglect.

Of course, we all know what happened -- the British tried to tighten the reins, and the colonists, now long accustomed to their freedom, revolted.

This is part of what's going on here. Supporting a mod scene takes a lot of technical and social effort, but it's worth it because it provides bug fixes, free expansions, and long-term value. Mod scenes also often venture into copyright infringement and other legal gray areas. But as long as there's no money involved, everyone can look the other way and go about their business, and only blatant Mickey Mouse mods need fear the DMCA.

The minute we add paid mods to the mix we have to deal with these issues. They've been around all along, of course, but with no money at stake nobody cared.

So rushing into this situation is obviously a bad idea.

The Dumb Points

But now for the less persuasive points brought up by those opposed to paid mods.

"Just add a donation button!"

Mods should always be free!

Financial incentive is evil!

Let's start with the big one:

Just add a donation button!

This is never, ever, going to work. By that I mean, yes it will work for Dwarf Fortress and a few other outliers, but it will never be systematically viable.

It solves several problems from the player's perspective, and at least in their well-meaning imagination, solves certain financial, legal, and technical problems as well.

Here's the logic as I understand it:

I'm sure lots of people would donate! It's a donation, not a payment! No legal issues! All the money would go to the modder Try-before-you-buy Mod interoperability is preserved

I'll admit points 4 and 5 as valid. To be sure, erecting paywalls in a community traditionally based on collaboration, "flying under the radar", and a strong dose of remixing is a tough sell. Valve definitely needs to address these issues if they want to support the mod community and provide financial incentive for modders.

That said, points 1-3 are totally wrong.

1. I'm sure lots of people would donate!

I tackled this in my previous article, Pay What You Want and the Four Currencies.

For context, my "Four currencies" articles posit that transactions concern not just Money-Dollars ($M) but also three subjective and intangible -- but very real -- "psychological currencies": Time-Dollars ($T), Pain-in-the-butt-Dollars ($P), and Integrity-Dollars ($I).

When a developer offers a free download link on her website with an optional donation button, she is legitimately offering the game for two different minimum "prices":

The $M price of donation is as low as possible - any positive value will do, so why don't most people donate even 1 cent? Because they can already download the product quickly ($T) and painlessly ($P) for free ($M). Since the developer herself provides the free option, most people don't even feel guilty ($I) about it.

Pulling out a credit card, typing a number into a paypal window, etc, is too much bother ($P+$T), especially when the developer provides a legitimate option to skip all that.

But let me give you some real-world examples. I used to make mods, sure, but more recently I also made entire games and released them for free on the internet. Most notably were Super Energy Apocalypse and CellCraft. SEA took over a year of my time, and I received all of $38.88 in donations via the Kongregate tip jar.

Make it rain!!!!!

(CellCraft was an even bigger year-long team project and earned a similarly anemic amount of donations).

This doesn't mean that there aren't good methods for supporting free content. Churches, charities, non-profit organizations, and NPR all live fairly well on donations. Patreon seems promising, as does Gofundme. As for me, SEA and CellCraft were funded by patronage -- SEA was my Master's Thesis, sponsored by Houston Advanced Research Center, and CellCraft was paid for by a MacArthur foundation grant.

The one thing all of these have in common is that they're a lot more effective (and take a lot more work) than a weak-sauce web donation button. Heck, SEA and CellCraft made more from advertisting than donations.

If your product is totally supported by donations, congratulations, you're an extreme outlier. Letting-people-give-you-money-for-free can work, but you need to think about the psychology and how you frame the offer, or (practically) nobody gives anything.

2. It's a donation, not a payment! No legal issues!

This argument presumes that donations belong to a magical category that doesn't count as "commercial activity." Free product goes out the door, unrelated money somehow comes in.

Now I'm no lawyer, but that doesn't exactly sound like a robust legal defense. For instance, I own a company -- Level Up Labs, LLC. The "LLC" stands for "Limited Liability Company," which means if we get sued and the plaintiff prevails, she can only take the company's assets, not mine. I'm safe! It's my company, not me the individual! No legal issues!

Not so fast. If a judge rules that I've been doing something naughty, like mixing my personal and company assets in the same bank account, or anything else that makes my company a "disregarded entity," they can take my personal money, house, car, everything. This is why I'm very careful to keep my company and personal finances entirely separate.

I'd bet good money that accepting donations for a mod is nearly indistinguishable in the law's eyes from charging for access. And even if it's technically not, that won't stop someone from suing you on that basis.

3. All the money would go to the modder!

This ties into the above point. Legally speaking, creating a mod is what's known as a "derivative work" -- you're building on top of someone else's copyrighted material, and this gets especially tangled if you're using not just the company's IP, but another modder's. And hey, I'm no copyright maximalist, I personally think that we should have a stronger Fair Use doctrine and a greatly shortened span of copyright protection since we're always building on somebody's prior efforts. But that's not the world we live in.

Even in the extremely unlikely case the law doesn't treat a donation button as commercial activity, that won't stop an IP holder from issuing a DMCA takedown anyway. In a world where the law says that intellectual property is a thing, the IP owners have the (copy) right to dictate terms on which any derivative works can be made.

Now, this is where moral arguments and using the voice of the community to negotiate comes in. IP holders benefit from having an active mod community. It's a selling point for the game. Modders fix bugs. It's free post-release content, etc,

Those are all good arguments for increasing the modder's share -- 75% to Valve+Bethesda seems excessive*, and practically speaking it's not a huge financial incentive to encourage people to make cool stuff. I totally get "these terms suck, we're not going to take them, join our protest." And hey, it looks like that worked.

But here's my point -- there's nothing magical about a donation button that lets anyone get around the IP holder's legal right to set the terms in the first place.

* Yes, I know that plenty of AAA game devs earn less than 25% royalties on their work. I think that's a valuable point of perspective, but ultimately I think that's a raw deal too!

So now that we've got "just add a donation button!" out of the way, let's discuss the last two points:

Mods should always be free!

Financial incentive is evil!

Economic Storks

Back in my youth, three other kids and I were helping a neighborhood lady pack up her house for a move. She was a single mom down on her luck, so we gladly spent the whole weekend cleaning up, packing boxes, and moving furniture. When we were finished, she came out, beaming with gratitude, and said, "Thank you so much, boys. I could have never done this without you. Here, let me give you something for this..." and reached for her wallet.

Almost instantly, I said "Oh, that's not necessary! We're happy to do this for free!" She insisted, but I rebuffed. Virtue is it's own reward! The other kids looked down at their feet and mumbled their assent. As I walked out of the house grinning, I noticed they were glaring at me. It wasn't until years later that I realized why -- I didn't need the money, but they did.

In other words, it's easy to set "free work" as some kind of moral standard, when the only thing that gives you that position is your good fortune.

Ever heard of the Economic Stork theory?

It's an idea propsed by John Mueller, brilliantly summarized here by John Medaille:

In the Economic Stork Theory, workers arrive in the economy fully grown, fully trained, and fully socialized. These stork-borne workers are a “given”; that is, there is no way to explain the growth in workers or their level of training and socialization, and hence little reason to support them with political or fiscal policies.

This was meant as a critique of the broader economy, but it applies here. Modders just appear from nowhere happy and eager to make Cool Stuff We Like.

Therefore, there's no reason to provide financial incentives for the production of, say, Falskaar, because things like that just spring forth from mysterious forces like "passion" and "creativity." I mean, Falskaar exists already without any kind of economic support, right?

The real reason Falskaar exists is because it was a resume project -- the developer was making a bet that he could get a return on his labor in the form of a job. And hey, maybe that's not the motivation behind other big mods, not everyone is in this for the money!

As Mark Twain said, and various studies have confirmed, intrinsic motivation and extrinsic are very different things:

There are wealthy gentlemen in England who drive four-horse passenger-coaches twenty or thirty miles on a daily line, in the summer, because the privilege costs them considerable money; but if they were offered wages for the service, that would turn it into work and then they would resign

There are plenty of things I happily do for free (like my open source work) that if you asked me to do for minimum wage, I'd probably spit in your face. All that said, there is some level of financial compensation where you cross that bridge, and a whole new class of creative output becomes viable.

Did you know that months after launch, Defender's Quest was the lowest-reviewed game I've ever released on Kongregate, despite the fact that it's bigger, better, and less buggy than anything I've ever done before? It's because people were upset that I had the gall to charge money on a site where people were used to getting things for free.

From this article:

We were also accused of being "greedy," "evil," and -- my favorite -- "illegal." Against my better judgment, I logged into my personal account and argued back, but my comments were swiftly down-rated by angry players, and my grumpy words (mercifully) disappeared in minutes.

Over time, cooler heads prevailed, and the top-rated comments now look like this:

I don't know how the economic stork manages to deliver the talented hobbyists that it does, but I can tell you that without the proper financial incentives, there'd be no Defender's Quest. And for every hobbyist who manages to eke something out with no support, there's a hundred more potential developers that don't exist because they can't afford to.

Bottom line, there's a way for Valve and Bethesda to do this right, and if they pull it off everyone will be better off. Let's hope they figure it out.