Years ago, during mutual introductions while working together on a project with a large design agency in New York, they related story of only taking royalty on one project, from Sony, and the CEO said they’d never do it again. A colleague here designed several furniture items for a manufacturer, only one resulted in royalty payments, but 5 years after he completed all work, although he did admit it became quite lucrative.
On one of my projects with a very large technology company, during a design review the CEO went on a tirade regarding licence and royalty fees that would be required for certain pieces of technology. Asked later if he would desire his company free of a belligerent union or licence and royalty fees, he chose the latter.
I’ve heard this numerous times from executives of all levels at numerous companies: the ongoing commitment of royalties and licence fees are anathema. It is this business sentiment, I believe, that is one of the root causes of the twisted-spaghetti like intellectual property litigation between global telecommunication manufacturing companies
Yes, a royalty or licence fee system can work, but there are so many roadblocks to success that it’s strongly not recommended for single, for hire designers to pursue this model.
However, I do agree very much with Scott Bennett regarding design’s compensation value. I believe the design and sales activities are most highly attributable to market success, and should be compensated accordingly.