An open letter to James and Alexander

[DanielDeFig]

Like others have said: This is a rational and reasonable post. It makes several good point, while still being able to stress the importance of the matter and the absurdity of the situation we find ourselves in.

I don't fully agree with the point made about EC having to deal with "being too nice". The OP claims that they'r acting "like the good guy we all love to hate". Apparently, I'm not included this universal statement, as I think it was nice of EC to be lenient and understanding during a time of econimc constraints, since they were probably among the few who could afford to be so. Taking advantage of that leniency, to the point of attempting to ignore it, is simply ruthlessly unethical.

Finally, as OP made very clear, all this is hearsay until we get copies of the actual email exchanges. And as the OP reminded us, was promised long before this mess ever happened.


I have lost a lot of faith in who is actually behind this site, despite it's community having always been great.

 

[intheweeds]

Alexander, are you incompetent or just too inexperienced to handle this role? The Escapist didn't fail here, you failed. And you failed horribly. As CEO your job is to ensure that your company fulfils all it's contracts and that all these contracts are certain and complete. The fact that this situation arose in the first place means you failed disastrously, not only did you fail to uphold your contracts towards your employees by not paying them on time you also failed to ensure that whatever contract you had with EC about the donation money was certain and complete.

You should have made a formal agreement with EC in regards to the overflow donation money. If you failed to do this then you've got no rights whatsoever to any of this money, that's the price of a failure as fucking big as yours. Now I suggest you review whatever agreements you have with the EC crew and uphold these even if it ends up costing you. You don't screw others over because of your own incompetency, even if they're nice enough to bend over for you. If you're incapable of doing even that I suggest you find another job because seeing this mess here you're not even close to being competent enough to handle this.

Your sincerely,

Hagi.

Hagi,
You are right that I should have made a formal agreement with EC in regards to the overflow donation money. Because I did not, the result is the situation at hand. That was a huge error on my part. I don't think either party expected that overflow would even be an issue, so we both had different expectations as to what would happen when overflow did develop. As I have said repeatedly, we retracted our request that they use the overflow money on Extra Credits weeks ago when the sharp difference of opinion on this matter became clear. I do not understand why it is being brought up now other than as a straw man.

As for my inexperience, I've never disguised that I founded the company when I was 25 and have run it since. It was literally my first job out of school. Every day that we experience growth is the first day of my life running a company of this size. So, yes, I remain inexperienced in many matters. Hopefully I have done more good than harm overall in serving in my role at The Escapist, but that is ultimately for others to judge.

Thanks for attempting an even-handed response.

Regards,
Alexander Macris

With all due respect(and i do respect you for what you have achieved with the Escapist), if James and crew have been paid all monies due for services (as you state in your Facebook note) and you have relinquished any claim on the surplus donation money as well, then why is there still a problem at all? You write that there is a problem on Facebook.

You write:

In point 1:
"I reasonably interpreted "save Extra Credits" to mean that anything beyond what was needed for Allison's surgery would be used on Extra Credits production. I also Pay-palled James as much money as we had available at that time."

In point 2:
"We did NOT ask that James send us $9,500 - we said he should use $9,500 to create more episodes of the show that the money was supposed to be used to save."

Here is the main problem that I am having. You have as I understand it an agreement to pay Extra Credits a certain amount of money for a new show each week. Regardless of the late payment thing(forget it exists, it's irrelevant), you pay a fee for a show. They deliver a show. Production costs are on them and have always been on them. Imagine instead that the product you were buying was a bathroom renovation. You pay company X for a new bathroom and company X delivers a bathroom. How much it costs them to buy supplies and pay their workers are costs that have nothing to do with you. They are 'production costs'. What if they did use the money for production costs? - It doesn't affect you. If they don't? - Again, it doesn't affect you. I don't understand why you care.


then in point 7 you write:
" I then emailed James and his business development manager to explain that I wanted to get them paid as quickly as possible so that the back debt was not a sticking point in negotiations."

The only negotiation I see that you could possibly be talking about is how much wholesale Tshirts cost. Any other negotiations would imply that you disagree that you owe back payments or that you do in fact have a claim pending on the surplus donations. Anything they decide to do with surplus funds is between them and the people who donated money.

In line 2 you also write:
"Unfortunately, Kickstarter refused because they don't do charity. I then suggested James try RocketHub and RocketHub agreed."

This was clearly a charity not a business venture. If you had a formal agreement that stated any extra charity money would be put into your business, then i would understand completely. In your statement in your post here you write that you are sorry you didn't have an agreement, clearly there is no agreement.

While I agree that James has not handled this well and I will not be leaving the Escapist, you have a very double-speak quality to your replies here and on Facebook. This is a situation where you have made a mistake and now you need to take your hit and back off.

Please understand where I am coming from, I too am a young business person. Knowing you began this business at 25, we are about the same age. I have made management mistakes, I have accidentally hurt people and misspent funds. Everyone does as they are learning to deal with situations they are unfamiliar with. Everyone wants to pick on the decisions of business leadership especially when a business decision affects them personally, but being a good business leader is waaay harder than people realize, even on a small level. That is why people go to school for management and the guy who got promoted up form nothing will have to learn things the hard way. Just like me and just like you. Back off now, pay your debts with nothing more than a humble apology and learn from your mistakes.

You can always make more money, but respect is gone forever.

 

[Blunderboy]

Your post is well reasoned, fair and even handed.
In short, well done sir, I agree with every damn word.

 

[souper soup guy]

I just wish that the escapist and ec would take their problem to court already, there you can't exactly lie without enormous penalties, and it probably would be better in the long term anyway.

 

[BabySinclair]

Good points, more level headed than most everything else on the forums, and unbiased for the most part. Good job sir.

So since a contract was broken, does that mean we send the guy in red out?

Cookie for you

 

[Richardplex]

Snip

So since a contract was broken, does that mean we send the guy in red out?

1st: where's the picture from?

2nd: I agree with the OP, there's too little information on this subject atm to start demanding that someone be given the guilliotine.

At times like these, the google image search-by-image-link feature is awesome. Not scolding you or anything, this is the first time I've used it.

 

[TimeLord]

I don't want to take sides and the OPs letter is even on both sides. We (the community) only know what we've been told. Which is pretty colours of what both parties want us to see.

Like I've said already in other threads;

Why can't we all just get along! Both the Escapist and Extra Credits are awesome. They should not be parted unless it's on good terms. Not these ones.

 

[wench]

Alexander, are you incompetent or just too inexperienced to handle this role? The Escapist didn't fail here, you failed. And you failed horribly. As CEO your job is to ensure that your company fulfils all it's contracts and that all these contracts are certain and complete. The fact that this situation arose in the first place means you failed disastrously, not only did you fail to uphold your contracts towards your employees by not paying them on time you also failed to ensure that whatever contract you had with EC about the donation money was certain and complete.

You should have made a formal agreement with EC in regards to the overflow donation money. If you failed to do this then you've got no rights whatsoever to any of this money, that's the price of a failure as fucking big as yours. Now I suggest you review whatever agreements you have with the EC crew and uphold these even if it ends up costing you. You don't screw others over because of your own incompetency, even if they're nice enough to bend over for you. If you're incapable of doing even that I suggest you find another job because seeing this mess here you're not even close to being competent enough to handle this.

Your sincerely,

Hagi.

Hagi,
You are right that I should have made a formal agreement with EC in regards to the overflow donation money. Because I did not, the result is the situation at hand. That was a huge error on my part. I don't think either party expected that overflow would even be an issue, so we both had different expectations as to what would happen when overflow did develop. As I have said repeatedly, we retracted our request that they use the overflow money on Extra Credits weeks ago when the sharp difference of opinion on this matter became clear. I do not understand why it is being brought up now other than as a straw man.

As for my inexperience, I've never disguised that I founded the company when I was 25 and have run it since. It was literally my first job out of school. Every day that we experience growth is the first day of my life running a company of this size. So, yes, I remain inexperienced in many matters. Hopefully I have done more good than harm overall in serving in my role at The Escapist, but that is ultimately for others to judge.

Thanks for attempting an even-handed response.

Regards,
Alexander Macris

Well summed up, Hagi. And thanks for the response, Alexander - it's good to see you on here. I'm still hoping it can all be sorted out on some level... seeing the way James ended his response makes me hopeful that the parties can at least part ways more amicably.

 

[TheDist]

Hagi,
You are right that I should have made a formal agreement with EC in regards to the overflow donation money. Because I did not, the result is the situation at hand. That was a huge error on my part. I don't think either party expected that overflow would even be an issue, so we both had different expectations as to what would happen when overflow did develop. As I have said repeatedly, we retracted our request that they use the overflow money on Extra Credits weeks ago when the sharp difference of opinion on this matter became clear. I do not understand why it is being brought up now other than as a straw man.

As for my inexperience, I've never disguised that I founded the company when I was 25 and have run it since. It was literally my first job out of school. Every day that we experience growth is the first day of my life running a company of this size. So, yes, I remain inexperienced in many matters. Hopefully I have done more good than harm overall in serving in my role at The Escapist, but that is ultimately for others to judge.

Thanks for attempting an even-handed response.

Regards,
Alexander Macris

Hello Alexander, it is good to see you respond to such topics rather than staying away from them as some might.

I think if anything can be taken away from this issue, it is that clarity matters, in future I hope should another "donation overflow" happen that the money goes to a good cause rarther than being in an ambiguous situation, where the people who gave the money have no idea where it will end up. i.e anything over any type of limit is to be given to a neutral charity, for example MSF (doctors without boarders) is one I keep using.

Something else that has indeed come to light clearly is that people will always support things that matter to them, with more than words, indeed people always seem willing to give. With this in-mind maybe it might work out for the best to try a slightly more open dialog with the community, if we are aware times are hard, then maybe people will click a few adds, or donate money to help pay for the shows they like, the forum they use and the community overall.

Just a thought anyway, I am by no means an expert in anything related to this. Thanks.

 

[Yopaz]

So they decide to leave The Escapist and share their reason why they're leaving. They're the ones leaving for their reasons. As employees they aren't the ones supposed to share their employer's reasons why they're leaving. They gave their story just like The Escapist gave their story.
Showing they understand that The Escapist is suffering just like the economy as a whole is understanding. They said they would accept a delay and that's OK. There were no contract for how much it would be delayed, you're right, but there should be a contract that states that they ARE getting paid, delay or not. The fact that The Escapist was unable to cough up all the money they had earned on short notice is also understandable. If they have problems making regular small payments they will have a huge problem coughing up one huge sum at short notice.

Up to this point I have no problem with either side. The Escapist was willing to let them advertise that they needed donations on the site, which was a huge success and they got a lot more money than they needed. However when The Escapist claimed they had a right to decide the use of the extra money that's crossing the line. That is money donated by those who keep this site running for a good cause. We watch advertisement and use the captchas to pay for ourselves. When the money we gave to a contributor who is one of the reasons The Escapist earns money that money should belong to said person.
Seeing as they were in debt a fair trade would be to let them get the advertisement for the donation be a payment on their current debt.

Finally. It is not the employee's job to resolve conflicts between employer and employee.

 

[alrekr]

I hope this somehow leads to an Escapist Civil War. That'd be glorious for the intertubes history books.

OT: Well-written, concise, if not obviously a little aggravated. Conveys my honest thoughts about the topic, good job.

But our delicate eco system will be destroyed!

Anyhow I've had enough of violence; there's enough over here with these dam hoodlums trashing shit!

 

[Archon]

With all due respect(and i do respect you for what you have achieved with the Escapist), if James and crew have been paid all monies due for services (as you state in your Facebook note) and you have relinquished any claim on the surplus donation money as well, then why is there still a problem at all? You write that there is a problem on Facebook.

Thanks for your thoughts.

I can't speak for James, and contract negotiations are legally confidential, so all I can say is that: (a) as of yesterday, before his dialogue on Facebook, we had sent full payment; (b) we are not making any claim on any Rocket Hub money; and (c) we'd like Extra Credits to stay on the Escapist.

Here is the main problem that I am having. You have as I understand it an agreement to pay Extra Credits a certain amount of money for a new show each week. Regardless of the late payment thing(forget it exists, it's irrelevant), you pay a fee for a show. They deliver a show. Production costs are on them and have always been on them. Imagine instead that the product you were buying was a bathroom renovation. You pay company X for a new bathroom and company X delivers a bathroom. How much it costs them to buy supplies and pay their workers are costs that have nothing to do with you. They are 'production costs'. What if they did use the money for production costs? - It doesn't affect you. If they don't? - Again, it doesn't affect you. I don't understand why you care.

Without discussing James' contract in general due to privacy, our agreements over the last 5 years have generally been of two sorts. When we own the IP, then content creators get (a) a flat fee to cover production costs; (b) a bonus payment for every video stream their show delivers, regardless of any ads or not; and (c) a royalty on any other revenue the show makes from any source.

The idea is that we cover production cost, give them a bonus incentive to make good shows that will have great traffic, and work together to find additional revenue sources. In general this is a good relationship and a successful show can allow its creator to do quite well.

Unfortunately, due to the recession, we have fallen into problems when we fall behind on (a). As a result, many of our most recent deals we have structured such that we leave the IP rights with the content creator, and we only pay the traffic bonus (b) and affiliate revenue (c), with more generous royalties. The content creator is now covering their own production costs so they have more control and more upside.

So cost of production does affect us, at least on some of our contracts. The cost of producing shows probably represents 50% of The Escapist's costs every month, in fact. (The rest is overhead, bandwidth, servers, ad hosting, sales team, tech team, art team, editorial team).

then in point 7 you write:
" I then emailed James and his business development manager to explain that I wanted to get them paid as quickly as possible so that the back debt was not a sticking point in negotiations."

The only negotiation I see that you could possibly be talking about is how much wholesale Tshirts cost. Any other negotiations would imply that you disagree that you owe back payments or that you do in fact have a claim pending on the surplus donations. Anything they decide to do with surplus funds is between them and the people who donated money.

No. We already came to agreement on the t-shirt costs. We have an exclusive deal with Split Reason as our t-shirt provider. James and crew didn't like the cost of Split Reason shirts so they decided to do them on their own. We couldn't use a different vendor, but they were free to do so, and that's already been agreed on.

The negotiations I was referring to, and the only outstanding legal disagreement that I am aware of at this time, have nothing to do with payment or the RocketHub overflow. They have to do with whether or not Extra Credits will stay on the Escapist. We'd like it to.

While I agree that James has not handled this well and I will not be leaving the Escapist, you have a very double-speak quality to your replies here and on Facebook. This is a situation where you have made a mistake and now you need to take your hit and back off.

I am not sure where I'm double speaking. Hopefully what I've said above is helpful.

I have already admitted I made a mistake in not making things clear. As I said, neither side anticipated an overflow. We retracted any request for any share of the overflow weeks ago, in writing, when we realized how far apart our views on this situation were from James'. I stand by my *personal opinion* that the overflow money from fans of Extra Credits given to "save Extra Credits" should have been used on Extra Credits and not on a start-up publishing business, but a personal opinion is just that, and it's ultimately going to be up to the backers to decide.

 

[EHKOS]

And here I was about to try to start a career here....damn.

 

[zephae]

"A contract is a contract...If James wanted to be kind and sincere he should have negotiated an alternate contract with exact terms on the delay of his payment."

"A contract is a contract" works in court, but taking that kind of approach would probably just mean you'd never see any money. As any landlord will tell you, it's never worth sueing someone who's broke. I can see the thing about working out a payment deal at the time, but when you've already got a full time job and other considerations, it shouldn't be surprising that these types of negotiations end up by the wayside. Regardless, I find it hard to take that point as a criticism because James's relatively minor irresponsibility on the topic isn't what caused this whole problem in the first place: it was the fantastic success of the RocketHub site.

I'm also utterly confused on your transparency claim? Is your complaint that James said anything at all or that he didn't decide to disregard the non-disclosure agreement in the EC contract? I guess it would be the former in this case, but at least some notice would be required to let everyone know that EC is being suspended from TE indefinitely. I'm also not sure that it would be wise, after having apready declared what the excess Hub money was going towards, to have to suddenly come back and say "oops, instead that money's going..." Since your argument is somewhat circular, I guess the moral of this particular part of the story is "never promise transparency."

This entire argument hinges on what exactly had to be approved before the RocketHub project went up. That would seem to determine whether James was acting under contract when he set the site up and thus what claim, if any, TE has to the money (although the fact that James's name appears there with at best a casual reference to TE might render that discussion legally moot)

This issue could've been handled much more professionally than it has been, but I find myself squarely on EC's side as I was after reading Alex's response. Whatever might be said about the mistake of letting issues with this side-project of their's drag on for this long, there's so far been nothing to suggest that anyone other than TE as the source and well-spring of problems here.

 

[Hagi]

I won't speak on this situation as if I held the truth over everyone else, but you're quoting James out of context.
You're quoting things James said about how the EC team's yet-to-be-set-up indie publishing fund would operate. What he meant was that when their Indie game non-profit publishing project took off, they would be transparent about how it operated and what happened with it, nothing more.

What money do you think they're talking about if not the money invested into the indie publishing fund?

Regardless of who's right or wrong, assuming one party is even right, the indie publishing fund is at the heart of this issue. As such this case should be treated with the transparency we were promised.

 

[Archon]

Dear Alexander Macris,

This was a very honorable post you made. I appreciate that and I actually know how it feels to get a load of heat from making mistakes. You're not a bad person, as everyone (or most Users) has claimed. You've done a lot of great deeds for this website, and even though I joined in December 2010, you made a really successful website with the best benefits for everyone and actually try to improve, manage, and grow in favor of the Users. Not even Facebook is as good as The Escapist, because of the community as well as the services provided. This post isn't going to be like [user]intheweed[/user]'s post. Rather, it's pretty much an advising solution to the whole conflict if you can take your time to read please.

Even though I am sorry you're getting all this heat and I am sorry for that (along with thinking James screwed up just as hard for his poor decisions in the matter), you might want to pull your Staff together for a meeting and discuss how to manage paying people on time. The main issue in this is pretty much money isn't being given to people on time for making shows. Not saying your system is horrible and I know you guys supported Allison's donation by letting James sell Publisher Club Memberships and T-Shirts, thus this whole thing is a misunderstanding.

You and Extra Credits are well respected and very well known. I mean, yeah many are upset with you but you can make things right. It's not to late, all you got to do is take James in person and settle an agreement saying how you're both at fault, that you guys can fix this. I admit I am ashamed of Extra Credits for just leaving like that, not being mature in the situation and pretty much holding out the whole truth on us- but if you really want to regain respect then please tell the whole truth to your side of the story to the community. Some will judge hard, but many will take in your words knowing you mean it that you're sorry which overtime the website can heal. If there's anything I can do to help, please let me know. I don't see you as a bad person nor a failure, but just a guy in a very tight spot who didn't make the best of decisions. It's a very bad situation, but you've done more good then bad so don't be so hard on yourself. Many will still support the website, it's just you have to make things right and show that The Escapist isn't evil, yet isn't the innocent one ether. Please do this for the dedicated Members like me and others who know you for the best.

Yours Truly,
Ryan Matthew

Ryan,
Thank you for your very kind note.

I actually have had several meetings with my staff about getting people paid. Last week was actually one of our most successful weeks ever in terms of getting our accounts payable cleared up - a lot of people got sent checks, James included. But this was due to some cash from our investors, not due to improving economics.

In general, since the recession began, we have reduced our in-house team by 40%, reduced our freelance expenses by 50%, reduced the rent on our office by 50%, and reduced our bandwidth bill by 30%. Our current office is in a basement with no windows. There is a limit to how much we can cut before there's only bone left.

The reason for the harsh circumstances is that we largely depend on videogame publishers buying ads. Unfortunately, the sales of core videogames are at a 5 year low right now. See, for example, this article: http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/06/may-2011-video-game-sales-lowest-since-october-2006-npd.html

Lower sales means smaller ad budgets. Smaller ad budgets mean that the publishers place their ads on the largest sites exclusively where they get maximum reach. The problem is worsened by the recent trend towards making games that cater to "mainstream" rather than "core" audiences. Not surprisingly, you guys are considered a core audience, and therefore less desirable to advertisers than non-core gamers, I guess. The result is that we get even fewer ad dollars. Finally, Google, Facebook, and so on, keep adding more and more ad options, and search ads swallow even more dollars. This is why so many sites, like NY Times and The Onion, are switching to paygates. Nobody's making any money on online ads.

So from where we stand, our options seem to be:
1) Migrate to being a mobile and iPad content company, and hope revenue trends there stay strong
2) Switch to pay-gates for revenue, infuriating many loyal customers who can't afford to pay
3) Change our content to be more mainstream to attract ads, and lose our old core-gamer focus
4) Stop paying for content and be like HuffPost, losing the quality of our content producers
5) Something I haven't thought of

What would you do in my shoes?

That's probably more business discussion than you cared to hear, but I figure that since this situation has shined a spotlight on our business, more transparency is always better.

 

[Blackpapa]

This is an interesting case.

In the old media situations like this couldn't happen because the content producer couldn't speak directly to the consumers of that content other than through the content he produced. In today's day and age Extra Credits can talk directly to their fans.

This is a good thing.

Except when it's not.

On one hand it's hard not to appreciate the information that James shared, outlining the situation. We all like to know what's going on behind the scenes. We like to judge the mud-slinging, drama and accusations. We like gossip. And if you think about all of this - it's just gossip. There's nothing constructive that revealing information like this could possibly achieve. We, the consumers of Escapist content can't possibly influence the situation for the better.

I believe that James knew that and knew exactly what he's doing. The audience of EC uses social networks, forums, is inquisitive and opinionated. Whether intentional or not this audience has been weaponized against the Escapist. Even though the guys from EC don't openly encourage people to cease being customers the hate on the forums is immense. I don't believe for a second that James didn't expect this to happen, especially after they realized what influence they have on the community after the record donations. This is an underhanded tactic and James is a sly businessman.

Alex!

Good job on the damage control on this one. And I'm not saying this just to console you because my nick is like yours, but longer.

From where I stand this whole affair is the result of trying to be a person who speaks in English and not a corporation that speaks in legalese. This is all fine when the money is there to cover all expenses. This is why Google can be a corporation and not be viewed as evil.

Take caution, learn and don't get discouraged.

 

[supermariner]

Your point was pretty angry
but it's probably the nearest anyone's come so far in terms of fair treatment to both sides of the arguement

Let's just hope this all gets sorted out and EC continues somewhere else blissfully problem free
and The Escapist gets it's act together

 

[krellen]

I stand by my *personal opinion* that the overflow money from fans of Extra Credits given to "save Extra Credits" should have been used on Extra Credits and not on a start-up publishing business, but a personal opinion is just that, and it's ultimately going to be up to the backers to decide.

Your "personal opinion" is extremely unreasonable and blatantly selfish to boot.

If the Escapist wants to host a "save the Escapist" fund-raiser, do that. I know that broadcasting dire financial straights might scare big-time investors, but it also might garner you grass-roots support from the people that actually utilise the site as well.

You erred the moment you tried at all to capitalise upon a charitable donation drive. When you donate to charity, you donate to charity. I've worked in the non-profit sector for seven years now; this is the first time I've ever seen a partner try to capitalise on the drive's success.

You may be upset with James and the Extra Credits team, but you should probably be making some apologies here.

 

[Archon]

Good job on the damage control on this one. And I'm not saying this just to console you because my nick is longer than yours.

From where I stand this whole affair is the result of trying to be a person who speaks in English and not a corporation that speaks in legalese. This is all fine when the money is there to cover all expenses. This is why Google can be a corporation and not be viewed as evil.

Take caution, learn and don't get discouraged.

Thanks for the encouragement. Although I must add that if this situation is the result of doing a good job on damage control, I hate to see what happens when I do a bad job on damage control!