An interesting facet of the Flash Game Development Scene (for lack of a better term) is the fact that there is basically no monetary barrier to entry into Flash Game Development. Distribution channels already exist to put your game just about everywhere, and many flash game portals gleefully exert no editorial control whatsoever, allowing their users to rate games up or down at will. This means that in this arena, a truly well made game from an amateur can compete successfully with work produced by professional Flash artists.
Because the amateur and professional have different expectations for compensation, and different definitions of success, the question ‘What is appropriate compensation for a given game?’ is complex. Professionals may fear, perhaps justly, that the existence of the amateur in the same distribution channels tends to drag them down, to the point where they can not produce independent IP cost-effectively (ie: make enough to pay rent). Some amateurs (including to some extent, me), may be more interested in distribution, feedback, and e-peen, than hard cash. Players meanwhile, are consuming the end product only, and potentially get confused when asked to incur substantially different costs for two products that they don’t perceive as different.
The current primary system for ‘monetizing’ flash games (sponsorship and in-game advertising) is fairly complex and does not favor professional developers. Alternate microtransaction systems have been deployed by at least 3 serious players, and other models are being proposed all the time.
Out of historical interest I think it’s worth noting that there was a market for short-form games prior to the internet. Back in the early to mid ’80s, short-form games similar to the smaller flash games of today were distributed in magazines and books, usually as BASIC programs, or sometimes as ‘machine language’ hex listings.
Tom Halfhill, who had been a senior editor of Compute! magazine, was kind enough to answer an inquiry about authors rates and reported that authors of these listings in the early 1980’s were paid $100-150 per page, with average programs running about 6 pages ($600-900). After Compute! added disk based distribution some authors were receiving as much as $5,000 depending on how much space the program took up on the disk. Another source reports much the same… Analog was paying $60/page capped at $360 in 1984.
Using Mr. Halfhill’s inflation calculator (java applet), these numbers can be adjusted to 2009 equivalents of $815 (Analog) – $2007 (Compute!) for a six page game (1983 as a starting year). The top-end disk based games get adjusted to $10,363 (using 1985).
For comparison, FGL reported the average accepted sponsorship bid for January 2009 as $743, and Sep 2009 as $1589.[1] Note that these averages don’t tell the whole story– we know that some developers will accept as little as $100 for exclusive rights including source code, and we also know there have been sponsorship deals in excess of $10,000. The total volume of the short form game market is probably larger than it was in the ’80s. FGL alone reports $184k in transactions for September, and they do not represent 100% of sponsorships.
I don’t want to suggest that it’s a bad thing for flash developers to be looking at other models, and I look forward to playing the long-form microtx games which are on the horizon! However, I think that the current compensation model for independently produced short-form games appears to be in line with historical pricing for independently produced short-form games in at least one distribution channel.
-TF
[1]- Link. Requires an FGL account.
Edit 10/7: Changed link for ‘excess of $10,000′ to a better overview.
Thoughts | Tony | 
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