Will Lunar Competitors Forego the Google Lunar X Prize Over IP Rights?

Sometime during the next 3 years, a rocket will sit on a launch pad in Florida or elsewhere in the world containing a lunar lander and rover built to win the Google Lunar X Prize. Only, the team launching it might no longer be in the competition.

Why would a team turn down a minimum of $20 million in prize money for a mission that costs many times that amount?

That’s an excellent question. And a fascinating tale. Read on.

The answer involves the Master Team Agreement [PDF] between the X Prize Foundation and the competitors that lays out the rules for the competition. The mandatory agreement assigns all media rights and many IP rights to the X Prize Foundation and Google. The parties are free to profit from the teams’ work as they wish, with revenues then apportioned according to the table below after expenses and a management fee are deducted.

X Prize
Foundation/Google
Grand Prize
Winner
Second Prize
Winner
Eligible Teams
(Divided Equally)
35%33%16%16%
43%38%None19%
50%None25%25%
68%NoneNone32%

As I wrote two months ago, this arrangement has never sat well with many competitors who understandably want more control over the rights to their work. Any missions flown are likely to generate massive worldwide interest, and there is potential to profit on the flight and any surface activities that are undertaken. The rights provisions — and the uncertainties over them stemming from years-long negotiations over the MTA — have made it difficult for teams to raise money and attract sponsors.

As a result, at least a half dozen teams have seriously discussed dropping out of the competition before they launch if the X Prize Foundation and Google are unwilling to alter the MTA.  The launches would proceed, but not as part of the competition.

It’s a powerful threat. If a team dropped out and then flew a mission that met all the requirements of the Google Lunar X Prize, then the value of the competition is greatly diminished.  The first GLXP team to win the prize would be only the second private team to drive a rover on the moon. It would be a great achievement, but the equivalent of Apollo 12 from a public relations standpoint.

Altering the agreement could be difficult, however. In the wake of a controversy over proposed changes to the MTA earlier this year, an agreement was made that  all 28 teams would have to approve any further alterations to the rules.  That could be very difficult task to achieve, and it might lead a team to withdraw rather than a conduct a prolonged series of potentially fruitless negotiations.

Whose idea it was to the write the MTA in this fashion is a matter of debate. Some say that the X Prize Foundation is repeating what it tried to do with media rights during its earlier Ansari X Prize competition.

Other sources say that Google made control over the rights a condition of putting up $30 million in prize money. No rights, no competition. The X Prize gets a small percentage of the revenues with Google getting the bulk of it, they say. Revenues are not expected to be that high based on the X Prize’s experience with its past prizes.

I asked Tiffany Montague, director of space initiatives for Google, about this during the recent NewSpace Conference.  She said Google doesn’t expect to profit from the competition, nor does it need the money, having $36 billion in cash reserves (double NASA’s budget).

“I know this may not sound plausible, but we’re not in this to generate revenue or increase our brand. Our founders are extreme space nuts,” Montague said. “We’re doing pretty well. We don’t have to demonstrate that there’s a return on investment. We enjoy a very nice position in the world right now. We get to do things because we like them, because we think they’re the right things to do.”

Montague added that the MTA was an agreement between X Prize Foundation and the teams.  I asked her whether controlling the IP and media rights was a condition of Google funding the prize, a question she did not answer.

Whatever the case, the ironies abound. The whole goal of the Google Lunar X Prize is to prove that lunar exploration could be done faster and cheaper through commercial means. And to get away from government contracting with its onerous rules and provisions. And yet the competition has been marked by years of acrimonious negotiations over the rules since it was announced four years ago next month. And it is now threatened by provisions that are viewed as so onerous that teams are willing to walk away from $20 million for missions they’re going to fly anyway.

It’s a strange situation. Hopefully, they will figure out a way of resolving this matter. The competition is very valuable, and if teams succeed it could open up an entirely new era of lunar exploration.