This attitude is sweeping the Nation, and we MUST find ways of pushing back against it. I'm a freelance illustrator and animator and have run into this type of client frequently in the past five years, but rarely did I come into contact with anyone like him in the previous 20 years of my career. A heads up for recent college grads; even if you aren't an artist there are "employers" everywhere in America who have similar plans to take advantage of you. DON'T FALL FOR IT!
http://www.comicsbeat.com/2010/08/09/keep-them-in-the-dark-what-some-very-bad-publishers-are-really-thinking/Late last night, Twitter flared with anger – led by artist Sonia Leong — over a post entitled How to hire an artist by a designer of Flash-based computer games. Although we usually don’t quote things so extensively, it seems that running enough of an excerpt to get the whole story is important here (plus it may be taken down). This is what the author, Christopher Gregorio, has to say about selecting an artist for a game project:
How to find an artist:
I recommend looking through art sites such as Deviantart for an artist which suits your taste, or any other site that has a decent art community such as Newgrounds. There’s a few reasons you want to find an artist this way. First of all, they’re cheaper. These guys aren’t used to making a lot of money for their work so they will be more appreciative of the chance even if they are being payed slightly less than what professionals are payed. Second of all, they’re better. The quality of art you can find through this method is pretty amazing, and the vast amount of artists guarantee you will find something that suits your tastes and needs. Unless you have a specific price you want to pay in mind, ask THEM what they are willing to charge for the project. This usually causes people to give offers that are lower than what you normally pay, and will make them happy.
How NOT to find an artist:
Do not look for either professional artists, or an artist that has done a lot of game design work in the past. The problem with artists who do this as their full time job is that they’re usually expensive. Compared to what you can find through art sites, these guys tend to cost an arm and a leg. Artists who have done a lot of game design work are also bad for a similar reason, they know how much flash games can earn so they expect a decent percentage of the profit. It’s ridiculous to pay something 50% of a sponsorship when you can find someone else who would accept $500 for the same job. When your game sells for $10,000, the difference in cost is a multitude of 10.
(more at the link above)