This is very intelligent insight on the author's part. It's also the same argument that has been staring the RIAA in the face for over a decade: you can't fight the future, so you'd better figure out a better way to earn revenues.
With Minecraft, Mojang has an opportunity to monetize illegitimate users by creating incentives through community play and online rewards that may not be available using pirated copies of their product.
I would guess that whatever the RIAA spends on fighting piracy is recouped tenfold in iTunes sales. iTunes would not exist if nobody fought piracy and legitimate business models could be built on it. (i.e. if What.cd had the ability to be a venture-funded startup.) Just keeping piracy underground, no matter how successful it is there, is a positive ROI.
Granted all of that is still not as good, from the RIAA's perspective, as the old model. And it's maybe not as good as some potential future model that nobody's discovered yet. But it still generates large revenues and will continue to fight for it's own existence.
This is covered in his Rolling Stone magazine interview:
Notice that I'm not throwing around moral claims. I'm just making an observation. If you want something to be made, and it costs time and money to make, you can encourage its creation or not. But don't complain that the music selection sucks if you don't financially support the music you like.
It's legitimate to want any sort of business model to work. But if it doesn't work, complaining that you wanted it to doesn't help.
While buying music is one solution, another approach is donating to the artist. (And with easy piracy, both amount to the same thing modulo middle-man.)
He's right about doing what he can to provide features that pirates can't take advantage of, though. That's the only way to actually combat piracy.
Pirating software is often a pain - find a proper release, install, replace a binary, generate a key, avoid online services, seek out cracked updates (or go without them). If your time has value, it's hardly free. Do you really think everyone pirating anything is going through this process for every Tom, Dick and Harry they know, as opposed to just saying, "Yeah, it's $50 at Gamestop..."?
What the author is talking about sounds like the far more common scenario -- friends will see a pirated game being played (or just hear it being praised), and make a purchase later if they so desire (perhaps on services like Steam, where hordes of people who used to exclusive pirate games now periodically pay for the simple conveniences of being legit). And the pirates themselves are occasionally 'turned' by the kind of value-adds that the author is taking about. How many people who really liked the single-player modes in their pirate copy of MW2 didn't go legit so that they could play multiplayer?
Piracy can unquestionably lead to expanded mindshare and buzz, it's silly to assert that it merely spawns more piracy. Piracy of Photoshop isn't destroying Adobe's profit, it's securing it. How many legions of designers and photographers cut their teeth on a pirated version, in the process trained themselves to all its concepts, quirks and idioms, and later became a paid seat in a professional context (where using a pirated version is astonishingly stupid behaviour)?
Edit: This is clearly an emotional issue. Parent is getting a steady stream of upvotes for blithely making a generalization about how all pirates behave, whereas I saw a downvote faster than what I've wrote could even have been read.
Really the biggest likely pitfall facing indie-game developers is that they release their game and nobody notices or cares, not even enough to pirate it. There are a ton of indie games that come out every year that never rise out of obscurity, which is the main thing publicity attempts have to overcome, at least early on. Enough people pirating it to generate some forum/blog buzz is one possible way, like underground musicians who get their initial publicity via people trading mix tapes.
> Pirating software is often a pain
I agree with the first part. The second line is also true, but the cash value must be low. I am a student, and I will very often see students (pirates) helping their friends pirate Cadence Orcad. Sure, it's a pain, but it's not THAT much of a pain and a single license is several thousand dollars. (Heck, it might even be more- they don't list prices, because they don't sell to individuals!)
Orcad is a fantastic piece of software by the way. I'd happily give them lots of money if they'd sell it to me, and I had lots of money. (call me cheap, but I am guessing my annual income is probably on par with only a small handful of licences)
Probably, yes. They're trading their time for social capital.
No. That's the only way to make money in an economic reality that copying is free. It's redefining what you sell so that it cannot be pirated because it's a different product/service to start with.
You're not combating piracy when you offer a non-copyable service - you're just redefining your terms to work with reality.
The article says:
> But what if that person likes that game, talks about it to his or her friends, and then I manage to convince three of them to buy the game?
The author is hoping that he can convince these friends to buy the game; he isn't suggesting that pirates do the convincing. In the next paragraph he describes how to do it:
> Instead of just relying on guilt tripping pirates into buying, or wasting time and money trying to stop them, I can offer online-only services that actually add to the game experience. Online level saving, centralized skins, friends lists and secure name verification for multiplayer. None of these features can be accessed by people with pirated versions of the game, and hopefully they can be features that turn pirates from thieves into potential customers.
Investing actually money into something as brittle and vague as a video game simply requires that I certainly know what I'm buying. Thus, the title must either be a few-in-a-decade known hit or tested with a pirated version.
If the situation is even remotely like that these days, game publishers are making their money because of piracy, not despite of it.
I'd be pretty annoyed if I couldn't play my fun new game on a plane because it needs to constantly connect to the internet to prove I didn't steal it.
If you look at Minecraft, it has the worst graphics possible and, in the Alpha that Notch is selling, half of the features don't work in multiplayer. The main thing the game has going for it is its limitless replay value with the ability to create and show off things (however tedious I think the average person would find the process).
Despite its flaws, Notch seems to be doing something right. He doesn't have much overhead and he can sell the game for cheap (although not very much so by indie standards). He doesn't even have an effective copy protection scheme. The login system is easily bypassed, and multiplayer servers hosted in "offline" mode are no different from a regular server.
Granted, there are previous incarnations of the game that did not take off and Notch has a lot of open promises about what he will deliver with the game. Yet, the game is in a state that is highly addictive and people have nothing but good things to say about it. Word of mouth and social media (namely youtube tutorials and showcasing) have rocketed sales.
Obviously, this game is a different caliber than most big budget games, but they are at a disadvantage to Notch's straightforward development style. Game studios are often rushed to finish their game and they need to see immediate success upon release. Yet, they are almost always still working out bugs. Beyond patching and token DLC, the game is considered final. Some games have even lost modding support despite how much value that adds to a game.
Blaming the current generation of consumers doesn't fit. There is an exponentially larger consumer base buying games. Most gamers are always ready for the next game and often games are sold on hype alone. Maybe this is an overstatement, but we have attained what is close to rabid consumerism. There is a lot of competition, but when a game hits, it sells big.
Could it be that there is something else rotten going on in the games industry? Look at the surefire success that is the Call of Duty series (even despite the supposed boycott). Activision apparently couldn't afford to properly take care of Infinity Ward and there was a huge falling out. Can this be explained by greed, incompetence, or what?
Even if piracy is to blame, games are already harder to pirate. You can probably fight it head on to a certain extent, but I doubt you can stop it. At some point, it will hurt business more than it will help. The type of article Notch has written here has become fashionable among indie developers. It makes them look good, while making big game studios appear to be at a loss. Maybe they are also trying to serve as an example of how you can rise above piracy concerns rather than getting hung up on them.
But it stinks that developers now have a bias towards online features (because they combat piracy) instead of potential offline features that are more useful or better serve customers.
If you're not actually adding any useful internet-based features, then this is just another DRM system that will piss off paying customers when they want to play but don't have a net connection because they're using a laptop on a plane flight.
The question should be: how do you account for the fact that your customers are criminals and still make money without crippling your game? Putting useful features online is a good answer to that question.
I don't think there's really anything "wrong" with that, though. It's not very fair, but that's how the world works. Given that people are going to continue to try making money from games, it seems like an optimal outcome.
It also often creates the paradox that pirates get a better experience. Once the pirates work around all your antifeatures, the pirated version is actually a better product than the one you're selling (which makes piracy even more tempting).
1) It drives your customers to your competitors
If you had a choice between a shop that detained you in an "interview room", and checked your bags, pockets and body cavities against the receipt, every single time you went there, and one that just had a few CCTV cameras, which would you choose?
2) It makes people think "If I'm going to be punished anyway, I might as well commit the crime"
In some countries (IIRC, both Finland & Netherlands do this), purchasers of recordable media are "treated as criminals" and pre-emptively fined for copying music (specifically music, not software). If I were subject to that kind of treatment, you bet I'd copy as much music as I could lay my hands on.
Now 6 of my friends (who never would have been hooked on the series otherwise) own legal versions of the two most recent novels starring our favorite wizard-detective.
Those sales would not have been made if they hadn't gotten a taste of the series beforehand. Sure, this situation isn't the rule, and they pirated 5x the books they've purchased... but 2 sales each is better than 0, and with 8-10 more books coming in the series, the author/publisher have come out far ahead.
(see? Another chance to hook somebody)
The Night Angel trilogy by Brent Weeks is good in GraphicAudio, as is Warbreaker by Brandon Sanderson. Warbreaker is stand-alone, so it may be a good starting point.
There are a few rough bits, but there always are; some sections with awkward musical choices, some re-used recognizable sound effects, but they're no more common than errors in standard audiobooks.
(Disclaimer: GraphicAudio books are abridged, but functionally unabridged. If it's raining, they play the sound of rain instead of having the narrator say "it was raining". By definition, that makes them abridged, despite no loss of content.)
We stopped tracking piracy when we realized that we were getting into a cat-and-mouse game with application pirates and the feature wasn't worth the resources, but I can't imagine these stats have changed much since.
Untrue, I have direct personal proof to the contrary ;)
What is so crazy about releasing a fully playable free demo that lasts 10 days that enables you to save your progress and pick up where you left off after purchasing the full version?
No doubt a system like this would have multiple weaknesses but if this system existed I can guarantee you that I would own more games.
It's just too bad so far that you can only do this with an extremely limited selection of games that have already been on the market long enough that I would have bought them if I was actually interested in them.
But the concept is great.
This is as bad as the logic spouted by the media industry that a piracy = one lost sale.
If not even worse (because it is just plucked from thin air)
Games-as-a-service in the future?
But I bet it was more effective than any other form of DRM they've used over the years.
Unfortunately their catalogue is pretty old and weak (a few diamonds but nothing special) and I'm more of a console gamer. If a similar rental system was available on the consoles I'd probably never buy retail again.
I hate this argument.
People who want to pirate games or music frequently say that by pirating, they are actually providing a benefit to the author by giving him exposure. That's true sometimes, but I don't think it's always true.
In general, with any creative product, you want to try to turn some portion of it into exposure and some portion into money. You might divide things up 10/90 or 50/50 or 70/30 or even 100/0-but-I-charge-for-support, depending on what you think is optimum for your goals.
But pirates presume to make that decision for you.
(Though I agree that smart authors will embrace the fact that copying is free and easy rather than trying to fight it. The piece of your product you want to use for exposure can be copyable, but the piece you want to sell shouldn't be. Or if it is, you should be honest about your income being from donations or exceptionally honest people.)
At launch date / first to market, there is a high price tag for the digital good (whether it be music, game, movie, etc). This is so that the vendor/author can make sure that they can sell at a high price to those "first movers" that actually want to pay $1000 to be the first person on the planet to have that special ring tone, ahead of everyone else in the market, for example.
As time passes, and as more people buy the "product" (which is done via a download or a file transfer) - the price of the product goes down - because the as demand rises, the cost of production actually doesn't change - and the author already made some money, so there's no point being greedy, because then people would go and pirate it.
Once this price goes down, it goes down for EVERY SINGLE customer, including those who bought it during the high initial price. I mean, the vendor does have the customer's credit card numbers. Do a residual, scaled, periodic refund for every single customer, based on the differences between the current discounted price and the original price at which the customer bought the good.
As the # of units sold increases, the price of the product decreases - of course the relative rates can be tweaked so that the vendor is still making more money than they are discounting, because as an electronic/digital good, there are no factories or warehouses - it's easier to make money at mass scales when it comes to digital goods (vs physical goods like bicycles).
Existing customers feel validated - the more people they recommend to buy the product, the more money they get back.
New customers don't feel like they're getting ripped off - the prices are falling all the time, and you "buy into" a whole discounting structure.
The original vendor/producer can finely tune the ratio at which the prices fall in order to control profitability, popularity, and sales rate as a factor in promotion and marketing.
Again, if you take advantage of the fact that if you sell 10 copies, the cost for building the software/digital good is no different from when you sell 100,000 copies, then you can exploit that "efficiency gap" if you can call it that between the existing pricing structures and a variable pricing structure that I describe.
At some point, you will reach a "price floor" at which the producer is comfortable reaching their target cumulative total profit. Since altering the price changes the price for every single customer since the beginning of the lifetime of sales for the product, you can actually say - I want x million for this product in 3 years time - and actually be able to hit that target by planning out the way the price changes. OR if you believe in the long tail, go ahead and have a constantly decreasing price - as you reach the hundreds of millions of people in the long tail, you can charge 1 cent - and you would get hundreds of millions for a product you made - providing usefulness for all those people at a great price - AND being able to protect your livelihood during those critical first few sales.
Of course, this requires every single sale to every single customer to have its own merit, its own tracking system, its own values. BUT personalized sales is exactly what we are looking forward to in the future.
And I think technically, it's not super hard - I mean we have nonstop systems and mainframes and clusters of all kinds - that analyses the trillions of collisions in the LHC - what makes us think that we can't track six or seven billion consumers who are alive on this planet, who might be making 5 or 6 million transactions a year? It's not that bad when you consider the scale that google / national science foundation / CERN operates at.
Alternatively, what if the price went down for previous customers—retroactively, as you've said–but not for new customers? Then, customer N - 1 gets paid back a bit of money when customers N and greater purchase your product. There is a name for customer N - 1 in this case: an investor.
I've had the hypothesis for a while that the future of artistic economics is microinvestment: your fans purchase, through a completely streamlined process (e.g. iTMS), tiny amounts of the right to steer your career around—and the actual digital goods come for free with those investments. The "collector edition" becomes the "investor edition." Polls on your fan-site—in est a virtual shareholder meeting—hold real legal sway over your publisher/studio/firm. Etc.
Why do things have to be the way they are? I mean we are the future generation. The current generation who run the banks will vanish sooner or later, why can't we imagine a space where pricing and inventory and investments and money are completely different concepts?
You, the customer, obviously wouldn't name a price higher than you were willing to pay (the product is not worth that much to you), but you also wouldn't have an incentive to undercut too badly - if you do so, I'll simply pick a higher cutoff than your price, and you won't get the product. There's really no gaming this system, if I'm not happy to sell at a price, I don't sell to you; if you bid fairly high, though, you'll never get screwed by me, all purchasers will be "filled" at the same price every month.
Chargebacks are the main problem with this - you'd have to make sure that you could retroactively adjust prices in order to avoid possible gaming of the system via fraudulent charges, and I have no idea how that would square with the CC companies.
Bonus points for somehow arranging things so that you can profit off of the interest on the committed-but-not-yet-spent money that people commit to spend on your product...
If you buy it at the low price, you can "recommend" it (write a review) and then later after the price has risen, get the difference in price credited to your account. (The difference between the price at the time of the review and the current price.)
Unfortunately I think they're closing up shop in a month or two...
As a consumer, I've also thought - hey this service/product is totally worth $50, and I would give them that money - but it's priced at $10 - so I'll just pay what they ask - 10 bux it is - it's a steal! - Great for me, not so great for the seller.
Have you ever felt like that as a consumer?
And if you're looking for consumers who can't afford more than $10 to spend on this theoretical product, maybe you're in the wrong industry segment, or you need to match the sale price with the production costs - ie you can't hire coders at $80,000/year just to make a $10/user product - until you hit that scale of # of customers.
McDonald's hires kids for their crew at perhaps $12,000/year, and sells burger meals for average, maybe $6 - $10.
And they're extremely profitable - even though they are selling physical goods with warehouses, processing plants, real estate, etc.
A single statement from my merchant account includes 26 different types of credit card processing fees. And this is my third processor, the most transparent so far, which prices me only by a fixed percentage markup over the fees they're charged by Visa/MC.
They're also examples of developers who have declared 90%+ piracy, so I'm not sure that this anecdotal evidence has any value.
But then don't old customers feel ripped off for having paid "too much"?
Time and time again, all these big publishers keep putting out big name titles with only 8-16 hours of gameplay for 60$. No wonder their games get pirated...
The problem is, what if I want to play it on a flight? Enabling this enables pirates. So, is this worth it?
It doesn't matter what they are, what they do, or whether or not the network aspect of these services/features is integral to them - pirates and consumers who insist that any features not on the disc at install-time are an inconvenience will still cry DRM.
Are these "online services" integral to the game? If they are, then what happens when they go down? It's really not much different than what happened when the Assassin's Creed 2 validation servers fell over. Are they not integral to the game? Then pirates will do without them or find ways to replace them, and some people will still bitch that they shouldn't be so inconvenient.
There's no getting around the fact that creating copies of a digital work is free, and so there's no solution that's going to make everyone happy. It's unfortunate, because every developer now feels the need to create online services as a part of their game, even if their idea doesn't really call for it.
Imagine an alternate dimension in which StarCraft shipped with LAN support but never supported online play over Battle.net. The StarCraft community would be based on gamer-oriented VPNs, and would likely be about as healthy as it has become in our dimension. If, when StarCraft II was announced, players learned that LAN play would still be supported, but play over Battle.net had been added, I don't think very many people would complain that the product had been deliberately crippled.
In our world, StarCraft supported LAN play and Battle.net play, while StarCraft II does not support any type of multiplayer other than over Battle.net. Battle.net play has resulted in half-second latency for all players and several days of downtime since release. Additionally, it is known that a "Professional" version of StarCraft II exists that supports LAN play - the feature has simply been removed from the retail version.
I think it is pretty clear which of these is a feature and which is not.