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Piracy and the Four Currencies (gamasutra.com)
161 points by cobrausn on Feb 23, 2012 | hide | past | favorite | 44 comments

I think this is just a different way of expressing the idea that piracy exists only because the pirate user experience is better than the non-pirate user experience. So if the non-pirate experience, for example, does not require that you have the disk in your dvd drive in order to play (since all the assets are copied to your hard drive at install time), then the pirate experience is better. And so on.

so the trick is to make the non-pirate experience better and the piracy problem goes away. The only people pirating are the ones who would not buy your software/game anyway, so free advertisement/word of mouth should be welcome anyway.

The industry's problem is that it's hard to make a better experience, existing cash cows being existing cash cows and all. It's easier to protect them than to innovate.

But the point is well-taken.

Well said. I used no-CD cracks on the entire Diablo series because my CD drive was slow but my HDD was big. I bought all of the games and expansion packs. Also, when running Diablo II on WINE, it was a massive pain in the ass to "umount /dev/hdc; eject" ::change disc:: "mount /dev/hdc /cdrom" every friggen time. I had a 20GB (!) HD, I damn well want to use it!

"so the trick is to make the non-pirate experience better and the piracy problem goes away. The only people pirating are the ones who would not buy your software/game anyway, so free advertisement/word of mouth should be welcome anyway."

There are a couple of problems with this line of thinking.

First, the Louis CK $5 comedy show is a good example of this not working. Even though it has no protection and is very cheap, it's all over the torrent sites. Why would piracy continue in such massive numbers of the end user is getting everything they could possibly want?

Second, Yes, those people may not purchase your stuff. But, the bigger problem is that if everyone knows they can just download your stuff for free (and you don't care and there are basically no consequences), they will not pay you. They will get it from their friends or download it for free. I've seen this happen time and time again. Since software isn't a physical good, its value is almost like currency: it's only what people are willing to pay.

Piracy is also much worse than theft because if a TV is stolen, you just lose that TV. Over time, piracy can ruin an entire product line. Not just that one copy.

"The industry's problem is that it's hard to make a better experience, existing cash cows being existing cash cows and all. It's easier to protect them than to innovate."

Piracy has actually stifled innovation. Under normal circumstances, if I'm losing money, I'm going to figure out why, which will result in a better customer experience and product. Instead, since there is mass piracy, I'm just going to try to stop that first (Since it's obvious people like the product, they just aren't paying for it).

"Instead, since there is mass piracy, I'm just going to try to stop that first"

I didn't say the _incumbents_ would necessarily innovate; new competition will if they do not.

There are people that say piracy is a symptom of a broken business model. I tend to agree with that.

> Piracy is also much worse than theft because if a TV is stolen, you just lose that TV. Over time, piracy can ruin an entire product line. Not just that one copy.

You'll need to be more specific if you want to assert that.

Humble Bundle, Steam, and most app stores solve these problems for gaming.

It's too bad some titles from Steam include some really horrible DRM from their respective publishers, namely Ubisoft. Whenever I somehow lose a connection to Ubisoft servers, my game pauses with a 'Waiting to connect to Ubisoft servers' screen. The only way to get out of this screen is to quit the game. Based on this experience, I will never buy another Ubisoft game again, and yes this is post Ubisoft PR release about lightening up their online connection DRM.

Humble Bundle, Steam, and most app stores solve these problems for gaming.

Still, there's another unit of currency in play that the app stores and subscription services don't offer. It's $VPO or Value of Proud Ownership and it's a currency you get instead of spend. You only get $VPO from buying while these centralized stores are more like renting.

I've written many times that the desire and ability to own something is an inherent motivation to buy it. If I like the band and the album, I buy the cd-or-equivalent because I want to own it. And to own means investing in something that belongs to you to the degree that you can resell it. That's my tribute to the creators, because it's human nature to try to liken yourself to what you admire. Owning a copy is flattery. Even owning a pirated copy is flattery because the price isn't a major factor there: owning it is.

I've been playing games in this decade that I bought in the 90's. Granted, I use an emulator and I often download, from abandonware sites, the ports most suitable for my emulator: I might have originally bought the game for Amiga but now I'm playing the PC version under DOSBox. Other games I've salvaged in time from 3.5-inch disks to my hard drive as images. But I still own the games I bought and nobody has taken it away from me.

This is why I'm not into app stores either.

While I might be a hermit retrogamer and certainly not a fan of the bleeding edge releases, and while I realize that for many people services like Steam might be a exact best solution, the underlying fundamentals don't change. There's a significant motivation factor buried in it.

If I really loved a game made this year I would want to buy it, not rent it. If I smelled it's a classic I would want to be able to play it in an emulator in the 2030's or even later. This means I need an "internet-age hardcopy", i.e. something that I can stash somewhere and unpack later for use with an emulator or original hardware. This would not be possible when I can't be sure any of the app stores is online after the next five years. This is the same reason Spotify doesn't speak to me at all.

check out Good Old Games ( gog.com ).

They have figured these additional costs out - they sell old games (ans some new games - mostly their own ) on-line like Steam, but without any DRM, and with nice installer and preconfigured dosbox when needed. So you can redownload the game any time, and because there's no DRM - you can make copies/use the game on many computers, etc.

So the cost in four currencies is sth like 5-10 USD + 0.1 $T + 0.1 $P + 0 $I

You're pretty rare. I don't know of anyone who would still play ancient games or abandonware. The closest thing that I know of are people who still keep the Dreamcast, and I can count how many times they've played it over the last 10 years: 0. I don't feel that $VPO is a cost for most gamers as long as they can still access their game within at most a 5 year period. I would also argue that with services like Steam, players will be able to access their games for a longer period of time after changing machines.

They're not as rare as you might think. More than a few of us know about gog.com, DOSBox and the like...

Isn't $VPO equivalent to the situations where the author stated that you might have -$I, that is the value of proud ownership is a credit to your integrity?

Every time I hear arguments like the one linked to in this article, I counterlink to this: http://thepiratebay.se/search/terraria/0/7/400

Great game, indie developer, easy download (steam), quick install, cheap price, available for sale everywhere on the planet. All the metrics favor purchasing this game instead of pirating it. And yet it is massively pirated.

All the talk of it being about the convenience or about fighting the man probably contains a tiny little nugget of truth at the core, but it seems clear that most people who pirate do so because, hey, it's free and you won't get caught. I imagine if newegg.com had a sneaky "Just ship it to me but don't charge me anything, ever" button next to their "add to cart" button, that sneaky button would be getting a lot of love and a lot of 50 inch LED TVs would be on the next UPS truck, even if clicking it gave a popup that said "Warning, this is unethical and illegal! (but nobody ever gets caught). Proceed? Y/N ".

World of Goo is a really great indie game that's massively pirated, but it's still successful. The question to ask is whether the pirates would have bought the game if there was no option for piracy? It's not like they are physical products, nor are these pirates using these developers' bandwidth. From an economics standpoint, the developers lose nothing but pride. At the same time they stand to gain a massive mind share for sequels

imo I think most pirates in the West, pirate mainly because they're broke students. Once people grow up with a post college job the piracy tends to end unless there's no other option.

Yeah, there will always be pirates. I don't think you can fairly say "massively pirated" because you don't actually have numbers to back that statement, just like I couldn't say that "most people get the game through Steam". However, I would speculate that using Steam as a distribution channel has helped the author more than whatever online pay-then-download mechanism he would ever come up with. I would further speculate that using a common distribution channel like Steam increases the audience and simply by holding piracy constant and increasing paying user numbers, the percent of piracy would decrease. I'm sure "holding piracy constant" is a bit of stretch, but I wouldn't imagine it would increase as massively relative to the number of paying customers. Again, I don't have numbers, so this is just speculation, but I think they are reasonably sound.

If you look at TPB and say "look at all the piracy!" -- well, you won't find much else, it's TPB. I wouldn't assume then that it's pirates all the way down.

The comparison to NewEgg.com is pretty poor. What you're describing is theft of physical property. There is always a real loss of money (not potential money/profit, but honest-to-God money and resources). Software/music/digital art doesn't have this property. There is no loss of real money/resources used to make the copy. This fact actually DOES make all of the difference. If everyone pirated a game, it would not drain the physical assets of the company that produced it for each copy made. Yes, it's still theft, but it is a lot more justifiable (and sustainable, for better or for worse) than robbing a warehouse.

I pirated a copy of Windows XP 64-bit Edition (for Itanium CPUs). You know why? Because Microsoft won't sell it to me, nor will anyone else. I literally had no other choice. In America, we're blessed with being first, but I have it's really annoying to try to get around bans/censorships/date shifts that make something unavailable in your region. When you have no other choice, it's a lot easier to say "eh, screw it, they won't take my money, fine."

I'm sure plenty of people pirate because they hate paying, but I'd be interested in a large-scale survey as to the reasons. I'm sure they vary by income level, technical knowledge, and region. That would be a lot more useful than pidgeon-holing all pirates as cheap bastards when quite frankly, none of us know the results of such a survey.


Pirates will be pirates, yes, but the goal isn't (and never will be) to eliminate all pirates, it is minimize losses (and therefore, maximize revenue). Right now providing really good service, extra value (steam features), and low pricing is the best way we know to coaxing users to voluntarily part with their money without the flak of "WE HATE DRM" that is common with overly draconian measures. Steam's profit margins attest to its successful model.

Yeah, Ubisoft lost a sale of Assasins Creed over the Holiday. I wasn't going to give them any money for a product that used to have such onerous drm.

This is why Steam is so good - it's less of a pain, and takes less time, than piracy.

But not for someone who's previously had their account locked, someone on usage-capped broadband, someone who doesn't know if their PC is up to scratch and knows that they can't get a refund...

I'm not sure how Steam would be worse than piracy for someone on usage-capped broadband. It would be better than BitTorrent, at least. And I think Steam lists system requirements for everything in its inventory, so though the refund situation still sucks, it does address the "Is my PC up to scratch?" question somewhat.

With piracy you can download it somewhere else and use a memory stick.

PC system requirements are still notoriously inaccurate. There are too many variables and the wrong combination of CPU, GPU, motherboard, memory bus, OS or drivers can make or break performance of a game. Minimum (or recommended) spec doesn't always mean that playing will be enjoyable.

You can actually backup&restore local content on Steam, so you can do the "download elsewhere then copy to memory stick" thing as well.

I don't think I've ever seen a store that accepts refunds on software the moment you open the shrinkwrap, so I'm not really sure how Steam is that much different.

The comparison is to piracy, not to lousy retail stores.

Don't forget silly things like fleecing European customers or region-locking.

I believe 'fleecing' would add to the $M cost, making piracy look that much more attractive, and region-locking would most assuredly fall under (and add heavily to) the $P costs as described in the article, as would pretty much all DRM.

Sometimes (but not always) the fleecing is being done by European governments. The Value Added Tax in Italy is currently at 21%, with the possibility that it'll rise to 23%! Not to mention various "fees" when importing stuff.

They tried to get me to pay import fees on a birth certificate my dad sent me from the US. It cost him $50 to get it from the state of Oregon, so he declared that as the value (it would have cost him that to replace it, right?), and they tried to make me pay duties on that $50. I asked them what they thought the retail value of a birth certificate with my name on it was, and they backed down, but...sheesh.

And sometimes the fleecing is just fleecing. Buying Photoshop, U.S. English language, as a digital download from Adobe.com costs literally 100% more if my billing country is "Sweden" instead of "United States". Even Sweden doesn't have a 100% VAT. And digital downloads have no duty fees or international logistics costs.

"The Value Added Tax in Italy is currently at 21%"

Which is hilarious to me. Everyone wants socialized health care and huge government benefits..but then complain when they are forced to pay enormous taxes and take their mis-placed anger out on business owners.

That's actually a long and complex discussion, but suffice it to say that, overall, health care costs a lot less in Italy than it does in the US. The "waste" is elsewhere - people retiring at 59/60 and then living through their 90ies.

Sort of a Devil's Advocate point here -

This analysis is a great way to frame the discussion, but I think it is worth noting that it really depends on your user makeup by segment. As an example:

HN Reader | Very small % of population | Really good with torrents and pirated software | Higher Average Income | More likely to sleep better after not pirating

Non HN Reader | Really big % of population | Really bad with torrents and pirated software (on avg) | Lower Average Income than HN user | Less care about programmer well being

Obviously things would be easier without DRM, but some programs may (or may not) benefit from DRM for profit maximization because they derive far more revenue from the latter group. A non DRM product can easily be shared by the mainstream where a DRM product is still fairly hard to share for the mainstream.

Even if I did not care about programmer well-being, I would be reluctant to use torrents and pirate sites because of the threat of malware.

But then I have one Windows PC that I use for both games and online banking. Maybe that's rare among HN readers.

I stick with TV-series, and I've never seen an infected file. If I had been downloading software, sure, I would have been slightly more worried, but even so most sites have comments and ratingsystems. Looking at them probably helps you find out if a torrent is malicious or not.

TL;DR-version: In my experience, with some sense, your risk of running into malware in torrents is slim.

That's because you're knowledgeable enough to not click on the misleading ads yelling "download here". Average users might not be.

Offering a safe easy medium does have an appeal to many users, as shown by the success of Steam.

How would you know if a program you downloaded had been modified to send files from your hard drive to a server? I think it can be easily done without an antivirus noticing.

"Integrity dollars" are not like the other three.

1. There is no limit to how many you can spend in a lifetime.

2. They are non-linear: the more you spend, the lower the integrity cost of everything you do in the future.

3. The effect of #2 is localized - if I still have a rack full of pirated CDs (both music and games) from my student days, I am less reluctant to pirate music, but that will not necessarily make me more likely to pirate movies or business software.

They can also go "negative" in a way, in that people who want to support someone will spend more than is reasonable. Just look at some of those recent Kickstarter drives if you want an example of that. People are willing to spend more real dollars because there are so many "negative" integrity dollars that the price is still "cheap" to them.

Steam and the Mac App Store are good examples of how all of these different factors can work if applied right. Why can't these companies understand that I WANT TO PAY THEM. If you treat me like a criminal with a purchased copy of the game but I can get one without all the DRM from a torrent then it's really tempting to just go with the torrent. I don't pirate however there have been times that I felt so abused by the DRM that I can understand why people do.

The author mentions this a little in the article, but I feel like they probably could have expanded on that point - the "$I" cost of piracy can change depending on the seller's track record. As noted recently in the Oatmeal comic about pirating Game Of Thrones (and Andy Ihnatko's response), the state of piracy is such that, effectively, all efforts to make piracy harder, make piracy more appealing.

I wonder how much pain these various industries will need to endure before they realize that the solution is to stop punching themselves in the face.

I would be prepared to pay all the $M the media industry wants today as long as they reduced the other three currencies considerably. My main reason for piracy is availability. I can't even buy the things I want where I live.

My dream scenario is a 1080p, DRM-free film, available worldwide behind a pay-link. I want to be able to download it, to feel that I own it. And that my money doesn't go to suppressing human rights and suing file-sharers. Pull that off, and you'll get my $M.

The author doesn't mention that buying from companies¹ perceived as evil incurs an $I cost. In the same fashion one wants to support indie devs, there's resistance to feeding the beast responsible for bad market direction. It's basically a boycott; one still consumes the product, but without supporting the publisher.

For example, think back to when Spore was pirated: http://torrentfreak.com/spore-most-pirated-game-ever-thanks-.... That's an example of a negative $I cost: even people with no interest in the game were getting on board, to send a message to EA.

¹Companies with dodgy user-experience track records, intrusive DRM, or who are perceived as having a negative effect on industry or the direction game design is going. Examples: Ubisoft, due to the forced-online connection even for single-player games, EA for Origins and banning policy, etc.

I thought this was a good analysis, though the author seemed to think the 'Integrity Dollars' were constant. In reality, they seem to be different per person.

Also he did not mention Value-Added bucks, which would be a benefit you get for playing the real version that you can't get with the pirated version.

The author does address the subjectivity of the integrity dollar value:

""The $I cost is the most subjective of the four and depends on how much stock a player puts in "doing the right thing," (so to speak) or whether they even see any moral integrity in the choice at all.""

I agree on the value-added point though, there are often services game makers can provide which make the official copy more attractive to players.

The time is different per person too, depending on tech-savvy-ness. Pain-in-the-butt-ness also is dependent from person to person. Even price is not a constant if you consider coupons, discounts and price drops.

True enough. After all, I like the features provided for me by Steam (cataloging, cloud, achievements, friends, etc.), so what some would consider a cost (in terms of DRM) I would consider a benefit.

that's so freakonomics, awesome

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