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Step 1: Piracy, Step 3: Profit

Tue, 02/22/2011 - 7:03am
Jason Lomberg, Technical Editor

Jason LombergAn article in the e-zine “Gamasutra” urges game developers to “love their pirates.” Rather than endeavoring to defeat piracy, developers ought to embrace theft (i.e. piracy) as a viable advertising tool. The article is based on a number of myths and logical flaws that I’d like to address.

The author’s central premise is that content has no real value. If so, then the primary value of an IP lies entirely in the physical (or in the author’s convoluted line of reasoning, building “relationships”). So the value of a novel is the accumulated cost of the ink, paper, and binding. A movie is worth no more than the blu-ray or DVD disc.

This is a logical fallacy of the highest order. It assumes that great works of art spring forth from the earth without cause or reason. Mark Helprin addressed this in his treatise, Digital Barbarism: “a common misconception among the copyright abolitionists is that the value of a book or article is primarily physical.” (Helprin, 78) He goes on…“a physical hardcover book is worth two or three 2008 dollars more or less…but the buyer judges the real value to be in the content, or he would buy books by the pound, blank books, or whatever book came blindly to hand.” (Helprin, 79). 

For those who make their living creating art—musicians, writers, game developers, etc.—content is a business, and business has overhead costs. IPs don’t appear from thin air. They requires a significant investment of time, effort, and, yes, money. “The investment is real,” says Helprin. “It often consists of years of work without compensation…” (Helprin, 82)

Gamasutra glosses over this fundamental idea, or does it? Says the author: “Realize that your game content is entirely valueless. You may have spent days, months or lifetimes working on it, but what you have created has no tangible value. At all.” Technically, he’s correct. An IP represents abstract value, not something you can hold in your hand. But it is real value nonetheless, the product of years of labor.

The author’s solution is for publishers to adopt a Google/Freeware approach. He points to Google, Facebook, and Twitter as examples of properties that have no tangible value (and are free), but are worth billions. 

I quote from the piece: “The reason that they, and many games, have zero value but plenty of worth is that they are gateways to something else. Google makes money from advertising. Facebook makes money from advertising and sales of virtual goods. What these companies are doing is leveraging relationships (in search and social) on a vast scale in order to make a profit. The fact that the product is free is why it spreads so far, and the revenue comes later.”

Thus, publishers should either adopt a freeware/micro transaction approach, or embrace piracy, a legitimate means of “building relationships” with fans. Accordingly, these “relationships” will eventually bear fruit, as pirates are magically converted into paying customers. “Everyone that plays your game, legitimate or otherwise, is another node in your network that may spread the name of your game and its marketing story. Each is an opportunity to build a relationship, convert into a customer.”

This is based on another myth: all pirates are fans (and thus, potential customers). In my experience, piracy begets more piracy. It doesn’t lead to revenue. The prospect goes against human nature. Why would someone suddenly decide to pay for something they’d previously gotten for free? Artists (at least those not wishing to embody the “starving artist” stereotype) can’t afford to live on the charity and good will of others.

The fact that Google created a fortune by proffering a free product doesn’t mean that content providers can do the same. Moreover, if pirates also eschew all forms of advertising (which, in my experience, they often do), this systematically eliminates all revenue streams. Say goodbye to big-budget movies, tv shows, and games. Novels would be replaced by fan fiction. Forget "popular music". It calls to mind the business meme popularized by South Park:

Step 1: Piracy

Step 2: ?

Step 3: Profit

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