Among the programmers who love the PS3, the decision caused a scream of rage (and pain) that echoed through twitter. Considering the difficulty of programming for the platform as it is different than most other platforms out there, you could think Sony would care about the programmers that want to experiment on it. On a personal level, I don’t care — I simply don’t have the time to tinker with Linux on my PS3.

But if you want to program for a current generation console out there for real, this is your only option. The Xbox 360 with its XNA and software abstractions doesn’t really do it — coding a game on XNA is not a feat really with the distance being put between hardware and software. Coding a game on the PS3 in Linux, however, would probably land you a job.

And let’s face it: with all the bragging about how the PS3 can do things that the Xbox 360 can’t, Sony really needs programmers who can push it to it, who love the system and will squeeze the last bit of performance out of it. Those programmers are all sad puppies now.

The decision is just flat out wrong in so many ways, the most obvious being that of consumer rights. It does not matter how small a percentage of the user base that uses a feature, if you stick it on the package of a product and use it as a selling point, it’s supposed to be there when I use the product.

You could argue that I’m not forced  to upgrade, which is bogus since I am forced to upgrade if I wish to keep the functionality of my PS3 intact. Imagine a DVD player that is suddenly “upgraded” to not support the remote control anymore. You only have to upgrade if you want to be able to watch new DVDs though, if you settle for your old collection, you can opt out. Oh, and subtitles stop working too. Sorry ’bout that.

The example is absurd, but in all essential parts a direct mapping of what Sony is now doing. Come tomorrow, you may choose which way to cripple your console — no Other OS or no new games or PSN.

Laws differ, but I’m quite sure this sort of act from a company is illegal in Sweden, where I live. Quite possibly it is in several other places around the world… it would be interesting to find out.

The second interesting thing to mention is how a large international company again fails to recognize the Streisand effect. I really had no idea some dude had started cracking the system… nor any interest in it. Now I know, and now care. The Sony decision was quickly met by a promise to fix an alternate firmware version which could be used without disabling the feature:

Hacking isn’t about getting what you didn’t pay for, it’s about making sure you do get what you did. And this is about more than this feature right now. It’s about whether these companies have the right to take away advertised features from a product you purchased.

By doing this, Sony puts a big spotlight on hacking the console, essentially starting an arms race — one it is virtually guaranteed to lose. Until now, the homebrew community has had no reason whatsoever to try to crack the PS3. Now they do, and probably will fairly quickly. I think it’s likely that when it happens, Sony will end up having helped hasten the day when piracy appears on the PS3, in its flailing attempt to prevent it.

So while I’ve spent the last few years trying to find a way to get some sense into circles of business leaders and politicians, I’ve never thought much about the consumer side of the same coin. It makes perfect sense in hindsight, but I didn’t see it at the time: many consumers are just as clueless about the changes we are going through. I don’t mean that as a slight to anyone — we’re living in a social and political revolution brought on by a technological leap forwards. It’s hard to understand this new world.

So let’s take a look at that statement from the consumer side then: It no longer makes sense to sell copies of digital culture. The music and movie industry is extremely reluctant to realize this, but pioneers in those segments still have, which is why we see things like streaming music services and donation-funded movie productions, generally from newer artists not already settled in old business models.

It has excited me then to see a some of the big game publishers move towards newer business models. EA is notable with things like Battlefield Heroes and other new models. Others are hellbent on locking in their old “sell-copies” mentality by introducing DRM that requires you to be online all the time, for instance.

I mentioned in the post on Project $10 that game resales are causing much of the same problems as piracy for publishers. This is tightly related to the fact that the industry is used to selling copies of things and that consumers are used to buying copies of things.

Fundamentally, though, a game is not a tool or a utility which you are bound to keep, or a consumable that you use  up — a game is an experience. It makes sense then for the consumer to trade in the disc, since he or she has already “used up” the experience on it, but it still has value for someone else.

When a publisher fights for the right to sell copies or when a consumer is fighting for the right to resell a game, they are both doing the same fundamental mistake: they’re mistaking the game as being a plastic disc rather than as an experience. Back when copying was hard and game resales not much of a deal, the game basically became the disc (or cartridge), just like the music tightly associated with the CD it came on.

As soon as this connection is broken, old business models fail, and people inevitably complain. Publishers complain that people copy or resell their discs, consumers complain that publishers are greedy and think they have some sort of “right” to be paid more than once for each game.

What is happening now is a rough period of trying to invent new ways of making game development business work. It does not involve companies thinking they “have the right” to be paid, but the simple fact that the companies need to be paid or they will go out of business, which would be bad for everyone involved.

The problem now is that we’re in the middle of the transition. We’re in a world where we cannot expect everyone to be able to download a game from the net, which means we need to sell copies. At the same time, hyperdistribution is a fact and game resale is abundant.

From my point of view, seeing EA try to find a way forwards with a middle ground of things like project $10 to earn money off resales and more “free downloadable content” included with the boxed products to start an ever so slight move towards providing services.

To see retailers complain about the move is expected — after all, they must know just like we know that we’re moving fast towards a world where music and games are not distributed on pieces of plastic anymore, which means that there wont be a need for a store to buy the pieces of plastic in.

Still, I said this in one of the posts I started off referring to, The future of PC Gaming:

Then he fails to grasp the core points of what makes Steam popular: It gives something back to the customer. It’s that simple — the other DRM schemes are all for the benefit of the producer, while Steam has loads of nifty features for me as a consumer that have “Future” stamped all over them.

This also goes back to the other post and human nature. People have come to expect being able to trade games back in for a part of the value towards a new game.

There is a disconnect here really, since the problem for publishers is that the same disc is used twice (which means disc != experience), but the problem for the consumer is that not letting the disc be used twice would stop his or her ability to hand in the game disc, essentially making games more expensive.

I’ve suggested that a solution to this would be to include a game disable function in a Steam-like digital distribution system to fill this need. Once you’re done with a game, you could disable it for a piece virtual currency. You could then use the virtual currency to buy new games if you have enough, or fill in with regular money.

Even more likely though, I think we’ll see more transitions towards games being cheaper content platforms and that part of what you get is tied to an account. Transitioning from a producer of boxed game products to service providers needs to happen for game publishers to survive, but I’m sure we can find ways to do this with both sides benefiting.

Of course the middle men are unhappy, but as soon as they’re out of the way we can live in a happy world where the price of games isn’t so outrageous.

Anyway, retailers have spoken out against the so called “Project $10″, saying it will cause consumer rage:

“The person you’re pissing off the most is the consumer,” McCabe told GamesIndustry.biz. “This affects [them] directly – they pay the same amount of money and yet the resale value is much reduced. From a retailer’s point of view, they’ll just readjust [the price] bearing in mind you have to buy the voucher.”

This is an interesting development. For those who aren’t familiar with the concept, the $10 project essentially puts a code in the box to unlock additional content online for the game. The code can only be used once, which means that buying the game new has additional value over buying the game used.

Consumers who buy a used copy can still choose to buy the online content, but for a fee (one would imagine $10, considering the name of the “project”, but I think it’s actually $15 for the current titles). It’s been done with a few recent games including Mass Effect 2 this far (awesome game by the way, I’ve been having a blast with it), and will be done for future titles, including Battlefield: Bad Company 2.

“EA’s project $10 move is aiming to stifle pre owned games sales, but what they don’t factor in is the damage this could have for them in relation to new sales,” said Day.

Wow, what a complete misunderstanding. This has nothing to do with publishers wanting to stop resales — it’s simply a business model where publishers can earn some money off of resales.

There are interesting parallels to be drawn for me, between the console and PC markets. Pre-owned games pose much of the same problem on the console market as piracy does on the PC market. The end result of both is the same: people play our games without a single bit of money ending up with the people who made the game. In the worst case, we end up paying a lot of money to keep servers online, while getting no money at all from the sale.

There has been a lot of whining from publishers and developers about both issues. Those of you who know my stance on piracy should not be very surprised that my stance on pre-owned games is very similar. Whining about it or blaming people for it is not going to help — yet you cannot deny that the fenomenon in itself is causing major problems for publishers and developers (just as piracy is) — there is no getting around that.

However, trying to “clamp down” on used games sales or piracy is pointless. Piracy is illegal, but unenforcably so which means that it doesn’t really matter. Resale is simply a business choice. While you might think that it is a bad business choice and that retailers would be better off long-term by staying clear of business practices that will kill their providers, they are making a ton of money short-term. There is no way they wouldn’t fall for that temptation, and in the end, any business choice that works for them is a valid one. Whining or arguing about it isn’t going to help.

This causes an interesting problem for publishers. One way would be to move to direct online sales only, but this excludes large chunks of consumers who can’t download large games or who aren’t connected at all. Another version would be to require online activation and to bind the game to a certain console or live/psn account, which simply wouldn’t be fair to the consumer and would cause a never-ending stream of problems and well-earned gamer hatred.

The middle ground, then, is to sell a full game to people through retail, but to provide extra value with unlockable content to people who buy the product new. It should come as no surprise that retailers dislike this — it will certainly cut a chunk of profitability out of the resale market. It will lower the value of a game for resale, which means it’ll be worth less to trade in. Will this annoy some customers? I’m sure it will.

Many people seem to be taking this as the publisher wanting to be paid twice, which I think comes back as the default gamer response to anything developers or publishers do to earn money being horrible and bad. It sometimes gets to me to see this kind of attitude with gamers. We can’t make games as a charity, and making these games on bleeding edge tech is extremely hard work, and the people in the industry are incredibly dedicated to their art.

The other side of things is that buying the game used will be cheaper, creating a much better “try before you buy” environment, where you can potentially buy the game used and try it. If you like it, you can buy the DLC that you would’ve got from the new version. This is sort of a win-win situation for the publisher and the consumer, but of course not that great for retailers.

To publishers, this is the option that provides the best value to consumers while moving to a new business model that allows us to actually start making proper money from games again, which could halt the current trend of studios closing and developers being fired.

I’m sorry if that takes money out of retailers pockets, but I really do think that the talented people who sweat blood making these games deserve the money more than people who only know how to push people to buy used instead of new. It may have been a good dream for you, but it was still a dream and now it’s time to wake up.

And yeah, retailers claiming to stand up for the consumer is nothing new. But just as with music labels claiming to speak for artists, they are simply middle men that are slowly losing their value.

The column seems to present a very optimistic view of the Internet, a liberal view seldom seen among politicians today. Between the urge to stop file sharing and combat terrorism and child pornography, censorship and mass surveilance among the western nations has taken our Internet connections several steps closer to what the average Chinese user sees when logging on.

Sweden has traditionally been a strong country for new technology, so why wouldn’t the fight for a free Internet take root here? Indeed, Sweden is the birthplace of a political movement focused on saving the free Internet, the Pirate Party, so why not? I feel the need to offer up a report from within the country governed my Minister Bildt’s party.

The column in the Washington Post was preceded by a similar column (google translated) in one of Sweden’s largest newspapers and a blog post on Minister Bildt’s own blog. Sadly, the Swedish columns are less clear on this issue of what freedom means.

Here is a translated quote:

“It is obvious that the international rule set is far too weak and that the means that are available to ensure adherence to the rules in place are insufficient. The users have ended up trailing far behind the abusers.”

I wouldn’t call that obvious. The summary of Minister Bildt’s columns appears to be “more freedom will be had by introducing more government control”. This matches the actions of the government he is part of as well.

It is easy to criticize the Chinese government for their surveilance and censorship, yet the last year alone the Swedish government has put in place a law breaking a long tradition of free communications, ordering a mass surveillance of all Internet traffic that crosses the nation’s borders. Knowing how the Internet works and considering the small size of the country, that works out to just about all Internet traffic — all emails, IMs, chats, you name it.

This caused a wave of protests through the country and an online protest now known as the “blog quake”. Google declared that after the law was passed, it would no longer place any servers on Swedish soil, due to concerns for user privacy and integrity.

The same government has given media companies rights that go further than the national police force when it comes to hunting file sharers, and is preparing a new law mandating that every cell phone call, text message or other communication be logged, together with the position of the device at the time, essentially turning every cell phone into a tracking device in the state’s service.

The columns caused an outcry among Swedish Internet activists and supporters of freedom. The minister responded on his blog, showing just how ignorant the government is:

I do not understand that Christian Engström and others are upset about what I have said. Do they not think it is good that Sweden has a government that wants to defend freedom on the ‘net? To whine about FRA (the governmental body tasked with the mass surveilance of the Internet, my note) and our intelligence agency has nothing to do with it. Sweden does not restrict freedom of speech on the ‘net or anywhere else.

I would applaud Minister Bildt’s call for Internet freedom in the Washington Post, had I seen it in isolation. However, all is not well in the state of Sweden. While I would love to see the Iranian attempts to silence protesters fail and the great Chinese firewall break down, an easier political target would be to respect the rights of the people in your own country.

And sadly, the Swedish government has failed to take even the slightest account of it’s citizens’ right to privacy on the Internet. I would not trust a pest control company with roaches inhabiting its offices, and I will not trust a government that censors the Internet to tear down any walls against Internet freedom — in China or elsewhere.

The fear was that if this kept happening, the people creating works of art would tire of creating culture and seeing others profit while getting nothing for themselves (a reasonable assumption), so copyright was introduced, giving authors an unlimited right to association with their works and a limited economical exclusivity with regards to production and distribution. This would make sure middlemen would not be a problem in the production of culture.

Sadly, in this exclusivity now appears an effect that goes in the direct opposite direction related to the original intent. To explain what I mean, let’s discuss something of high cultural value — commercials. Leading up to the fifth season of The Deadliest Catch, Discovery Channel created a trailer. A music and sound design studio called Musikvergnuegen were hired to create a soundtrack for the trailer.

The trailer aired, and something somewhat unusual happened: People heard the music and rushed to the TV in order to see what it was about. On Musikvergnuegen’s blog, under a fairly short and simple post about the trailer, people started gathering in the comment fields with fantastic stories about how they reacted to the music.

Let me tell you my story of this song. I wasnt even in my house but i heard this music come through the surround sound so i darted inside to find out it was a commercial for my favorite show. But wut really mattered was this music. The celtic sailor feel and sorrow filled sound makes this one of the best pieces of music ive ever heard.

The blog post has more than 40 comments, with people asking that the song be released somewhere so they can buy it and listen to it. Several other blogs have called attention to the music and linked to the post on Musikvergnuegen’s blog.

The studio appreciate all the attention, but answer that sadly Discovery owns the rights to the soundtrack, and that  because of that they can’t sell it. Instead, they’ve mailed Discovery, and urge others to do the same. The only problem is that Discovery doesn’t reply.

So, here’s a middleman blocking the flow of culture between the author and the consumers, stopping the people from getting the culture they desire. Recognize this problem? This saga ends on a slightly upwards note, as Musikvergnuegen takes matters into their own hands and add the music to their demo reel, which means it’s now possible to stream it from their web site.

Another example of the same kind of cultural blockage is how music giant Universal let its lawyers loose a few weeks ago to prevent the performance of a theater play at the City Theater in Stockholm. Not, as you may have thought, because they hadn’t paid for it, but because Universal wanted even more money for it, claiming the music was a central theme in the play. However, it turns out the author of the songs in question, Paul Simon, doesn’t agree with the middleman that the play should not be performed.

Abandoned Goods

A similar development has been in effect when it comes to computer games for a long time (and here it’s even more clear). The whole concept “Abandonware” exists to denote older games which are no longer on the market. There are websites that specialize in catering to people feeling nostalgic about games. As with many other kinds of culture, there are a whole lot of people who long for the good old days — the older games have a higher level of quality, they claim. Others still just want the ability to play “the classics” — just like there are classic books and movies there are classic games… the difference is that you can’t get the classic games anymore.

The fact that games can’t be bought doesn’t mean the copyright on them has expired, however. The rights to various games and game intellectual properties are bought and sold between different companies and often you’ll find the rights to games far away from the people who originally created the games after a studio closed its doors.

The fact that they’re no longer selling the games doesn’t prevent companies from having a go at web sites providing Abandonware. Sometimes, whole web sites are the targets of attempted shutdowns by lawyer, at other times, only certain games are targeted and removed. But the games themselves are not sold, so the people who wanted to play them are left empty-handed.

Sometimes, people get so desperate for their old, lost games that they even gather up the people needed to form a team and go through the enormous effort of creating a remake of their classic game of choice, only to be shut down by the rights holder.

There has been a long debate about this in gaming circles, sometimes with thunderous accusations from big games companies. People who download abandonware are called pirates, and blamed for some form of loss of income, even more absurd than the normal kind of calculations.

The Upper Hand of the Middle Man

In addition to all the problems outlined above, the cost for both creation and distribution has brought back something a situation which is very similar to the world before the introduction of copyright: middlemen dictate the conditions they like and grab large parts of the pie, since the authors are so completely dependent on the chain of distribution. In these negotiations, one side has sharp lawyers with years of experience of writing contracts, fine print and cost vs revenue calculations. On the other side are inexperienced, often young talented authors with no experience of writing or even reading contracts.

The imbalance becomes extremely obvious in the average record contract. In normal venture capital business, investors come in with capital, taking a risk with that money in exchange for a slice of profit if the gamble plays out (highly simplified). This state of affairs is a quite reasonable starting point. Looking at the music industry, their standard contract is very different from this — it is more like a loan than an investment… but a loan that turns into an investment once repaid.

Let me explain. The musician or band gets money for recording an album, creating a video and other needed things. The album is released, and all the profits go directly into the record label’s pockets until the entire loan has been repaid. Only then does the artist get a first dollar for his or her hard work. At a glance, this seems incredibly skewed, and it’s just as skewed as it seems. If things had ended there, it would have been outrageous but somewhat real, but that’s not where it ends. In addition to these expenses, there needs to be marketing for the artist. Reasonable proposition if you want to sell the album, but the marketing money also comes out of the “loan” to the artist. Only it’s the label that controls the marketing spend.

So the standard contract is a shared partnership where all the risk is held by one part. In a normal start-up business, this situation would be interpreted as the artist talent and work having no value  at all (and thus should have no part of the income). Add to that the fact that the labels have binding contracts for the artists, but are free to pick and choose how they want to act themselves, and we’ve ended up incredibly far from the original intention of copyright. Let me explain further with two examples:

The New York-based band October Project created some beautiful (but hard to classify) songs during the 90s. They released two albums that were quite successful. Then, without a warning or official explanation, the record label terminated the contract, which killed the band. Two of the band’s founding members went on to start the “November Project”, a band which collected all the money they needed for their recordings themselves, directly from the fans on the Internet. On the homepage for the band, founder Emil Adler urged the fans not to buy the October Project records — “Not a single penny goes to the band”, he wrote. Not a penny, even though one of the albums had hit top-50 in the US.

Another band, Splashdown from Massachusetts, looked to have a bright future. They signed a contract with a child label for Capitol records and released an EP, which quickly sold out. The band made a song on the soundtrack for the movie Titan AE, and expectations were high. They recorded a new album, “Blueshift”. Once done, the label decides not to release the album. After a long fight with the label and because of the fear that Capitol would own any future songs, the band chose to call it quits.

Authors giving up on creating new culture because of middleman behavior was exactly what copyright laws was supposed to prevent in the first place! Something is wrong here. Instead of acting as a guarantee for the flow of culture into society, the effect is a draining of culture.

It’s Broken, Fix It!

There are already political forces in parts of the world that are growing stronger campaigning for a reformed copyright. In Europe, the Swedish Pirate Party has won a seat in the European Parliament. The German counterpart looks to be going strong in the coming elections for the national parliament. Support for both parties is extremely high among young voters.

Taken to its edge, you really could wonder about why the rights to works of art should be something that can be bought and sold at all. There seem to be plenty of problems that would go away if an author could never sell the actual right to their works.

There seems to be some very simple things to do though. Digital distribution has brought down costs of distribution by several orders of magnitude. This somewhat breaks the hold the middlemen have over the market, but there is still something of a monopolized market. Things are starting to change, but what is needed is a much more direct approach, fans meeting artists, players meeting developers directly. This has already started happening more and more in the computer games industry, and I believe we’ll see much more of it from musicians in the future.

Another thing with the Internet is that there is never any really good reason to stop selling something. Put all vintage titles you own the rights to online for a small fee. Even a fee of $5 or even $1 per game means a horde of people would buy them, and it would make you a whole lot of more money than any amount of lawyers sent hunting abandonware sites. Oh, and while you’re at it, skip the DRM. The new market is on the consumers’ terms, and with a direct connection to fans comes the responsibility of treating them like customers, rather than potential thieves.

“Dear Mr. Record Label Executive, let me tell you something. You should listen to me, because I can tell you why it’s all wrong now. I can tell you how it all went wrong, when it went wrong and what effect it has on the world today. I am the messenger of the future.”

“Who are you?” said Mr. Record Label Executive, clearly not used to being in this position. “And how did you get into my office?”

“That is of no importance,” the man answered. “You can call me Lime, if you need something in the way of a name. What is important is my message. Your problem is that the youth refuse to buy your records. They download them, file share them, and refuse to pay. Correct?”

Confused, Mr. Record Label Executive nodded.

“People have been asking for paid download services for a decade, yet you were too afraid to let them have it — afraid they would just file share the downloaded music — so you gave them nothing.”

“Ah, but we created…“, Mr. R. L. E. started.

“Nothing of sufficient quality“, the enigmatic Lime cut him off. “You gave them nothing that could match what they sought. So they kept downloading, they kept file sharing. For free, because that was the only available way.

“It went on for a long time like this. Kids grew up, who’d never bought a CD in their life. They too started file sharing. For free, illegally.”

By now, the man in the luxury leather armchair was leaning forwards over his large mahogany desk, nodding.

Lime impatiently paced the room. “You see, there’s a new generation out there, who’s always downloaded music for free, because there were never any legal paid download services out there to download from. Don’t you see what you’ve created? A whole generation who’s never paid a dime for music, who has been taught that music is free, without value. You taught them.”

“Now wait a minute! How can they think they can just steal the music artists have put so much effort into?” Mr R L E protested.

“They’re not stealing anything. You never gave them options, so they all learned that music was free. You taught a whole generation that music and other entertainment had no value. That is when it all went wrong!” He paused to look at the stricken man before continuing, “as you hunt them now for what they feel is natural and right, all they feel towards you is disgust, fear and anger for your greed. Imagine, all those millions of potential customers out there who are now lost to you because you didn’t take the chance of selling them what they wanted, out of the fear of what might happen if you did.

“Now they’re a million very angry people instead, who want only to see your empire crumble.”

Mr R. L. E stared at him aghast as the realization dawned. They looked at each others in silence for a while.

“I see that you understand,” the mysterious man finally said and headed for the door. “Millions of angry people,” he repeated. As he closed it behind him, he added, “and now you’ve given them martyrs.”

The three guys from the pirate bay, and their internet co-location and bandwidth provider were sentenced to one year in prison and a total of 30 million SEK of damages today. Whatever you think about the pirate bay, the sentencing of their internet provider is nothing short of incompetency from the Swedish court.

But let’s put that aside for a moment.

Let’s just look at the costs and benefits. These guys now have to pay 30M SEK for their sins of building a search engine. Let’s put that into perspective, shall we? 30M SEK is (with today’s exchange rate) €2,680,246. Contrast this with the spendings of the industry: 75M Pounds is what the record industry spends each year hunting pirates, apparently (only the record industry… who knows what the international movie associations’ and games associations’ and writers’ associations are spending…). With today’s exchange rate, that’s €81,466,099.

That means it’d require 30 such spectacularly unpopular court cases against major file sharing sites won just to win back the costs spent on hunting pirates. Really, who is it that thinks this is a good idea?

In other news, if you’re going to pirate a game, please do it off the ‘net and where it wont hurt the companies that tries to support it for the people who buy games. If you pirate a game and then try to get support for it, you’re a real asshole.

It changed not because the trial is less political than expected (or less spectacular, indeed), but because of the involvement of the industry I work in, and because of the way it’s being conducted in our names. It’s become increasingly clear to me that not only the outcome of this trial but also its very existence affects me, regardless of my choices. To explain my view on it, let me begin with some background.

The games industry has had its own battle against piracy, very separate from the other parts of the entertainment industry (Music and Movies) — our very nature is that we’re an interactive media, which differentiates us from them. The grander the interaction, the harder it becomes to do any meaningful piracy, to the extreme of online-only games and MMOs, where piracy of the game client is almost to be considered helpful.

With the emergence of the Internet, the games industry quickly picked up on the budding culture of participation that was thriving with the new possibilities — “user-generated content” as it’s so nicely called nowadays started appearing as level editors and levels for Doom, mods for Battlefield 1942 and Half Life. At first, the unexpected creativity shocked everyone, but then it was all embraced by the game studios and eventually turned into the massive support systems for user-generated content that today exist in games like LittleBigPlanet and the Trackmania games series (awesome games by the way).

Today, there’s basically two problems for the industry (well, winning the “simplification of the year” award here, but anyway): piracy for PC titles, and used game sales for Console titles. Yet if you listen to the internal dialogue in the industry (at least my part of it), the talk about what to do about this is not about punishment, it’s about new business models, and about providing more value for owners of original game copies, like giving away free stuff. I can guarantee that you’ll see more of that in the future.

Contrast this with the Music and Movie industries, who have been happily strolling along with the “shove it down their throat” business model until now. With a tight grasp of the market, distributors have been able to pocket most of the money, sending only spare change to the people doing the actual creative work.

With that background, I find it extremely strange how there are computer games in the list for the trial. It gets even weirder, in that World of Warcraft is one of them. So, one of the games that’s the very poster child for the new business models I mentioned above, that give away their game client on free trial discs, is a part of a lawsuit against a piracy site? Wait, what?

Why does this happen? Simply put: because the studio is one step removed from the publisher, and the publisher is one step from these umbrella lobby organizations. The end result is that the people doing these lawsuits are pretty much lost when it comes to the material they’re representing — they have absolutely nothing to do with its creation. The middle man is behind lawsuits, because the middle man is being cut out in the new world with a new economy, and more of the money is starting to flow directly to games studios, directly to musicians.

The behavior of the industry lawyers in the court has been nothing short of disgusting. With no actual case, they’ve spent the entire sessions trying to discredit the professors who have taken the witness stand, acting like an IFPI lawyer was qualified to pass judgment on who’s fit to be a professor and who’s not. They’re so eager to hide facts that don’t fit into their outdated view of the world that they don’t even realize that not only is it an insult to the Professor in question, it’s also an insult to the entire academic world and everyone who’s had a hand in reviewing and publishing his papers.

I’m proud that I’m part of the sector of the industry that is trying to move with the times rather than ride the lawsuits all the way to the end. I’d like to be able to say that I’m proud that my studio’s products aren’t on the list for that lawsuit — but sadly I think it’s just a question of random selection.

In the end, even if we aren’t associated directly with the lawsuit, we’re funding these organizations and we’re indirectly connected to it by our very profession, and treating people that way is nothing short of a marketing disaster. With the amount of money we spend getting games out there, not having the process sabotaged by a public backlash should be priority.

My conclusion is that it’s time to sever the connections and publicly distance ourselves from anything even remotely to do with suing our customers, and go back to working together with the gamers out there on the net. We have nothing to win in court, and nothing to lose in the market.

The mountain of flowers sent to professor Roger Wallis and his wife by (and paid for by) people following the trial on the net shows how deeply people care (and are obviously willing to pay for things they care about). I’d rather recruit this unprecedented movement of creative energy than die slowly of starvation like the likes of IFPI are going to. After all, there’s only so many years you can spend 75 Million Pounds on jailing your customers — if you somehow don’t run out of money I’ll guarantee you’ll run out of customers.

If you’re interested in the trial, check out the Wired article series or follow #spectrial on twitter.

The “radiohead experiment” was a failure. Read this article: http://www.comscore.com/press/release.asp?press=1883 Basically most people freeloaded and paid either nothing or next to nothing for the music. Radiohead still made some money out of it, but way less than they could have via normal commercial channels.

This is a very interesting point, and the article is a good read, yet there are a few things to note here if you want to interprete it as a “failure”…

What we know from their data is that about 2 out of 5 people who downloaded the album paid for it. In the model they tried, people were invited to determine what price they thought was reasonable, so different prices were paid by different people. So the assertion that HomerJ makes is that they made less money from this than they would have from normal sales.

Before drawing any conclusions from this, let’s do the math: With an average of 40% of everyone paying $6, the number needed who would actually buy the album at normal download cost ($8) is 30% for a break even. Now there was a whole lot of attention in the media about this, so it’s pretty certain that a fair few people downloaded it just out of curiosity… that’s the whole point, isn’t it? And if a few of these people liked it, and paid for it, that would otherwise not have bought the album. Also, some of the people who paid less for the album may not have bought it at all, while the people who paid more would of course only have paid $8 for it.

So in order to declare this experiment a success or failure, you have to take into account all the above factors in order to determine whether the amount of people who would also have bought the album for $8 if it had not been available for free download is more than 30% of those that downloaded it. The answer is in no way obvious, so I’m not going to claim to know it… but claiming it as a failure only on the basis of that study is a leap of faith, rather than a logical deduction.

Essentially, this comes down to something I’ve written about before as well: it’s time to overcome the primal reaction of feeling let down by someone “taking my stuff” — what matters is not how many percent of all people freeload, but how much income there was as an end result.

HomerJ also commented:

I can ignore a study when it says that it is based on surveys. I don’t need to disprove it because the underlying methodology is known to be too faulty and biased for usage. Of course pirates don’t particularly care, they’re happy to use anything to support their freeloading.

Ah, of course… anyone who thinks this way only does so to support their freeloading, to justify their piracy. It may suffocate the discussion, but really does it ever win anyone over, or convince anyone? Intimidation is unlikely to get you customers.

It’s a discussion where one side inevitably calls the other side names — which really is quite a curious fenomenon. I’m happy to discuss the facts, research, ideas and to hear arguments… but I’m not happy to be called a criminal whos only motivation is to justify my own criminal behaviour (which it’s taken for granted that I have), when talking about broader ideological issues. I may not agree with someone, but calling them a thief or criminal because of their opinion isn’t likely to help either of us.

It’s a somewhat slippery slope of debating that shows in all parts of copyright and piracy debates… some opinions are simply considered illegal even to express, or at the very least the only reason to have said opinions is that you’re a criminal. I find that highly dangerous even in the broader sense that it threatens the very democratic foundations we build our nations on… In the words of Voltaire, “I do not agree with your opinion, but I would fight to the death for your right to express it“.

And as noted, I already make my living from copyrighted works, in a business hit extremely hard by piracy.

So, earlier this week the news hit of a dutch study performed by the researchers at TNO on behalf of the Dutch government, showing among other things that people that do illegal file sharing in general buy more entertainment media than those who don’t. A good summary of it is available over at MarketingVOX. A similar study was been done before by the Canadian government and concluded that there was a positive effect from the illegal downloading of music.

Looking at sales, the album that sold the most on downloads last year was Nine Inch Nails’ Ghosts, even though it was given away for free. And recently, Monthy Python sales on Amazon spiked by 23,000% as all of their material became available for free on youtube.

So there are two interesting questions that come out of this research… first of all, the big music businesses aren’t stupid when it comes to making money, usually, so how come they’re ignoring this research? And second, why is the PC games sector being killed by piracy if this is true — shouldn’t it apply to games as well? Or was all of that just a big lie?

The answer to the first question is rather obvious: The big music companies aren’t the ones making money. Their business model is based off a tightly controlled music sector where big hits like Britney Spears are produced over and over by a very small set of producers. They’ve been able to select who gets to release an album for a long time now, and they’ve taken most of the profits from the sales themselves.

Now, in contrast, smaller bands and artists are profiting. The money from Ghosts took a much more direct route from consumers to Trent Reznor, and none of it ever landed in the pockets of EMI or Sony. New talents are emerging through other routes than the record labels. Not strange these companies are trying to stop the flood, but rest asured that the result will only be drenched music industry lawyers. Musicians are freeing themselves from the clutches of big business, and profiting from it.

The second question is more tricky. Are we wrong? Do the people who pirate actually buy more games? No, obviously not as a general case, because we’re losing money on selling PC games, and the industry as a whole is moving away from it. So what’s the difference?

I think one key thing to consider here is the cost of games. The currently high cost of games is a large enough barrier that I’ll think twice about buying something. If I hear a song and fall in love with it, the cost of a download or a CD is low enough that I might buy it impulsively just from that entertainment value. In contrast, I’ve looked at buying Call of Duty this month, thought about it and decided not to on the basis of cost — and yet most of the people we expect to buy our games probably have less money to spend.

Why do games cost so much? With Steam and other digital distribution channels there’s no need to make a DVD, print a manual, make a box and ship it across the world… so the download should be cheaper, right? Of course it should, but enough people still buy games at retailers like GameStop and Game to let them bully the industry. Whenever a company wants to sell a game’s download version cheaper, the retailers step in and say “No, if you do that we wont sell your game” (“so people have a choice” — wait, what?). The sooner you stop buying games at retailers, the sooner we can break this evil lock-in and lower the price of games.

But I don’t think that’s all to it. I think at least part of the issue has to do with replay value. If I download an album from a torrent site, I’ll listen to it for a while, start loving it, and buy it because I’ll still play the album hundreds of times after I bought it. With some games, there’s next to no replay value. The point of “love for game starts” is very close to the point of “game ends”, and thus there’s a very short period in which there’s a high incentive for the player to go and buy the game.

The online portion of games counter this. Comparing the play time of a singleplayer game to a combined SP/MP or a pure multiplayer game, there’s a huge increase in replay value. Sadly, that does nothing to save the singleplayer experience, so the only reasonable way forward is to bring down the cost of games.

Especially as downloads fix another major problem in the process: that games aren’t available to some people at release.

So what’s the conclusion to all of this? Simple: buy your games online, help break the retailers’ stranglehold on the games industry.