Pirates, Perceived Value and Pedantry.

The digital age that we live in has brought us something that we weren’t accustomed to before: desirable products that have no limits on production. All forms of digital media can be reproduced essentially for free, and this leads to their supply being apparently infinite. This doesn’t work well with traditional business models as the normal rules of supply and demand would dictate the price would drop to near nothing if this was the case. What this has led to is a constant arms race between those who wish to profit from the digital age and those that wish to exploit a near limitless resource for their own game. I am of course referring to the pirates, or more accurately copyright infringers.

The reasons that people pirate are as varied as they are numerous, but the common thread I see throughout most of them is that there is an almost zero cost and risk associated with pirating something. When the barrier to entry is so low that almost anyone can get on and get whatever computer software they want for free with very little risk of being caught the perceived value of the product drops dramatically. In essence these pirates view the digital media as being worth a lot less than what it is being sold for commercially, and the risks associated with illegally downloading copyrighted material are small enough to be written off as well.

Most of the mechanisms that have been used thus far to combat piracy have been blunt and ineffective. The most traditional form is a Digital Rights Management (DRM) system which attempts to regulate access to only those who have purchased a copy legally. In all my years of working in IT I have not seen one program that has managed to resist the efforts to break its DRM, with the record standing at a mere 2 weeks if memory serves me. Personally when I pay for a game or application that dares to throw more then the most basic DRM at me I do feel like I’m being treated like a criminal for doing the right thing, whilst the pirates get away without having to worry about it.

However, despite all this bellyaching there are a few glimmers of hope. Stardock made headlines late last year for releasing a Gamer’s Bill of Rights outlining what they believe to be 10 rules that all game development companies should adhere to. In essence it was all about improving the value of the product for the customer, I.E the ones who are actually paying for the software. Whilst there has been no solid research done thus far into how DRM systems affect sales (although historically any draconian DRM scheme is met with strong customer disatisfaction) it comes as common sense that if people percieve the value of a product higher when they get it for free then you’re doing something wrong.

You can then understand my excitement when I saw Ubisoft talking about how they are going to combat piracy:

“Altogether on console, the piracy is low,” Guillemot said. “On the PC the piracy is quite a lot. We are working on a tool that would allow us to decrease that on the PC starting next year and probably one game this year.”

Guillemot didn’t say what that solution would be, but it since he talked about it as if it were a new tool and not an existing form of digital rights management, like SecuRom, it stands to reason that it may be an internal solution.

The topic of piracy came up during Ubisoft‘s quarterly earnings call after Guillemot pointed to it as part of the reason that their DS games haven’t been selling well.

He said that piracy on Nintendo’s DS is strong, though oddly not as bad on the DSi, and that the company has learned that they can reduce the impact of illegal copies of the game by including physical extras like figurines, with their titles.

This is exactly the way they should combat piracy. Improving the value of a store bought copy through things the pirates can’t get their hands on and duplicate is what will draw people away from the world of pirated software. History has shown that DRM is ineffective in preventing people from obtaining a product they want for free and recent forays into reducing the price (hence increasing perceived value) have worked to increase total sales.

With 2 of the big names starting to come around perhaps soon we’ll be rid of the DRM bugbear.

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