Tobold's Blog
Friday, November 16, 2012

The Id DM has a brilliant post up about non-ownership. What I found particularly interesting there was the implied slippery slope from owning physical goods to renting virtual goods to stealing virtual goods. If "ownership increases perceived value to us", and companies insist on only renting stuff to us instead of selling it to us, we perceive the value to be lower, and thus feel less guilty if we pirate the content. We perceive stealing a physical CD as being a crime, but downloading the same CD as just a minor naughtiness; but in fact the part of the cost of the physical item in the price of a CD in a shop is actually rather small; there is very little difference in damage caused between stealing the physical item and the digital item.

On the other hand I believe that there is a difference in value between a physical game and a digital game which isn't just psychological. I repeatedly encountered the situation this year when various games were up to 50% more expensive in the digital pre-order form than in the physical form I bought on release day. Some game companies apparently expected me to pay up to 20 bucks for 3 days of early access. I would assume there is more cost involved in physical distribution, and a retail shop takes a bigger cut than a digital platform, so realistically digital games could cost me less than physical ones. But here in Europe the situation is often reversed, with the digital distribution platforms having a 1$ = 1€ exchange rate policy, while the retail shops have the real exchange rate and thus end up being a lot cheaper.

For that and other reasons the phenomenon of non-ownership seems to be more prevalent in the USA than in Europe. Here in Europe I can't watch TV shows on iTunes or Amazon or Netflix, they simply aren't on offer. Thus I still buy physical DVDs with those TV shows. If the Id DM is right, I'm getting better perceived value for my money like that.

Price doesn't reflect personal value. If it did you'd have to give everything you own for your first daily liter of water.

Rather, price reflects an equilibrium of supply and demand and one way to increase revenue is price differentiation, which means that the 3-day early access game has another demand/supply equilibrium. (Even though it still competes with the normal version of the game and even other games / free time activities).

Digital download is often more expensive, because at this higher price, revenue is guessed to be optimal for the company.
Honestly if you read anything about marketing, you see that price does not even remotely reflect supply and demand (for digital goods, supply is infinite, so price should tend to zero). So the price ends up being decided more by psychology than economics: for example even if it has zero sales, a high price serves as anchor for the buyers, making the other prices look "cheaper".

You can see this in action with LotRO pricing, which applies the "three level" approach of expensive/cheap/average (there's a lot of literature showing that people tend to go for the average price, independently of the rest, in the absence of the more expensive option, more people would go for the cheap one).

An overpriced digital pre-order has than several effects:
- it does not cost more to the company, and it can bring directly some extra cash, since it's possible that some fan will pick it up even if it's overpriced,
- even if it does not sell, it makes the (relatively high) price of the "normal" version look like a good bargain, driving sales up.

Sounds like win-win to me, which is probably why it's getting adopted a lot.

The problem is mostly the imbalance between the consumers/content owners. The power that a singe author must have over his work, just scales a bit too much when granted to a billion dollar company.

If I want to use somehow a painter's painting I can negotiate a deal by contacting him. If I want to use something from a game I must negotiate with EA. One way to deal with this is to force every non genetically human being owner of copyright to license under FRAND terms. Also reduce copyright to 5 years.
I think the rental clause in MMOs and maybe Amazon or Itunes or whatever is to avoid class action lawsuits in the event of downtime or the game doing under.

If you acknowledge the user has property on your server, you would have class action lawsuits (or at least the theoretical possibility of one) every time you did a gear wipe or Hurricane Sandy deprived them of their property or whatever.

As far as ownership of media goes, it becomes cumbersome after a while. You can either cart a bunch of DVDs and backups around for the rest of your life, or you can sign up for Netflix or your Itunes account. It's just information.
A physical CD is rivalrous. When you steal a CD, you have deprived the owner of the ability to use.

When you copy ideas, or strings of code, you do not deprive the holder of that information from its future use.

Information is non-rivalrous.

I suspect this difference is at the heart of the intuited moral distimction between illegal filesharing, and theft of tangible goods.
When you copy ideas, or strings of code, you do not deprive the holder of that information from its future use.

That is the lame excuse all thieves use. It reveals a complete lack of understanding of what intellectual property is, and how people who create things make money with it.

For example if you invent a wonderful machine, and start producing it to sell it, and somebody else copies your plans and sells your machine for cheaper, he *did* deprive you from using your invention.

The same is true for created content. Once you copied that CD, you are unlikely to buy it afterwards, even if you like the music. I'm not saying that nobody would ever buy the CD after stealing it, or that everybody who stole it would otherwise have bought it. But overall the future income of the maker of the CD is reduced.
Rethink your position.
Tobold, I don't think anyone is arguing that it is okay to take someone's design or idea and redistribute it without permission or compensation.
As far as I know that is exactly what you are doing every time you start up a torrent program.
By insisting someone is a thief you show that you have no idea what a copyright is. The correct term is copyright infringement. You infringe of the state granted monopoly of the copyright holder.

Also when you fire a torrent client you exchange bits, nothing more. And you cannot claim to own a number (dibs on 0, e and pi if you can)

Supply may be infinite for digital goods, but when the price would be determined by that (and tend to 0), supply would always be the same, already existing digital goods since noone would create new stuff.

Im a software developer myself and as a principle pay for any program/product i use. Its old fashioned, i know. I even pay for shareware when i like it, and the creators ask for a donation. I know, its INSANE in this age of entitlement... I always laugh when i see people arguing that the price of a 'digital good' is too high (says who?) and therefore it is A-OK to steal it. Sure.
That actually makes a lot of sense because most people wouldn't shoplift games from their local store but, downloading from TPB isn't that unfathomable.
Tobold, people can download without uploading or at least limit the upload to an insignificant ratio. There are also ways to pirate that don't use bittorrent.
The correct term is copyright infringement.

"Correct" in what context? The day you find yourself in front of a judge, maybe. But in the context of good old-fashioned morals, if you have any idea what that is, you're still just a damn thief.
If I borrowed a CD from somebody, would that make me a thief?

If I taped a song off the radio, am I a thief?

Old-fashioned morals wouldn't have recognized intellectual property. That's why the copyright had to be legislated.

As far as good old fashioned morals go, the music industry was more than happy to strong arm its customers when it had control of the information flow, so I don't feel too bad for them now that the customer has the power. Maybe if they hadn't spent so much time trying to loot teenager's tiny paychecks (by refusing to sell them the single of the song they want, and only offering an $18 cd with one good track and 11 very b-sides) and fighting the future they could have prevented millions of people from becoming acclimated to piracy.

The lesson here is not that there's a bunch of scumbags out there. It's that if your business model is using your control of information to abuse your customers, you'd better hope they never get to turn the tables on you.
In the world of good old-fashioned morals charging interest was theft.

Why are you so attached to the words of theft and stealing? They don't describe the same thing. Maybe they carry the negative emotional context that is needed, but they are not the same action. We need a new term that describes piracy in negative terms, or to just give piracy the properly negative emotional weight.

That is the lame excuse all thieves use. It reveals a complete lack of understanding of what intellectual property is, and how people who create things make money with it.

And this is the lame answer used by all people who don't know what they are talking about. Property and Intellectual Property are completely different, they just don't work the same way and you cannot transfer the reasoning you can do on the first on the second.

In your example, if the creator was selling so high that noone would buy it, the one copying the invention is *NOT* stealing profits from anyone.

And BTW maybe when *YOU* start torrent you pirate stuff, I use it to download linux distributions and WoW updates, so be careful with your lame overgeneralizations.

All your weasel words don't change anything to the basic facts: Somebody is trying to sell a product. If you get that product without paying or the permission of the person selling the product, you are a thief and you rob the seller of some income. Everything else is details and semantics.
By any chance have you changed employer to BREIN soon? Because in the last few years of reading your blog, I notice that you have shown remarkable skills in working and interpreting data and dealing with somewhat subjective matters and being able to distinguish nuances. So taking this absolutist stand is either a very subtle trolling or part of your job description.

Copyright infringement is not theft the same way abortion is not murder. They are different beasts that require different approaches and laws.
I have 47 patents to my name. If there was no protection of intellectual property, not only would I be out of a job, but the world would be 47 inventions poorer. What you people with your sense of entitlement forget is that there are people living of creating intellectual property, and that this intellectual property will not be created if you don't pay these people.
You mean people like software developers - like me? We create only pure IP, nothing more. Patent system is created not to protect you, but to make you disclose how you do something in trade for monopoly for the disclosure. But if I don't care how you achieve something I want the right for clean room invention and implementation. Current patents are so broad that people patent the end result and not the way to achieve it in the US. But that is another can of worms.

You insist that maybe the world will have been 47 inventions short - I doubt it. When people are presented with a set of problems, they tend to find solutions. Maybe a year later. And maybe the world now is short of 47 inventions, because yours blocked some lines of research.

IP laws are created for the benefit of the society. If they don't bring the maximum innovation ( which there is growing body of evidence they are currently not doing with the overly generous and ignorant US patent office) for the least cost for society they must be changed.

IP laws must balance the rights of the creator and the interests of the society. That is why there are usually fair uses and first sale doctrines, although eroding.

Current IP just don't translate good into the digital era - we need new laws, new frameworks and new mental models.

I am mostly a web developer. Which means that i am having no trade secrets - everything is out there for everyone to see and copy. And yet we are still profitable, although we have competition breathing in our necks all the time. We are just better.

It is not a zero sum game.

If you earn your living making IP, then why do you insist that it is your right to pirate the IP of others?

The "I make a game for free and let people give me whatever they feel like" business model might work for one-man efforts like Minecraft. But I don't see how you could produce a multi-million dollar triple-A game with no laws protecting the game from being pirated.
Loaded question. Nice.

I am not insisting on the right to pirate stuff. I am insisting that the current copyright system is broken. And it needs to reform. Now that is one thing. The piracy is a side effect of many factors. Some of it is a basic freeloading, but you can say that regional pricing and other types of discrimination are absurd in the digital age. The consumer of digital content now at this age has no rights whatsoever.

Until the balance is restored, you cannot be serious about eliminating piracy.

And for this you will have to give some rights to the user over the content they purchased. And show some goodwill - like the indie developers are doing.

Until steam has legal blocks that prevent them from closing my account, having a DRM stripped version of any game there that I have bought with my own money is both fair use and good sense.

How is that any different from physical property? The distribution of physical property, or the way companies make money with physical property isn't perfect or completely fair either. And nobody argues that this unfairness should result in a license to steal physical property. So why would imperfection of the sales of digital goods make pirating those goods make acceptable?
How dare the electron be a particle and a wave and unfit for classical physics, when the newton laws do such a great job for describing the thrown ball. Its just not moral.

What you ask is known in the software fields as the law of leaky abstractions. Property is a good abstraction for physical goods, but just breaks down with digital, which just present one freakishly huge number that in certain circumstances can be converted to represent information other than its pure numerical. so if I count from zero to 8*1024*1024*1024*100 (100 GB) I would create every possible blu ray encoded movie ever. How can you price a number?
You should look up the story of the egg of Columbus. There is considerably more involved in creating a game than a sequence of bits.

You price a digital good the same way as you price a physical good: By a combination of what it cost you to create that good (which can be hundreds of millions of dollars for a game), by how many copies you think you will sell, and by how much you think people will pay. Everybody who steals your product messes with that calculation, and if there are enough people stealing instead of buying, the company making digital goods goes out of business and is not making digital goods any more. Gee, thanks, pirates!
You are welcome. If we fling quotes at each other - there is this one "Now We Are All Sons-of-Bitches". Napster was an Trinity moment. The moment it happened we were in a different world. And to solve piracy problems we have to strip some civil liberties or change business models. Seems you prefer the former. i prefer a world where the people'a ability to have root access to their computers and to be able to encrypt and exchange information without fear of tracking is preserved instead of a world where everything is restricted and Avatar makes 2.2 billion instead of 2.1 . Piracy killed that one. And avengers. And Call of something or other. And wow is hurting too - all those pirate servers. Piracy is a non issue - it is a usually a matter of pricing and access. Not of entitlement. The only way I can enjoy some TV shows is via torrent because they refuse to sell them to me.

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