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The Evilness Behind Piracy

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By NeonAnderson08-01-2013

Internet piracy... a term that evokes a great deal of emotions and reactions for all sorts of different people involved in the video game industry. It does not matter who you are: a consumer, a video game developer, publisher, or even a pirate – the issue of piracy will affect each and every one of these people in different ways, either directly or indirectly. The focus of this article is to share some of the knowledge I have gained through a recent management related assignment at my university. In the literature-based research, I made some shocking discoveries about the issue of internet piracy that I think most everyone who will read this will never have been able to imagine.

So what is internet piracy? Fortunately, every single book and author on the topic seems to agree (more or less) on what internet piracy is: the downloading or purchasing of illegal (non-official) copies of copyrighted material. This material can be video games, movies, music, and books. While the definition of internet piracy is clear-cut, where the controversy arises is in two specific places. Namely, why people pirate copyrighted material and what the impact is of said piracy.

Guillemot, the face of an anti-piratist

Guillemot, the face of an anti-piratist

Big companies such as Apple, Ubisoft, Microsoft, EA, Valve, etc, all have different views on how piracy affects them and influences consumers. Take Ubisoft for example, they cannot make up their mind about piracy. They say one thing, taking a certain path to combat piracy, then suddenly decide to drop that path for a few months - before going back more severely to the original route they decided to drop. It is almost as if the management in Ubisoft have a big board in their management boardroom, in which they toss a headless chicken and see where it stops. Their most recent statements and video games have been made with the viewpoint that piracy is completely bad and is fully the fault of “evil” consumers who want to get out of paying money. As Guillemot (CEO of Ubisoft) himself has stated, “On PC it's only around five to seven per cent of the players who pay for F2P, but normally on PC it's only about five to seven per cent who pay anyway, the rest is pirated”.

Reading the statement by Guillemot, it became clear that Ubisoft was getting this number from somewhere, so more research was needed on this. Eventually I managed to find the source myself and that is when bricks were shat. It turns out there is a big alliance between the largest software companies in the world called the BSA, whose mission statement is “BSA’s global mission is to promote a long-term legislative and legal environment in which the industry can prosper and to provide a unified voice for its members around the world.” On that same page they also have a bit about piracy and the first thing it says is “Software piracy negatively impacts software publishers, creates unfair competition for legitimate companies, damages brands through distribution of substandard products, and exposes customers to a range of IT risks including security breaches and data loss.”

Oh, the much feared FBI warning that causes pirates to tremble...

Oh, the much feared FBI warning that causes pirates to tremble...

So how does the BSA relate to Ubisoft then? The BSA is a non-profit alliance between 30 different global software companies including Apple, Microsoft, Adobe, AVG and many more well known names. This organisation is part of who was responsible for the American “SOPA” (Stop Online Piracy Act) legislation. In addition to this, the BSA also provides consulting services to software firms who seek it. It is here that Ubisoft got these piracy figures from, the way to identify it is within this booklet available here, which explains terms and formulas created by the BSA including something called the “piracy rate” this term also comes back in Guillemot’s speech.

Can it really be true then? With such big software firms behind the BSA, surely they have reliable statistics? It is well worth reading the full booklet from the BSA that explains the piracy rate and how they calculate it. However I will be kind enough to point out the key things from the booklet. Firstly, the piracy rate itself is based on a calculation which is based on another calculation which is loosely based on real sales figures, but even here there is a lot of silliness involved with coming to the actual sales figures. The formula makes a lot of big assumptions and can easily bend the actual figures, it is not worth going into too much detail here as to the obvious flaws in these formulas as they were probably created through years of supposed studies by PhD and Master certificated professors and researchers. Instead, it is far easier to take these numbers and apply them with factual knowledge.

The hero of the gaming industry, Gabe Newell, to the rescue!

The hero of the gaming industry, Gabe Newell, to the rescue!

According to the BSA booklet, Russia has a 70 to 75 percent Piracy Rate, the blame of this is placed on poor laws and control and it even says outright that countries like Russia are “home to rampant piracy”. Thus it would be impossible to sell any legal software in those regions. Yet Valve has brought Steam to Eastern Europe, including Russia and Gabe himself has stated  that “prior to entering the Russian market, we were told that Russia was a waste of time because everyone would pirate our products. Russia is now about to become our largest market in Europe.” So how is it that a country with 70 to 75 percent Piracy Rates is vastly becoming Steam’s number one market? If the BSA research were correct, then Steam would have been met with massive failure in the Russian market. Thus, the BSA research is invalid as a theory and statistical formula has to be applicable in all situations, unless clearly stated in the research itself that the theory cannot be applied to those specific situations along with a valid reason for this.

Giving BSA the benefit of the doubt, I used the full capabilities of my research skills to find any and all empirical research that would prove that the BSA is correct. However, I was completely unable to find any. Instead what I found was a long list of research performed on various parts of the entertainment industry regarding the usage of DRM and the impact it has on consumers. While sadly none of these can be linked directly here, I can provide the author’s names and the year of publication; these can then be put in Google scholar to find previews of the papers I found (ironically papers saying DRM is bad, have DRM in them). The first source that promotes a DRM free environment is Matt Mason (2008), his book “The Pirate’s Dilemma” can be downloaded for free through his site. In his book he looks at both sides of the piracy debate along with research performed in the area. He concludes that consumers are more likely to purchase software if it is DRM free and provided at the quality and price point consumers want. In addition to this book, I also found multiple research papers that examine the applications of DRM on music. One such paper is by Rajiv K Sinha, Fernando S Machado, and Collin Sellman (2010), for their paper they conducted research in America on 2000 college students to discover if DRM increases or decreases sales. The result of their research was that DRM was promoting piracy while decreasing sales. In this same research, they also discovered that the majority of the 2000 college students would purchase all their music if it were provided DRM free.

Attack of the pirates!

Attack of the pirates!

Another study by Brett Danaher, Samita Dhanasobhon, Michael D Smith and Rahul Telang (2010) found similar interesting facts in their research. For their research they examined if the piracy of NBC shows would go up or down due to the removal of NBC shows from the iTunes store. This happened after disagreements between Apple and NBC regarding the decision for iTunes to go DRM free. NBC felt that this would cause more piracy of their shows and thus decided it would be better to remove their shows completely from iTunes. For this study they collected data from Amazon and Mininova. From the data and research they performed, there was a noticeable decrease in the sales of NBC shows (even on Amazon) while the number of times their shows were downloaded through torrents skyrocketed. This links directly in to what Gabe Newell has stressed repeatedly, that piracy is not a cause but an effect. As Gabe Newell states “In general, we think there is a fundamental misconception about piracy. Piracy is almost always a service problem and not a pricing problem. For example, if a pirate offers a product anywhere in the world, 24 x 7, downloadable from the convenience of your personal computer, and the legal provider says the product is region-locked, will come to your country 3 months after the US release, and can only be purchased at a brick and mortar store, then the pirate's service is more valuable. Most DRM solutions diminish the value of the product by either directly restricting a customer’s use or by creating uncertainty.”

With this much empirical evidence and this many industry experts, one important question becomes clear: Why do companies still refuse to increase their sales and profits by reducing piracy through improved service quality and the removal of DRM in games? To this question I am afraid no one can provide an answer, people can only make large assumptions and theories as to why companies would want to hurt their own sales and decrease their profits. As there can be no possible reason for a company to take actions and important business decisions that lead to decreased revenue and profits, possibly even losses.

With that in mind, I will leave everyone with one last statement by EA “Piracy Can Help Us Sell More Games”.


Comments (8)
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Posts: 20

I agree with Gabe that piracy is an effect and not a cause. In today's market the phrase "the customer is always right" has never been more true. With the internet consumers can do infinitely more research on a product than they could before. they can read other customer reviews on the product, see the history of the company and their statements, and make a far more educated decision on their purchases. Companies who fail to realize this waste time, money, and man power on selling a false image of themselves that the internet can see through, then remember. If the company tries again, it'll only backfire. It is no longer a one-way street. Companies NEED to listen to their customers for feedback. The game is changing. The quicker companies realize it, the better off they'll be. Otherwise they won't be around anymore, just like their old business model they cling to.

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Posts: 45

I don't know what happened before Extermination so no harm done I guess. I'll just say I haven't pirated as an attempt to solve the problem or protest I did it to play the games which I wasn't willing to pay for because of you know what, however that doesn't mean I don't do anything else about it, I've actually writen to ubisoft before about this in their forums letting them know in other words that if they don't give a shit about me I don't have any moral problems about not giving a shit about them and actually what happened is that I was banned and the thread probably deleted which confirms what Neon just said.

I've completely lost faith in most big publishers, any money I could send their way will be much better spend supporting gog and other alternatives and don't think I'm just speaking from the outside I've just started working on a game a couple of months ago as a modeler, a free game as a matter of fact with no strings attached.

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Posts: 593

Didn't mean to make you look like a fool. Just an issue that has angered me for many many years. So I have been keeping an eye on it and even trying to press the issue with these companies. Thus how I actually found out that the threads are ignored, removed and or banned. These companies just have strict no DRM and no piracy talk rules on their forums. Besides, presuming you could get a company to listen, these massive gaming companies have no long-term. Everything is short-term as once the next CEO comes in and the old one is out, everything changes again. Not even Blizzard is immune to this anymore, now that they have grown so big after World of Warcraft and merging with Activision. Honestly though, I don't know what it would take to get these big companies to listen and then keep listening. As a personal note though I keep myself to a strict no buy, no play rule. Meaning I either buy a game legally or I never play it. This way at least I get to keep myself on the moral high ground when I say I boycott a product or service.

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Posts: 22

@Neon, thanks man. Ouch well now I look like a fool. I apologize Ryo then but still I wish it were true that we had some sort of way to make these companies acknowledge that they're destroying parts of their communities with these restricting business concepts. Thanks though Neon for the info I never knew that.

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Posts: 593

@Extermination, I deleted your accident for you, hope you don't mind :P As for what you say, I think now would be a great time for me to direct you to the official Ubisoft and EA forums. Any and all threads regarding DRM have either been ignored, closed down or deleted. EA and Ubi do not want to hear about their DRM, not all companies are like Valve and thus willing to make changes to their business model due to consumer feedback. Thus the only way around a DRM is piracy, and this is also what the Rajiv study found with the music industry as well. Fortunately, one company was listening - Apple, and managed to make the right decision to remove DRM from their music. I just hope eventually companies like EA and Ubisoft also begin to listen, instead of deleting and banning anyone who dares to say anything negative about their DRM on their official forums.

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Posts: 22

Whoops, made an accident down there. @Ryo instead of just simply pirating something which to me makes zero effort into trying to solve the issue why not as I stated try to solve the issue? Bring it to their attention, in the long run I believe it helps. I'm not saying they're going to throw away any sort of system to try to deter piracy, but they'll improve it which is a helluva lot better than stagnating and letting them continue to go on the wrong path. I never understood why people would just have it one way, work around an issue, and not try to fix it.

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Posts: 593

Yeah, that would put you right in line with the study by Rajiv K Sinha, etc... that discovered that DRM was deterring otherwise paying customers from paying. They did not even take into consideration whether or not it increases or decreases the number of illegal downloads. All they did is look at sales data and perform different methods of research on those 2000 college students to see how consumers react to DRM on music. While I personally buy all my games, though only if they are on Steam or have Steamworks. If I find a game is out of my budget or too expensive I wait for a Steam sale. But this trend was not always like this for me, it is Valve that put me in this trend with their shockingly good sales and non-stop great service. I just click download and after an hour or less I can play already - no hassle, no finding separate updates, nothing. It is just ready to go. Service at the price I want without having to go through the process of installing and activating 9000 different DRMs (like I had to when I played Anno 2070, god, that was a hassle. 3 or 4 different DRMs, just utter and complete insanity).

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Posts: 45

Very nice article I feel compelled to say that copyrights are a bunch of crap now before the common knee jerk reaction this doesn't mean I support piracy or non piracy for that matter I believe people should support companies who provide a good service and have good policies and that's exactly what I do, I think games with intrusive DRMs ie anything beyond steam like activation shouldn't be bought and even that should be avoided but everything else should be supported as much as possible. Last ubisoft game I bought was prince of persia 2008 fully drm free boxed at release price, after that I just pirated everything I won't support a company that wants to have that level of control over the content I buy, doesn't matter if they say I'm buying a licence to play or whatever legal bullshit they come up with, if I buy a game it has to be my game under my control.