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Valve's Gabe Newell On Piracy: It's Not a Pricing Problem
New submitter silentbrad writes with a followup to our discussion this morning about Ubisoft's claims of overwhelming game piracy. An article at IGN quotes a different point of view from Gabe Newell, CEO of Valve:
"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, purchasable 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 U.S. 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 customers use or by creating uncertainty."
The quote was taken from an interview at The Cambridge Student Online, in which Newell speaks to a few other subjects, such as creating games for multiple platforms and e-sports.
And yet Steam has that USD=Euro conversion and region locked pricing.
I was about to buy a copy of GTA IV on Steam during the sale they've got going. With credit card in hand, I found out in some reviews that the PC version requires Games for Windows Live for saving and installs SecuROM. Dealbreaker right there and I never purchased.
DRM does not stop pirates, they are smart enough to circumvent it, it only annoys legitimate users.
I'd say DRM encourages piracy more than anything. I'd rather a game just work, than having to jump through hoops to make it work. If a game has something like Securom, frankly I'd rather pirate than have to deal with it. DRM never works, it will always be cracked. There's no getting around that fact.
In truth I never like pirating, if a company makes a good game I'm of the opinion that they deserve my money, but sometimes they don't make it easy to take. Dreamfall is a noticeable game I remember, I have the boxed copy which uses a disk check, but thankfully there are loads of DRM-free .exe's the pirates have provided.
here prices are sky right and population's consumption power is not first world, mainly because of taxes that double the game's cost for the consumer. Prices here are not as bad as Australian's as far as I know, but it's the major player into piracy decision making, besides the growing culture of "only dumb people pay for what you can get for free".
This combination doesn`t exist: ETIs that know about humanity and want to see us dead. Otherwise we wouldn't exist.
Except it doesn't discourage piracy at all. It encourages people to break DRM. Sure most people have internet connections, and they are interested in breaking the DRM, they will use that connection to follow the instructions people post online on how to break that DRM.
Having a service problem doesn't mean there isn't a pircing problem as well. The three biggest issues IMO are pricing, service, and respect, although I'm sure other issues play a role as well. However, the respect problem isn't the 'pirates don't respect intellectual property' garbage, but rather, the lack of respect for customers from copyright holders. The FBI warnings on DVDs being a good example of disrespect that only affects those that actually BUY the product.
This is my signature. There are many like it, but this one is mine.
When the pricing of a software package gets to be too outrageous (not in terms of value but simply compared to how much cash one has on hand), then pricing becomes a significant issue as well. For example, a graphical WYSIWYG HTML editor, a graphics editor, a text layout tool, a math package, etc. each for $400 makes it quite difficult to afford the software. Most people are willing to lay down some sizeable dough for one program but, when you need to lay out $400 for your office package and 10 others each of which will need upgrades for $200 in several years it gets to be an investment that is not very workable.
OTOH, if the same software were available 24/7 for immediate download (with no support unless paid for) for a much reduced price -- say $50, the quantities sold will be much higher and the software company can reduce its costs by eliminating Best Buy and a host of other stores that take 50% off the top anyway. Additionally, there is no packaging, manuals, DVDs, etc. that need to be printed / burned nor shipping. The costs for the software company will go down and their sales will go up. I might be even tempted to try software that I wouldn't ordinarily buy simply because the software is not cost prohibitive.
The Apple Appstore is really a good example of this. Yes, the software is underpriced compared to an office package on your office PC but it does drive home that you don't need to charge $40 for a game and you can do it for a $1.00 instead -- a 40 fold price reduction. Oh, yea, Angry Birds has about 500 Million downloads now .... If Photoshop were $10 - $20 and available for instant download, I suspect that Adobe could make a lot more than they do. Especially when they double charge you by printing the "manual" in book form and then your having to buy it from the Last Bookstore in America.....
Make a reasonable price, make easy to pay (paypal?), make easy to buy/download, do not annoy me with DRM or "you must be on to play" and I will buy the game. Is so difficult?
Religion: The greatest weapon of mass destruction of all time
Piracy is a natural response to people who want to "CONTROL". The issue is not about IP, its not about getting something for nothing. Time and time again research, the research generated by the very vendors of IP, says people are happy to pay for something of value. That they simply want what they want the way the want it. It is the unbridled need, addiction to, the control of something that has become the crux of the piracy debate.
The irony is, that by punishing consumers for the fear of being robbed, precipitates the actual robbery. People just ask to get their music, movie or game, simply, easily, and accessibly from any technology they possess. It is the draconian measures which now threaten to destroy (SOPA) the very conduit our collective futures rely on (the Internet), that is a clear extension of the avarice and need to control. These people have enjoyed decades of complete control, allowing an infrastructure of suppliers and middlemen to rape artists at one end and consumers at the other. With the advent of growing technology, old paradigms fail. For these people, the answer is not to learn how to leverage the amazing power of the new technology, but strangle it so they can bring back the bad old days. We need to make it clear to our representatives in no uncertain terms, that the future demands that the internet be free, broad and democratic.
... sorry but pricing is a major issue. How this man cannot say that it is't when games go on sale for 75% off on his site frequently seems ludicrous. The big things effecting modern games are:
1) Game quality
2) DRM
3) Buyers avoiding paying more then $15-20 for DRM laden crap they don't own.
Lots of people avoid buying games entirely because of DRM and low game quality. There are those of us who buy games at extremely deep discounts (5-15$ at most) on steam because of DRM we refuse to pay full price for DRM infested games that we don't own but we do want to support PC developers and have few alternatives since many small developers release on steam.
Gabe has done a lot of marketing to brainwash people and get people to thinking he's a good guy but he's not, if he was the good guy games would deprecate their DRM after a year and the exe's unhooked from steam. The purpose of steam is to datamine users for 'business reasons' and he's putting this massive spin his datamining operation. This means more metrics driven game development as if we didn't have this enough of this alread with the constant clones every year.
Newell said that the "service problems" are the primary problem. He's right.
I will not buy region locked disks precisely because my family lives and works between 3 regions. Region locking is an absolute ripoff, at least for us.
Anywhere in the world, 24 x 7, purchasable from the convenience of your personal computer
Is anything less ever acceptable in this day and age?
Most DRM solutions diminish the value of the product by either directly restricting a customers use or by creating uncertainty."
He's being polite. DRM is mostly a form of defective products and sales fraud.
Price *is* an issue, it needs to be reasonable. But I won't even think about that until *all of the above is out of the way* or your "product" simply doesn't exist to me.
Steam as the only authentification method).
What is his point? That he is a supporter of piracy by making sure the main reasons for it are found on Steam as well?
I don't believe any of these things apply to Valve's own games, other than Steam itself, which is pretty tame as DRM goes. He's only responsible for his own games, not those he sells for others.
Sorry but the only instances of pirated games I have ever seen (and btw didn't download) were cracked versions of a game that could be downloaded for free. I haven't seen a site offering to sell me someone else's game for a fee. I agree its a matter of convenience in a lot of cases - when something cool is out people want access to it now - but I think it must be a much less common thing that people buy the game from a pirate. I have never associated piracy with a separate sale arrangement, just people who want something for free, or simply want it where its not available or (as noted by an Aussie above) its grossly overpriced and people feel ripped off.
The pirates charge less than the game companies. The fact that the price is $0.00 doesn't really matter; you're still paying less than if you bought it legally. If I were to make a bunch of copies of a game disc, and go around handing it out to people and paying them $5 (note, *I'm* paying them to "buy" my product), then I'm selling the game at an even lower price than the pirates. Yes, it would be incredibly stupid to do that, but that's not the point; the point is, just because the customer isn't paying doesn't mean they're not sales. I think Gabe's got it spot-on. In economics terms, the pirates are competition; competition who is selling a better product, more widely available, and cheaper. You can't beat competition like that by crippling your product even further.
I live in Latin America and have the following options for movies/music/games:
1. Get it on DVD from a pirate (approx cost $1) [ILLEGAL]
2. Rent a pirate copy (approx cost $2) [still technically ILLEGAL]
3. Buy it on iTunes (cost $1-$4).. but I can only do this because I've figure out how to get around regional limitations [psuedo-LEGAL]
4. Buying on Netflix/Amazon is not an option [N/A]
5. Going to threater (movies only).. sometimes, when/if it arrives at a timely basis (cost: $4-$5) [LEGAL]
6. Buy the legal DVD (cost: $30-$100) [LEGAL]
As you can see a great option is iTunes/Netflix/Amazon but the industry has systematically cut off those options from us. Also the legal DVDs are sold at much higher prices than in the US.
So do you wonder why there is so much piracy around the world??
There's no viable affordable legal option.
One can refer to piracy as a purchase, as a humorous euphemism. For example: "I just bought the new COD at the Pirate Bay."
Circumcision is child abuse.
DRM stops "casual" pirates (pre-crack) and it increases the R&D cost for serious pirates. Take the PS3 for example: it was not cracked until the removal of Other OS. Increasing the cost of legitimate hacking and made the USB solution more attractive to research. I do not say this in support of DRM, but any counter-argument must be honest in order to succeed. DRM works for certain definitions of "works", and that angle must be addressed head-on rather than brushed aside.
Other people should create art, music, games, films, and entertainment for me as a favor and fund it out of their own pocket.
Not aware of any pirates who want to force or coerce other people into creating things for them for free.
10) Because I have never had to create, develop and market a game and I don't have a clue as to what it takes to run a business.
Never heard anyone use that as an excuse.
12) Pirating something NEVER results in a lost sale. Not even when spread over thousands of people.
Not really aware of any that think that, either (Maybe I'm just not looking hard enough?).
Of course, all pirates are evil little thieves that desire nothing more than to see developers starve. It's almost like how all people who like copyright are corporate shills.
Filthy, filthy copyrapists!
One of the main reasons I'll download a cracked game is to try it out. Nobody releases demos anymore, and you can't trust reviews with all the goddamned shills out there. I did it for SC2, because I didn't know if it would be my thing. Well, sure enough I liked it, and bought it online the next day.
Case in point: Need For Speed - The Run. I knew it was coming from EA Black Box, responsible for all the "wigger" installments of the NFS franchise. Installed, played for about 10 minutes, deleted. Had I paid $70 for it, I would have put it in a box, shit on it, and Fedexed it to Trip Hawkins' home address with the note "Fixed it for you".
So, yes, Gabe is right, 'service" aka availability is a primary issue, and while price itself is not the most important factor, VALUE is. A staggering majority of major-brand games today lack value. They cost more than they're worth. In that sense, NFS The Run held very little value for me, because it's a shit game produced by a cut-rate studio and certainly does not belong in the same price bracket as, say, Skyrim, Arkham City or even F1 2011.
-Billco, Fnarg.com
Corporate suicide is not in the best interest of the shareholders. And if you read the article, (Asking a lot I know) you will find Gabe saying that actually serving your customers IS in the best interest of the shareholders.
No one prospers unless he renders benefit to others.
-- Tadao Yoshida, founder YKK zippers
Almost. It's nice to buy games on steam, but unless there is a sale you pay a premium for games. Take MW3 for example, it costs 59,99€ on Steam and I just ordered it for 43€ with shipping included from a brick and mortar store and that is ass backwards. One would assume that digital distribution would have the potential to be so much cheaper than a physical product, but in Gabe's magical lala land prices are higher and they hardly ever drop at all. While I'm already mentioning MW3, lets look at Black Ops, it still costs 59.99€ on Steam but at the same B&M store I can buy it for 27€ with shipping. There are few real perks for buying the games on Steam, unless you have lots of money to burn and you really want a 'genuine' TF2 item.
I agree completely.
Check this out.... I played bf2 so seriously and competitively that my clan has won a world championship (TGL 8v8). My clan, including me, has been awaiting bf3 for years. It recently came out, and I still don't own it.... they require you dl and install EA's clone of steam and run it alongsde the game, and then the server browser uses an external web browser...... uhhhh.. no.
I won't accept that trash. Game looks awesome, and I very highly anticipated it (having spent thousands of hours on the predecessors)..... but they're asking too much of me. I will pay an extra $5 on the price if that mde them happy, but in truth they want more from me than I'm willing to give.
I know I'm not the only one to hold out.
Let me translate that:
Locks on homes prevent people you don't want from coming in
DRM prevents people from accessing the content
Only problem is... the content providers WANT people accessing the content. Locks on homes are like having a firewall, patched software and some sort of AV software on your computer... the house would work just well without the security add-ons, and so would your computer. The add-ons make it more secure.
With DRM, the entire idea is to prevent access.
Now, a real counter argument is that if people are grabbing pirated copies of the content, there is nothing to prove that the content is still secure and hasn't been monkeyed with by the pirates, to, say, add botnet software, a keylogger, or something else nefarious.
Then again, some of the DRM software includes keylogger and/or botnet-like hooks that the Bad Guys can leverage, so it's probably a wash.
If your home security system only worked when you didn't have a cold, and only worked for some members of your household, or otherwise prevented people with the right to access the home from doing so in an accustomed manner, you'd find that security feature hobbled in some manner pretty quickly. Then you get the appearance of security without the benefit... just like with DRM.
Business models aren't even that much of a factor. A trivial case in point -- there are lots of cult TV programs out on DVD in Britain that cannot be obtained anywhere else because of region locking and formatting -- and will never be made available anywhere else. That is not a business model, unless bleeding small markets dry then deliberately killing them is a business model. To me, that's simple perversity.
The US is more... interesting... in that respect. Disney, for example, have released DVDs of some of their US television shows ONLY overseas and not within the US at all (or, when they have, only under extreme pressure and half a decade after everywhere else). Again, what kind of business model is that? It's a blatant attempt to kill a market, which is no business practice I am willing to recognize as a model of anything (except perhaps a Death Star).
It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)
From my personal experience, I'd say piracy is a pricing AND a service problem. During my student years, I pirated almost every game except a select few I absolutely wanted to have. 50€ was alot of money for me, and downloading something from the internet was more comfortable than getting a copy from a store and sticking the CD in every time I wanted to play. I didn't have Steam back then.
Now I'm using Steam and have a job. I've probably spent around 200-300€ on games this year, taking up many of the special discount offers on Steam, even buying games "legit" that I have pirated CDs lying around. Steam makes it easy, and now that I have the money, I don't think twice about spending 20€ on a game every month or so. From this experience I'd say that piracy has nothing todo with greed, bad intent or trickery. It's just plain lazyness and circumstance. And DRM is a waste of time that only makes things worse for paying customers.
But Jesus was the first pirate. He "copied" bread and fish for tons of people who wanted it. Doesn't that mean that good Christians should advocate sharing and copying, or as you refer to it, "piracy?"
But there are also a number of services that many people find valuable that the pirate can't provide, such as "Not breaking the law" and "Supporting the artists".
If the legal service is as convenient as the illegal service, and the only differences are the price and the legality, a lot of people will choose the legal service rather than the free service, even if the legal service is significantly more expensive. Again, we have evidence for this in the form of Steam, which manages somehow to sell games for $60 that you could pirate for free. If price was the problem, Steam would have failed long ago.
Of course charging for something diminishes it's value. Just look at open source.
Except that DRM isn't in itself about charging for something. I don't mind paying for a product. I mind very much paying for a product and then having to jump through hoops to get it delivered to me. And then finding that some software that's not needed to use my product but required anyway before the product will allow itself to be used causes problems with other software on my machine. And then finding out that I'm not allowed to use my product even though I've paid for it, just because I want to use it somewhere other than the machine I was using when I paid for it. Or that it won't allow itself to be displayed because of the particular I/O channel I want to use (even though, remember, I paid for it and I'm not trying to make illegal copies of it). And of course wondering whether I'll be able to keep using it when the company I bought it from goes out of business or decides to change their DRM scheme and the DRM servers the product wants to talk to aren't there anymore (through no fault of mine), or if my computer breaks and I have to replace it and reload everything and of course I can't reload the product because I only got the one copy and I'm not allowed to make backups (more copies).
Meanwhile, the illegal copy will play anywhere I want to play it. It'll keep playing as long as I have a copy, no matter what happens to anybody else's servers. I can back it up so I don't have to worry about losing my hard drive's contents. And I don't have to worry nearly as much about software conflicts.
I know that. Prior to the removal of OtherOS, the cost to crack the PS3 was higher than the cost to use a supported platform feature. After its removal, cracking became an attractive target (and as you point out, it didn't take long).
Disneys market strategy is to make you forget about their IP so they can sell it again to your kids. That is why they deliberately do not sell subsets of their content.
Also the legal DVDs are sold at much higher prices than in the US.
That might not be the fault of the studios as much as of national governments. Brazil and several other Latin American countries have prohibitive import duties for home entertainment products. Vote in a government that gets its revenue from things other than imports.
Stop whining about price. If you don't want to pay $60, then wait a few months or a year and buy it for $19.99.
Responding to your point 1: If I go to Walmart and buy a toaster and then get home and find that it only toasts one side of the bread, I can return it. Or if I find that it doesn't fit on my counter, I can return it. If I decide I don't like the color, I can return it. And that's for a $7 toaster (don't buy the $7 toaster, by the way--you get what you pay for, and, no, sadly, even a simple toaster can still be botched up in the 21st century). Now if I buy a $50-60 computer game and get home and find out that it has glaring bugs that may or may not be fixed by the developer if and when they feel like it, I can't return it, because it's opened software. Or if it doesn't fit on my hard disk, or run on my video card, or the min sysreqs are a joke, I can't return it, because it's opened software. Do you sense a disparity here? All the cards (and lawyers) are stacked in their favor.
Yeah, I can vote with my wallet--and I do. But the point remains. True piracy is stuff like selling bootleg DVDs. Even that is a misuse of the word--it's actually counterfeiting.
And while I do not think its necessarily justified to download a game and play the whole thing without compensating those who invested in making it (leaving aside issues of abandonware), I do think copyright is fundamentally an evil concept, used only to enforce and fuel greed. I'm not sure where the line of justification for civil disobedience is--I don't think it's a fine line, not black and white, etc--but it may be just as wrong to say that it's never justified as to say that it's always justified.
"Those who consume the bulk of goods are those who make them. We must never forget this secret of our prosperity."
Absolutely agree.
There is one more aspect he forgets to mention:
Dear publishers, if you put out all this DRM and copy-protection and basically treat me like a criminal, then who am I to argue with you? I'll use The Pirate Bay, because apparently that's what you expect me to do.
If you treat me like a valued customer, then I will be one. There's a shelf full of boxes right next to me proving that I'm quite willing to spend money on games. But I don't enter into business relationships with people who disrespect me. I'd rather respond by disrespecting them as well.
Assorted stuff I do sometimes: Lemuria.org
This guy has identified exactly the issue, which seems to elude almost every software company, and music and video publishers too (and an astonishing amount of executives in other fields too): it is all about putting the customer first. When companies put DRM on their product, and other impediments to product satisfaction, they are putting their customer last. The problem is fundamentally one of mistaken priorities at an executive level: sometimes that manifests itself as DRM, sometimes it manifests itself as not putting a superior product out for fear of "cannibalizing" an existing product, sometimes it shows itself in hidden fees and misleading terms. These are all symptoms of the same mistaken priorities.
15) The copyright industry is subverting our legal system. Funding them is morally worse than violating copyright.
The part you are missing is the part where Ubisoft's DRM servers go down and you CAN'T access the software you paid for. You did not buy a license to use the software whenever you want, you bought a license to use the software whenever they let you. Hence the analogy to an alarm system that locks out both unauthorized and authorized users.
Stealing is denying someone just compensation.
I'd say stealing is taking something that someone already owns away from that. Afterwards, they will no longer have it at all. Or, at least, that's what I think the average person thinks when they hear/read the word.
Filthy, filthy copyrapists!
An LLC is absolutely NOT an S-Corp... unless you want it to be (and specifically notify the IRS that you want it to be). There are a LOT of restrictions on S-Corps (no foreign owners, only one class of stock, no more than 75 shareholders, etc) so it's highly unlikely that a corporation the size of Valve is an S-Corp..
The vast majority of LLCs are treated as either sole proprietorships or partnerships for tax purposes.
The important part is that the type of company you incorporate as at the state level doesn't one-to-one map to a kind of taxable entity. Incorporation is a creature of state law, and federal taxes are a creature of federal law.
paintball
Rather than steam, consider this might be age, and wisdom. A few years ago before even steam came up I stopped pirating because it was not worth the hassle. Ah , who am I kidding, in my case it was probably only age.
The main reason for region locking? Have you ever been to south east Asia and took a look at the CD and DVD prices there? Let's put it that way, for the price of a DVD here, you get a pound of DVDs there.
The moment people could buy where they want, you'd instantly see people order abroad, quickly followed by businesses who do the same, import DVDs in SEA and put them on the market for a buck a movie AND make a fortune the same time.
Not excusing a business model that I would call shady at best (e.g. why is it ok if their DVD presses are in Malaysia and they can produce there but I cannot buy there?), just explaining why they insist in region locking and import bans.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
But how many sales did EA lose because of this? They lost me at least. I'm not going to install the Origin crap on my computer.
Same here. Actually, a tad bit worse even.
I live in a country that dubs its shows. Everything on TV is dubbed. And often enough, BADLY dubbed. You do not want to watch Simpsons in my country. The jokes are destroyed, almost invariably. So what I'd want is to watch it in its original language. I speak English well enough to understand what's going on, and besides actually finally getting to understand the jokes, the dubbed voices often sound atrocious at best.
So, ok, not on TV, I can understand that. Some people here wouldn't like that and they want their dubbed shows. Ok. Let me buy the DVD box when it gets out.
I cannot. Why? Because it's only available in the US because it hasn't been dubbed yet and hence not shown yet. We're now about to get to see how Charlie Sheen drops out of 2 1/2 men. It's been the talk in the pre-show ads on the networks that carry the show. Don't miss the last show with him! And see how it pans out after him! Yaddayadda... How long ago has he gone bananas and was fired? A year?
We're usually one season behind, give or take. Not to mention that I routinely get to see holiday specials at the most inappropriate times, Christmas specials are usually around September (next year) and Halloween is somewhere in the spring, but you get used to that.
What bothers me most is that often I can't even buy the DVD box without the dubbing AT ALL. Not even after we finally get to buy a DVD box (which happens a few years after nobody can even stomach the reruns anymore), you get the dubbed version (but hey, I could buy it dubbed in a billion languages I don't speak and never heard about) but for some odd reason you simply can't buy the undubbed version without some dimwit monkey screwing with the script and turning it inside out, often enough not only destroying the jokes but sometimes even turning around the entire fucking story (especially often encountered in Anime, you don't want to know how they get butchered sometimes. I don't speak Japanese, but I kid you not when I tell you I sometimes get more of the meaning in an undubbed version than in the dubbed one).
Now, why can't I buy the original? Why not? Aside of having to wait at least a YEAR after its creation to finally see it at all, why can't I simply dare to decide that I do not want to be subjected to atrocious voice acting to a script written by someone who very obviously never saw the show before or has any idea what it's about?
Why the fuck not?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Yeah it's that point about lack of demo for me. That seems to be the norm now that we have all the "app store" distribution models (iTunes Store, Steam etc). You're supposed to just "know" if a game is any good, that it will work well on your PC properly etc and gamble £30-50 on it. No thanks - if they can't be arsed to make a demo, I'll make my own.
Of course, once you've got a pirated version working it's up to discipline and morals to buy it. I would, but tend to be in the minority (I'm the sort of person who drives the speed limit. Almost no one does that). Maybe writing demos would help reduce it a little, or maybe there's not enough "pirated it for a demo and now I have it I might as well keep it" activity to justify the cost of making one which is their choice.
Actually, it does. If games don't sell for 60 bucks but they do sell for 20, makers of games will adapt to this business model or they will be pushed out of the game by makers who do.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.