Donna Wentworth
( Archive | Home | Technorati Profile)

Ernest Miller
( Archive | Home )

Elizabeth Rader
( Archive | Home )

Jason Schultz
( Archive | Home )

Wendy Seltzer
( Archive | Home | Technorati Profile )

Aaron Swartz
( Archive | Home )

Alan Wexelblat
( Archive | Home )

About this weblog
Here we'll explore the nexus of legal rulings, Capitol Hill policy-making, technical standards development, and technological innovation that creates -- and will recreate -- the networked world as we know it. Among the topics we'll touch on: intellectual property conflicts, technical architecture and innovation, the evolution of copyright, private vs. public interests in Net policy-making, lobbying and the law, and more.

Disclaimer: the opinions expressed in this weblog are those of the authors and not of their respective institutions.

What Does "Copyfight" Mean?

Copyfight, the Solo Years: April 2002-March 2004

a Typical Joe
Academic Copyright
Jack Balkin
John Perry Barlow
Blogbook IP
David Bollier
James Boyle
Robert Boynton
Brad Ideas
Ren Bucholz
Cabalamat: Digital Rights
Cinema Minima
Consensus @ Lawyerpoint
Copyfighter's Musings
Copyright Readings
CopyrightWatch Canada
Susan Crawford
Walt Crawford
Creative Commons
Cruelty to Analog
Culture Cat
Deep Links
Derivative Work
Julian Dibbell
Digital Copyright Canada
Displacement of Concepts
Downhill Battle
Exploded Library
Bret Fausett
Edward Felten - Freedom to Tinker
Edward Felten - Dashlog
Frank Field
Seth Finkelstein
Brian Flemming
Frankston, Reed
Free Culture
Free Range Librarian
Michael Froomkin
Michael Geist
Michael Geist's BNA News
Dan Gillmor
Mike Godwin
Joe Gratz
James Grimmelmann
Groklaw News
Matt Haughey
Erik J. Heels
Induce Act blog
Inter Alia
IP & Social Justice
IPac blog
Joi Ito
Jon Johansen
JD Lasica
Legal Theory Blog
Lenz Blog
Larry Lessig
Jessica Litman
James Love
Alex Macgillivray
Madisonian Theory
Maison Bisson
Kevin Marks
Tim Marman
Matt Rolls a Hoover
Mary Minow
Declan McCullagh
Eben Moglen
Dan Moniz
Danny O'Brien
Open Access
Open Codex
John Palfrey
Chris Palmer
Promote the Progress
PK News
PVR Blog
Eric Raymond
Joseph Reagle
Recording Industry vs. the People
Lisa Rein
Thomas Roessler
Seth Schoen
Doc Searls
Seb's Open Research
Shifted Librarian
Doug Simpson
Stay Free! Daily
Sarah Stirland
Swarthmore Coalition
Tech Law Advisor
Technology Liberation Front
Siva Vaidhyanathan
Vertical Hold
Kim Weatherall
David Weinberger
Matthew Yglesias

Timothy Armstrong
Bag and Baggage
Charles Bailey
Beltway Blogroll
Between Lawyers
Blawg Channel
Chief Blogging Officer
Drew Clark
Chris Cohen
Crooked Timber
Daily Whirl
Dead Parrots Society
Delaware Law Office
J. Bradford DeLong
Betsy Devine
Ben Edelman
Ernie the Attorney
How Appealing
Industry Standard
IP Democracy
IP Watch
Dennis Kennedy
Rick Klau
Wendy Koslow
Elizabeth L. Lawley
Jerry Lawson
Legal Reader
Likelihood of Confusion
Chris Locke
Derek Lowe
MIT Tech Review
Paper Chase
Frank Paynter
Scott Rosenberg
Scrivener's Error
Jeneane Sessum
Silent Lucidity
Smart Mobs
Trademark Blog
Eugene Volokh
Kevin Werbach

Berkman @ Harvard
Chilling Effects
CIS @ Stanford
Copyright Reform
Creative Commons
Global Internet Proj.
Info Commons
IP Justice
ISP @ Yale
NY for Fair Use
Open Content
Public Knowledge
Shidler Center @ UW
Tech Center @ GMU
U. Maine Tech Law Center
US Copyright Office
US Dept. of Justice
US Patent Office

In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline


« When the Tip Jar Offends | Main | Academic Disruption and the Difference Between Publication and Prestige »

February 14, 2013

On the Used and Pirate Markets for Digital Goods

Email This Entry

Posted by Alan Wexelblat

While we wait for a decision on Kirtsaeng a couple of interesting news items have crossed my radar and I wanted to write about them together, as they both relate to the marketplace for used electronic goods, and the non-trivial relationship of those goods to piracy. This is a bit of a long walk but I promise it all ties together.

The first item is the reporting around Amazon's recent patent announcement. This isn't an actual service that Amazon is providing, or has even stated that it's going to provide. Instead, it's a patent they were awarded at the end of January that purports to cover a marketplace for digital objects. Putting this out to the news wires is clearly them floating a trial balloon.

The patent (#8,364,595) involves creation of a "personal data store" for the digital objects. While you own the object you get to download or stream it up to a certain number of times controlled by DRM or policy. Since there's already a mechanism in place to limit your access, it's pretty easy to say "OK, I'm done with this object and no longer want it." At that point, your remaining number of accesses gets set to zero, and you can dispose of the object by selling it to Amazon (or whoever licenses the patent) for some amount. The used-object vendor can then either apply some more DRM/policy to give the next owner some more downloads or streams, or just keep the original counter going. Presumably when you buy a used digital object there would have to be some disclosure that your use of it was limited.

This all sounds reasonable to me, but it has raised some ire among people who see it as another way for Amazon to screw authors; for example, John Scalzi opined that he "...would rather you pirate the eBook than buy it used."

His objection is that Amazon would be making money off the used e-book, but he wouldn't. I find this baffling. To my knowledge, Scalzi doesn't object to used bookstores for physical books. I suspect he's also purchased a used CD or LP in his day, as well. As far as I know, in those cases no additional money is flowing to the original author. This, after all, is the whole point of first-sale doctrine, which is at the heart of the Kirtsaeng case. I confess I can't see any significant difference between the e-book and physical book situations. In fact, it's quite possible to buy used physical books right now through Amazon. It just so happens that Amazon has things set up so it's a front for third-party sellers, but it gets money on every sale and in principle nothing stops them being originating sellers. So what's the big deal here?

Other people have a different attitude toward used digital goods, and piracy. Take, for example, games. Right now we're at an odd place in the console gaming industry in that all the popular consoles are using old-generation hardware. New machines are on the way: Microsoft and Sony have both shown previews and talked about their upcoming devices. Both look fairly similar from a hardware perspective, but there's a potentially huge split coming in how the next generation of consoles treats used games.

For a while now there have been rumors to the effect that the next Xbox will try to block users from loading used games whereas the Sony console will allow it, or vice versa. Naturally, this is upsetting to places like GameStop that make a great deal of money from reselling used games. In a speech to the Goldman Sachs Technology and Internet Conference, GameStop's CFO Rob Lloyd showed his company's research that indicated a solid majority of consumers were opposed to having used games blocked and wouldn't want to buy a console which did that. His research also claims that most used games are older titles, with the clear implication that the used market isn't cutting into new-game sales, since the volume of game releases often means that all but the biggest-selling titles are cleared from store shelves within 60 days.

In fact, just as with respect to authors one of the biggest problems for a new or independent game developer is getting noticed. Nobody wants to lose money by having their stuff copied illegally, but if the choice is "nobody notices you and thus nobody buys your stuff" or "people get illegal copies of your stuff, but pay attention" some people will choose the latter. In specific, the indie duo who made the game "Anodyne" have come out and said "It's better to embrace piracy."

In fact, the makers have taken the unusual step of talking directly to people who have illegal copies of the game, asking for feedback, mentions in tweets, and upvotes on Steam's Greenlight, which is kind of Survivor for indie games. If this works out, then some people who pirated the game will like it and buy a copy. Some people will talk about it on Twitter and elsewhere, which is free publicity. And some will upvote it, which means more people see it on Steam and buy it because it's cheap there.

And that brings me back around to the console/used games issue. Steam, like Amazon and unlike GameStop or Walmart, doesn't have shelves to empty. Games stay there virtually forever. So long as the maker still exists to provide more license keys, Steam can sell additional copies. Steam has established itself as a place where older games are available at steep discounts. This begs the question of why would you buy a used game when you can expect to get it new from Steam (or Green Man Gaming or similar site)? It's entirely possible that the ubiquity - the effectively infinite shelf-life - of downloadable games will do more to kill the used-game market than anything Sony or Microsoft do.

And that, at last, brings me back around to the "I hate reselling" attitude that John Scalzi expressed above. Because here's the thing: if you can make a game for a console that blocks used games or you can make a game for a console that allows used games, from which you don't profit, which would you do? Well, if you think you'd lose sales to used games then you might want to go with the locked-down platform, just as Scalzi would have you go to piracy before resale. Except you may lose more original game sales because people might not buy that locked-down platform in the first place, as GameStop is arguing.

But if you believe that your game will always be available (e.g. through Steam) to people who want it then you can afford to wait for the less-popular console to gain market share. And of course there's a knock-on effect in that if people see more good games being released only for the locked-down platform they may just swallow hard and buy that platform anyway.

The big deal, then, is that it's not as simple as "Amazon reselling used stuff = bad". It's that we're witnessing a rapid evolution of marketplaces and business models with lots of players jockeying for position, all of which makes me hope even more fervently that SCOTUS doesn't "drop the banhammer" as we gamer geeks say.

(I am indebted to the game journalist who blogs as TotalHalibut, whose commentary in his Content Patch podcast sparked many of these thoughts.)

Comments (0) + TrackBacks (0) | Category: Big Thoughts


Remember Me?


Email this entry to:

Your email address:

Message (optional):

Sherlock Holmes as Classical Fairytale
Trademark Law Includes False Endorsement
Kickstarter Math
IP Without Scarcity
Crash Patents
Why Create?
Facebook Admits it Might Have a Video Piracy Problem
A Natural Superfood, and Intellectual Property