LGJ: Piracy and the economy

Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:

We stand in an unusual and unprecedented place in history. We face a global economic crisis and are simultaneously in the latter stages of a technological revolution that started with the internet explosion of the 1990s. Because of present circumstances, we have the potential to fall into a piracy cycle that will hurt both the industry and the consumer. I'm hoping that this column will, at a minimum, expose the potential issues concerning this cycle, so that people can consciously avoid taking a dangerous path. We're already seeing increased talk about piracy and actions against "pirates," but I don't think we're anywhere close to hitting rock bottom.

Obviously, a down economy means people are more concerned about their money, have less money, and, in many instances, have lose their sources of income all together. On the opposite side of the table, the loss in spending leads to a loss of revenue for companies, which leads back to job loss. So how does piracy fit in? Many people may turn to piracy to get the content they no longer can afford, or take the opportunity to take something for free to save their money. On the converse, companies in the intellectual property realms, like game developers, may see the opportunity to increase some revenue through enforcement actions against pirates. And here's where the cycle begins.

"Don't be a pirate. Just don't do it."

This can very quickly devolve into a massive increase in both piracy and anti-piracy actions, in which case we all lose. Game companies aren't making money from sales, so we don't see as many titles -- and certainly even fewer so-called "quality" titles. Meanwhile the companies aren't recovering much, if anything, from most pirates, so they continue to cast a wider net in hopes of making up what is being lost. At the same time, gamers who are seeing the results of lost industry jobs as fewer excellent titles, may themselves start to pirate some titles. Basically, this scenario id teetering on the brink of a new game crash. On the other hand, it's all easily avoidable.

If you're a gamer, the simple solution is to continue to buy games. That's how the game developers stay in business and produce more of the games you want to play. I'm not saying be fiscally irresponsible based on your available income, but if the demand ceases, then the supply will also cease. Plus, with a game you're generally making a good investment for your entertainment dollar; between the standard length of the initial experience and replay value. By the same token, don't be a pirate. Just don't do it. (Here's to hoping the comment section isn't flooded with more half-baked justifications for piracy.)

From a developer's perspective, there are more issues to consider. Among those, there's an important balancing act between the legal cost of enforcement, the losses caused by piracy, and the potential recovery from pirates. Think of it this way, if the only way to shut down a certain pirate is through a complete lawsuit, rather than a cease and desist letter, is that cost justified by either preventing the losses that pirate is causing and the actual potential recovery you could get from that individual? It's a complicated problem to solve, but necessary for better enforcement.

"Be smart with your money."

An analysis like the one Valve's Jason Holtman gave might illuminate an alternate strategy that solves the problem and increases revenue. His example, as you may recall, was the reduction in piracy Valve noted when it released its games simultaneously in all markets. Russia was one of Holtman's prime examples, where piracy isn't about wanting a game for free, but rather about the lack of a timely release in that market with respect to other products. Russian gamers already had the systems to play the games, and they had seen the internet advertising, so they wanted the product at launch and not at some distant, later date.

These are tough economic times. But everyone needs to remember that if every consumer just stopped spending, the problem would get worse, not better. I hate to sound like some meddling financial adviser, but be smart with your money. You should be trying to pay down or pay off debt, and you should be saving money. But unless you spend some money, the companies making the products you crave can't continue to operate.

---

Mark Methenitis is the Editor in Chief of the Law of the Game blog, which discusses legal issues in video games. Mr. Methenitis is also a licensed attorney in the state of Texas with The Vernon Law Group, PLLC and a member of the Texas Bar Assoc., American Bar Assoc., and the International Game Developers Assoc., where he is a board member of the Dallas chapter. Opinions expressed in this column are his own. Reach him at: lawofthegame [AAT] gmail [DAWT] com.

The content of this blog article is not legal advice. It only constitutes commentary on legal issues, and is for educational and informational purposes only. Reading this blog, replying to its posts, or any other interaction on this site does not create an attorney-client privilege between you and the author. The opinions expressed on this site are not the opinions of AOL LLC., Weblogs, Inc., Joystiq.com, or The Vernon Law Group, PLLC. As with any legal issue that may confront you in a particular situation, you should always consult a qualified attorney familiar with the laws in your state.