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Piracy and the four currencies
by Lars Doucet on 02/22/12 12:18:00 pm   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.


Cross-posted on my personal blog.

Part 1 of a multi-part series. (Part 2)

The problem with most piracy debates is that the only "cost" they discuss is money-dollars.  So, the problem is framed somewhat like this: 

"Buying the game from us costs money-dollars.  Pirating it costs zero money-dollars.  Therefore, most people will pirate the game if they have the choice and we must do everything we can to physically stop them." 
The familiar Money-dollar ($M)

 This is wrong because there are at least four currencies involved here, not just one (money-dollars). 

I propose the following: 

  1. ($M) Money-dollars
  2. ($T) Time-dollars
  3. ($P) Pain-in-the-butt-dollars
  4. ($I) Integrity-dollars
Whether a player buys or pirates a game depends on how much each service - not product! - "costs" in terms of these four currencies, as well as how much the player values each one. 

I hate spending these 

For the purpose of this article Money-dollars will be denominated in USD, Time-dollars will be denominated in hours, and Pain-in-the-butt-dollars will be denominated in SI standard units of "amount-of-aspirin-I-have-to-take-after-beating-my-head-against-the-wall-for-an-hour." Feel free to measure Integrity-dollars in Hail-Marys, or hours spent lying awake at night.

Okay, I kid, I kid.  Obviously, $P and $I are the most subjective "currencies" and it's hard to quantify them, even on an individual basis. That doesn't make them any less real, however - as I'm about to demonstrate, the $P and $I cost of a service are sometimes the most important ones.

You have a finite number to spend, and you never get any more.


So, let's start with my favorite example, Dragon Age II. On release, the game cost:
  • $M 60 
  • $T 5
  • $P 100
  • $I 0
This game was expensive, it took forever to install and deal with the invasive DRM, which was only slightly more fun than getting groped by the TSA in the comfort of your own home.  The only thing that was cheap about the game was that buying it was "the right thing to do," wasn't illegal, and it didn't make the player feel guilty.  The only way this service competed with piracy was in the $I cost.  

By comparison, pirate sites were offering the game for the low, low price of :
  • $M 0
  • $T 0.5
  • $P 5
  • $I 10
It cost no money, and the only time spent was downloading the game file. There was some pain-in-the-butt, ie, the player could accidentally download malware, needed to know how to use bittorent (easy for us geeks, not so for average joe/jane), and was constantly being hassled by lurid ads and pop-ups.  Finally, there was the integrity cost that piracy is illegal, and in some sense, "morally wrong." 

Spending one costs a tiny part of your soul.

What if Dragon Age II had this price instead?
  • $M 60 
  • $T 0.5
  • $P 0.5
  • $I 0
Ie, what if buying Dragon Age II was as easy as entering payment information, downloading the game, and running it? Now the game looks pretty competitive - it's actually less of a pain-in-the-butt than pirating it, and it doesn't "cost" any moral integrity or ask you to break any laws, either! 

The $60 price tag will still turn those who value $M above all else to piracy, but now the game can capture all those who value $I and $P and $T more than $M, which is not a small number.  

Again, I want to underscore that the relative values of each currency vary from player to player.  People who live in low-income nations will be willing to spend more $T and $P if they can get the game for 0 $M.  The $I cost is the most subjective of the four and depends on how much stock a player puts in "doing the right thing," (so to speak) or whether they even see any moral integrity in the choice at all.  

Those who reject the notion of copyright altogether would likely value $I = 0, though even in this case, thinking of it instead as "the risk one takes of getting in trouble with the law" still raises $I to some non-zero value.

The $I cost also varies with the developer's behavior. The friendlier and more "deserving" you are in the eyes of the player, the higher the $I cost becomes for pirating the game. Conversely, a hostile attitude can easily lower the $I cost of piracy as nobody loses any sleep over pirating from an imagined "rich, greedy CEO."

Additionally, there's some strong interplay between the various currencies - a high $M cost makes the player feel entitled to a low $P cost - if I'm paying out the nose, I expect white-glove, full service VIP treatment.  If I'm treated like a criminal instead, the $I cost of piracy just plummeted.  I'll give my time and pain-in-the-butt dollars to the competition, thank you very much.

We used this theory to inform our strategy for Defender's Quest. Here's the current price of the game:
  • $M 5-7
  • $T 0.08
  • $P 0.5
  • $I 0
And here's what it's going for on your local torrent site:
  • $M 0
  • $T 0.08
  • $P 5
  • $I 10-20*
*Depending on whether pirating an "indie" game makes you feel more guilty than pirating from so-called "fat cats" like EA.

You will never be able to compete with pirate sites on price ($M) alone.  Furthermore, at best you will only be able to match their price on time cost ($T), which is merely the time it takes to find and download your game. 

The two areas you can compete on, and which do seem to make a big difference, are in pain-in-the-butt-ness and moral integrity.  If you add any DRM, even if it only has a 1% false-positive rate, you've thrown up a $P cost for those customers that far exceeds that of the pirate sites. 

Strip the DRM away and provide a friendly and easy-to-use purchasing experience, however, and you can drive the $P cost down to fractional amounts, far below what a sketchy torrent site can offer.  

Also, by virtue of being the author, you provide the lowest $I cost in town.  In the best case, you actually have a negative $I cost, which means buying the game gives the player a moral integrity credit.  The player now feels like she's doing "the right thing," she doesn't worry about breaking the law, and gets a warm fuzzy feeling knowing she's supporting the makers of games she loves.

I'll throw in one more quick note - do not underestimate the value of $T, and look for ways in which you are potentially wasting the player's time.  I got many e-mails from players telling us that one of the chief reasons for buying the game was our long demo, which also allowed them to export their save file. Many said they would not have bought the game if they had to start from scratch.  For these players, spending the 7 money-dollars was not an issue, but having to lose the 2 time-dollars they'd already sunk into the demo would have been a deal-breaker. 

This little button lowers the $T cost of playing the demo


Well, that's my theory. It's not perfect, but I think it's a lot better than what a lot of congressmen, CEO's, and so-called economists have to offer.
-Lars out

Part 1 of a multi-part series. (Part 2)

Edit :

Lots of good discussion happening here, on twitter/google+, and on my own blog. One thing I want to emphasize is that I'm not trying to come up with concrete values for $M,$P,$T, and $I, or some fixed formal theory to end them all. 

Mostly I just want to call attention to the fact that we're "spending" more resources than just plain money. 

Which "resources" are in play for any given player, and their relative value for that individual, will vary from person to person, and even within the same individual, from moment to moment. 

There's likely many more different "currencies" than just the 4 I've thought of here - these are just the ones I usually think of "spending" when I go to buy a game :)

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Adriaan Jansen
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Loved it, great article!

Sean Choate
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This is a great analysis of the situation.

Jason Pineo
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I like this. Kudos for acknowledging the fact that value systems are subjective, even the $M. Amazing how many people insist on the opposite.

Tom Baird
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This sort of thing is something that I think Steam is good at. It IS drm, however once even slightly accustomed to it, it's just so simple, $p approaches 0. Keeps all your games in a library panel, but still allows regular shortcuts, auto logs you in, if you're feeling risky you can save your credit card info and just hit Buy, and it starts downloading. If you go to another computer, you don't have to go find the torrent site, you can just go to your library and hit install. Much more reliable installs, easier to track friends with a consistent, out of the way social UI. Easy to find games, search panels and New/Top Sellers categories, Wishlists, Release Date Lists right on the main page.

It's why I think Steam is doing so phenomenally well, even in generally regarded piracy havens such as Russia. It can't compete on price, but it competes full force on $p, and for many, many users it's just a much better deal to not have to hunt down vaguely named torrents and hope they are what they seem to say they are.

iTunes and Netflix are 2 other similar digital models that don't seem to be struggling at all against piracy, because they put such a high value on $p and $t. If only more companies realized this, maybe they would have some sort of competition, and less companies would be blaming their lack of sales on piracy rather than poor service.

Roberta Davies
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Here's where we see the personal equation entering the mix.

Maybe I'm just an old fogey, but I don't trust "the cloud" and for that reason I would never use Steam. If I own something, I want a real-life object I can hold in my hand and keep for as long as I please. I don't want to trust that Steam's servers won't go down when I want access, or that the whole company won't eventually go bust and take my game library down the tubes with it.

If we say this sort of anxiety is a kind of pain-in-the-butt-ness, then the $P price of Steam (or any similar online library) is far more than I'm willing to pay. The other features you mention (social contacts, wishlists, bestseller lists, etc.) I consider of no value, so they don't affect the equation either way.

Interestingly, the option of "hunt down vaguely named torrents and hope they are what they seem to say they are" sounds more appealing to me, despite the $P and $T costs, because in the end -- assuming I was able to find what I was looking for -- I could burn it to a disk and have a physical copy. So it is literally only the $I cost that prevents me.

Jonathon Walsh
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Awesome, but there are some other factors you can put in.

$I isn't static, the more you connect and communicate with your fans and build a relationship with them the more $I goes up. The more you talk to your fans the more human you appear, the more like-able you are, and the more people will want to reward you for your work.

$P can go negative, or piracy needs a higher value. There's some inherent value in what Tom mentions (having easy access to re-download games in the future) as well as other Steam features like auto-patching and DLC availability.

You could also do this article in the opposite, as in what the gamer gets. The obvious is the game, but there are also other things that factor into their worth. Access is an obvious one for multiplayer games. You can pirate multiplayer games but you miss out on playing with all the people who brought the game legitimately. Other factors like support or access to a forum account/website also contribute to a game's value over its pirated version.

Lars Doucet
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I see this article mostly as a loose starting point for a new way to look at the piracy debate, so feel free to amend/mutate this theory in any way you like to suit your purposes.

Jonathon's point is a good one, for instance.

Another one someone shared on my google+ page was this - I have an unstated assumption in the article that the the $P cost of piracy is always low (though non-zero), and the $P cost of DRM is always high. This case is usually true for my sample set - single player PC games.

However, it's not true for all cases. Steam, for instance, is a good example. Once you're over the initial sign-up hurdle, it drops the $P cost below normal levels, as Tom pointed out. Same goes for iOS devices, etc. The popularity of these stores despite the DRM suggests that when players are complaining about DRM, they're mostly complaining about inconvenience, and the true number of people who hate DRM on principle and get aggravated no matter how convenient it is (folks like me) are probably a pretty small part of the population.

Another example is console games. For the best example, let's go to 10 years ago. Pirating a game on the PS2 was a looot harder than pirating the same game on the PC, so the $P cost for console piracy was actually higher in that case. You had to hardware-mod your PS2, download and find an ISO, and then burn it to DVD, all of which require a lot more time, inconvenience, and technical knowledge than downloading and installing from a torrent, especially back before DVD burners were ubiquitous.

MMO's are the same way - it's a lot harder to setup and run a full-fledged WOW pirate server than to crack the serial number off of Crysis and upload it The Pirate Bay. And riffing off of what Jonathan has said, the experience (total value of the product) is going to be lower by comparison because it's not run by Blizzard, you're not playing with all your normal raiding friends, and the server probably has all kinds of weird hacks and balance issues, and terrible GM support.

That's another thing I left out of the article - value comparison for what you're "paying." My examples all assumed that the official product and pirated product were more or less equal, and so the main comparison comes to the "cost" of the acquisition service. This holds more or less true for my single player examples, but as Jonathon has pointed out doesn't capture all cases or reflect the value of multiplayer, support, etc.

Jonathan Ghazarian
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I've been able to put a little bit of time in your demo and Agree that you've done an amazing job of lowering $T and $P to almost nothing. A lot of game developers can learn a lot from your handling of that demo. I hope the benefits have met your expectations. I don't know if you'd care to share the results of the effects that this demo had on your sales.

Lars Doucet
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I've written a detailed write-up about our first-month sales numbers and sent it to a certain website for publication. If they decide to run it, it'll show up there and I'll mention it. If not, I'll post it on my own blog/website/here.

Can't go into too many details until the embargo lifts, but I'll say this - things have gone pretty well :)

Jonathan Ghazarian
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Awesome, thanks for the heads up. And I'm really glad to hear it's going well.

Jeffrey Crenshaw
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Absolutely fantastic framing! I love this article and all the discussions: formalizing how DRM is bad because it increases $P (and possibly lowers $I for the piracy route), discussing how to improve your $I value vs piracy by communicating with your customers, etc. I would say that these calculations happen all the time at a subconscious and sub-linguistic level, but linguistically we seem to focus more on money. I can already feel the discourse improving.

A friend and I thought of a way to increase the $M that goes to developers by providing an alternate route to direct piracy: asking people uploading torrents already to put txt files in torrents that link to the paypals of developers (and musicians and talent at movie studios), just in case someone wants to pay without most of their money going to corporate fat cats. They could pay less than full "market" price (talent would be getting more than they were anyway, so even $1 here and there would be appreciated) and might feel better about doing it if they see that the people getting their money are not in the %1. A way for devs in the AAA industry to make up for the long hours of unpaid crunch followed by layoffs without frustrating consumers (downloaders would not be forced to pay this money, they would just be given the information on how to do so; should be some wiggle room legally speaking, after all the developer is just getting a random taxable donation from someone for a non-provable purpose ;] ). This route has the same $M, $T, and $P as piracy because it goes through the same channel, but it has a lower $I cost because you would be supporting the people that actually make the game. In fact, in many cases I would view this as having a lower $I cost than legal retail, particularly used! Who would pass up the lowest $M, $T, $P, $I option?

Getting torrent sites to encourage and advertise this would probably work as, from my understanding, torrent sites aren't about screwing over the working class; they are more about mooching at the worst to simply not wanting to support the ruling class any further. Therefore, this does not incur an $I cost to the torrent site itself using its own communal integrity, I believe. I could easily see torrent sites encouraging uploaders to put in low-paid talent and paypal info into text files in their torrents via sidebar ads. So glad to have a new system of discourse, maybe now we can better discuss strategies to improve consumer quality while simultaneously improving developer rewards for their hard work :).

Adam Bishop
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Most developers who don't self-publish likely have a contract in place with their publisher that would make the arrangement you specifiy illegal. A developer couldn't just accept "donations" for games a publisher has negotiated the right to sell.

Nathaniel Marlow
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PayPal also generally doesn't like having their logo stamped on sites that have contentious content or an ambiguous legal status.

Jeffrey Crenshaw
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I would be curious to see it attempted though. I don\'t see how someone choosing to send you money as a donation because they think you're a cool person is illegal ;). Just like how corporations donate money to politicians who just happen to enact policies that benefit the corporations.

I also don't expect paypal's logo needs to be on the site; you can send money to another person from paypal's site itself.

But legal games aside, I would love to see the media and social reaction to such a movement. It would create so many popcorn-worthy discussions in comment threads. Heck maybe publishers themselves could do such a thing; release their game, no DRM, put up a torrent, and put a txt in it that says "we know this is going to get pirated anyway; we are releasing this ourselves hoping you will buy the game if you like it." I believe this sort of thing is being done on the indie front.

edit: woah, odd newline characters showing up

Eric Mickols
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It would take a ballsy developer to publish their paypal info like that. Especially because any competing torrent sites may just add a text file in the same format, with a paypal donate link to their own account.

Doable, but I see the sketchiest torrent sites benefitting the most, especially if they go back over old torrents and update the files to contain something like that.

Empty Skin
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I like the way you broke this down.

I have tried to tell people that songs and movies online need to be priced...basically in bulk; a nickel per song or something for people to consider buying them.

I study economics and people, in most cases I'm sure, value their "moral integrity" much less than a "money" or "time dollar." The only way to command integrity from users is to make good products. I pirate. I'll admit it, but I purchase games, music, movies, and books that I find above average. The way I see it is that large scale production will cease in the future, cds/DVDs, etc. becoming like record stores or drive in theaters, being replaced by quality user made content.

Money from real production will, in the future, be preferentially spent on real things you can touch and hold. Maybe if publishers wise up we can find somewhere to send all of our couch pennies.

I ask the author and anyone interested to have a looksie at my article on the subject as I feel it is becoming more and more apt.

Brett Williams
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This is a good article. However there is one thing you don't take into account and that's the burden on pirates that DRM creates. You don't evaluate in any way that bypassing DRM costs Time-dollars or Pain-in-the-butt dollars. The assumption of the article is that it takes zero effort and zero time for a person to bypass DRM.

There is inherant $T and $P cost with bypassing DRM.

Applying a $T and $P for the process of bypassing DRM is more complex because you have an Origin and an Edge. Where the Origin would be the group and persons that perform the work required to understand the technology and create the bypass. The further from the Origin the content gets and the more $T that is put into it by users along the way the lower the $T and $P for those closer to the Edge.

The higher quality the pirate package the less $T and $P for the end user.

The $T and $P at the origin is significantly higher than at the Edge. However every time a game binary is modified and a new version needs to propagate. The entire cycle begins again.

The primary message of this piece holds true. Regardless how you choose to represent or distribute your materials your $T and $P for paying customers should never be higher than the $T and $P for pirates.

Pirates and distributors perform the same steps when it comes to packaging and providing bits to end users. The process is almost identical in many cases because pirates were distributing digitally long before most commercial operations succeeded at it. It's important that the commercial operation use their power, their tools, their money, to improve their process and their pipeline so that it costs them less. This inherently provides a reward for the end user because the $T and $P of piracy is not cancelled out by the $T and $P of the retail distribution.

If this means not using DRM then it all works out for you. If this means you can work in User authentication and still be a lower $T and $P then it just means you have a better system. It's not a matter of you can't do it with DRM. That's a misconception.

Lars Doucet
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"The assumption of the article is that it takes zero effort and zero time for a person to bypass DRM."

If you'll look again the $P and $T values are non-zero for piracy examples, so I'm by no means making the assumption you state. (I just didn't discuss the cracker's efforts and costs in detail, focusing mostly just on the user, and limited the discussion to a small sample set of games)

In my above comment to Jonathon Walsh I expand the theory to cover some of what you say here as well.

That said, your comment is quite insightful and the point is taken.

Kelly Kleider
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First off, good article, I like the approach of trying to quantify what is often assumed to be unquantifiable. All of this talk about treating piracy as a service that publishers are competing against ultimately leads one to the inescapable conclusion that the user experience of purchasing a game sucks.
Enter Valve...App Store...Amazon...Android Marketplace...etc
All of these services have made it super easy to buy games, even games you already own. I recently tried to install quake one (my son has become interested in FPS gaming) and realized I had forgotten about all the "extra" crap you needed to run quake on windows. Steam had a pile of quakes for next to nothing. From my perspective, buying quake for myself and my son was far easier than getting the dos version of quake up and running.
On a semi-related note you should change $M to be $W (work time). This would give you another data point, which is the relative cost of a game to that individual. $60 game is not as big a hit on the wallet of a professional, but is an enormous hit on the wallet of a 16 year old.

Lars Doucet
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Thanks :) I can definitely see this going off in all sorts of interesting directions if we want to start drilling down into translating $M into values of labor (work) and capital (stored-up work).

Ron Kaminsky
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This has to be one of the most insightful discussions of the issue of the effect of infringement in the modern era. Thanks! (I even registered just to be able to thank you!)

Jacob Pederson
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Speaking of costs and piracy. Here's something I've always wondered about. Is it possible that piracy SUPPORTS the whole gaming industry via the following method?

Young folks spend a lot of money on top-of-the-line graphics cards, thereby funding the hardware research and development which trickles down to the rest of us (including consoles) They can afford these expensive cards only because they pirate everything else. I have absolutely no data to back this up, other than the experience I had growing up. Any thoughts?

I completely agree with your value system and how it effects piracy. Steam wins because it is hugely cheaper than piracy (once pain in the but cost is figured in), not because the society suddenly grew morals :)

Jeffrey Crenshaw
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My thoughts on this are that you can justify anything economically if you are creative enough :).

Piracy is a tough issue though, because it "feels" wrong but in the end it's just another person playing your game. Imagine two worlds: you make $x from y people playing your game vs you make $x from (y + 1) people playing your game. I would prefer the second one even though I'm scared that that logic taken to an extreme will mean I won't get paid to make games and would have to put less time into it working another job. I actually wonder if the future isn't going to be one where information-oriented content (games, movies, songs) aren't just going to be free and everyone has to find a more physical job to pay rent, just looking at how hard it is to stop piracy. Maybe this would be a good future, especially if we can use technology to get the work week down - imagine working 20 hours/week then having the rest to make a game that doesn't have to be a commercial success, almost sounds better than what we have now :)

These times definitely seem like the most unstable, where the future can go in so many hard-to-predict directions.

Martin Juranek
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Sometimes in smaller, poorer countries prices are higher than in biger and richer (EURO = USD on steam, starcraft pricing).
This feels bad and incurs $I (or its $A for angry?) price atop of $M. It can make purchase costlier in ALL (if its you consider this factor $I) factors than pirated game.
Of course, $M is valued higher there, so maybe they think, that only those who would buy at higher price would buy at lower, so they can make it more expensive and don't loose customers. And they can be sometimes right.

James Liu
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I'm late to the party, but this is a great article. The denominations are awesome. =)