While the economic experiments were very insightful, what really caught my attention was how Newell discussed the impact of piracy on Valve's thinking regarding pricing/service.
Newell: One thing that we have learned is that piracy is not a pricing issue. It’s a service issue. The easiest way to stop piracy is not by putting antipiracy technology to work. It’s by giving those people a service that’s better than what they’re receiving from the pirates. For example, Russia. You say, oh, we’re going to enter Russia, people say, you’re doomed, they’ll pirate everything in Russia. Russia now outside of Germany is our largest continental European market.
Ed Fries: That’s incredible. That’s in dollars?
Newell: That’s in dollars, yes. Whenever I talk about how much money we make it’s always dollar-denominated. All of our products are sold in local currency. But the point was, the people who are telling you that Russians pirate everything are the people who wait six months to localize their product into Russia. … So that, as far as we’re concerned, is asked and answered. It doesn’t take much in terms of providing a better service to make pirates a non-issue.At the end of the summary, Ed Fries provides the following summation of the point made above:
Fries: That’s some incredible data. … You talk about doing experiments. This is probably the biggest change that’s affected the gaming business over the last few years. It’s not just that we have digital distribution to our customers. It’s that we have this incredible two-way connection that we’ve never had before with our customers.
We’ve gone from a situation where we dream up a game, we spend three years making it, we put it in a box, we put it out in stores, we hope it sells, to a situation that’s incredibly more fluid and dynamic, where we’re constantly modifying the game with the participation of the customers themselves.” (Emphasis mine)The discussion is fascinating not simply for the insight it provides into the experimentation occurring in Valve, but also in how the statements above appear (at least to me) to be another validation on the interaction between high and low mobility potentials found in informational constructs- in this case, the constructs being games distributed through digital means. Pirated copies of digital games would appear to be exemplars of high mobility. They often emerge in markets where the audience cannot afford, or choose not to purchase, a game that is perceived as highly desirable yet out of sync with the needs of the target audience, either through pricing or format. The act of piracy often modifies the original piece in order to increase its rate of transmission. In this view, I am borrowing from the process examined by Adrian Johns in his book Piracy- specifically the chapter dealing with Dublin printers 'pirating' works originally published in London. Publishers in London often produced large folio versions of books that were neither affordable nor easily transported/stored, two key disadvantages that kept the works from reaching a larger mass-audience. Dublin publishers, instead, took the same works and printed them in much smaller versions spread over a few volumes. The Dublin works cost less, could be transported easily and began to eat into the profits of London booksellers.
Yet, looking deeper into the process driving sales of both books and digital games, mentioned above, it becomes obvious that pirated copies, while increasing transmission, do little to foster increased or sustained modification- a key component to my understanding of how high mobility potentials work. With books, as Johns noted, increased sales were definitely helped by reduction in cost and size, but the real key to growth was producing new volumes altogether. Compilations filled with 'new' or additional material put together by publishers, sometimes of dubious quality, gave people reason to buy new copies of already owned works. The original modification, making books smaller and cheaper, increased sales but only continued modifications- provided via new editions, additional material- sustained sales. A similar phenomena can now be seen in the production and sale of digital games. Thanks to the emergence of technologies enhancing the speed of communication and distribution (Steam being the noted example), piracy of digital games is of little concern (at least for Valve) as the 'fluid and dynamic...participation of the customers themselves' drives increased modifications of the games sold. In effect, pirated copies of games become low mobility constructs through their inability to be modified, while official versions become high mobility constructs through their constant modification driven through customer participation and interaction. Give users control over the modifications or an increased voice in the means of modifications and you largely solve the problem of piracy presented by competing low mobility constructs.
Now the pirates could respond by bringing original modifications into their pirated versions- neither Newell nor Fries say anything of this potential phenomena- yet we might assume this is not the case as users have a dedicated communications channel with the original content creators allowing them to funnel their desires for modifications directly to the source. It would be interesting to see how pirates operate in other franchises where this communications channel is either denied or cut-off (a game reaching it's 'end of life' so to speak), that is, would pirates become enablers of high mobility potential in products whose lifespan renders them, essentially, ossified low mobility products? There is also the question of how the act of piracy impacts the transition of an informational construct from high to low mobility and vice versa. As this brief examination proves, there is clearly a great deal more to explore in the interaction between high and low mobility potentials found in informational constructs.
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