A perspective on DRM

[_xxx_]

Sins of the solar empire is not really a "big hit game" with half a million copies. Heck, Spore was called a "failure" for selling like what? More than a million in a month?

Half a million is great for a game which got next to no PR and wasn't expected to be a hit.

Spore was planned and expected to be the next Sims, which it simply wasn't. Failing to meet the sales expectations is a failure, you just have to look at it from the right perspective.

But the point is, it can be done and it obviously works fine.

 

[KimB]

Once again, though, pcchen, pirates don't matter. They aren't customers, so they're irrelevant. People need to focus on designing their products for paying customers instead of attempting to force DRM crap through paying customers' throats.

 

[Acert93]

Well, I think DRM-free is perfectly workable. The answer is simply for companies to tailor their products for the people that actually buy the products.

Stardock really has the right take on this: piracy doesn't matter. People that pirate products are completely irrelevant to the market. They place no strain whatsoever on companies' bottom lines (except, of course for those that buy/sell pirated products: but there the law needs to step in). But neither do they have any say in what products are produced. If the companies making these products merely pay no attention to the pirates, and just pay attention to the people that pay for their stuff, then the market will solve the problem on its own.

Of course you could counter the dozens upon dozens (even hundreds) of media owners who have said the opposite.

I have witnessed a fair handful of people go from honest consumers who buy their music and games to pirating them as the means to do such online has become easier. The idea that if no piracy existed sales wouldn't be affected at all is your typical stealth pro-piracy slant. The reality is that the proliferation of PCs with broadband access over the last decade HAS changed a some consumer spending habits.

If free pirated movies, games, music, and software didn't exist the people who used such wouldn't magically cease using such media. That isn't to say they would buy all the media they currently have stolen so there is no direct translation to lost sales, but there is a margin of potential sales that are lost. Even if it is as small as 5-10% of lost sales that is significant in a lot of markets. For example in the gaming world many contracts are drafted where post-retail revenue is front loaded toward the publisher and back loaded toward the developer.

"They place no strain whatsoever on companies' bottom lines" is wishful thinking. Of course we have been through this before...

 

[KimB]

I have done the exact opposite: as I got older, and started earning money, I rather quickly transitioned from pirating to legitimate purchases. But these sorts of personal stories are just pointless when it comes to understanding the overall trends.

The primary issue is that pirates only hurt themselves when it comes to the marketplace: by pirating games instead of buying them, pirates have no say in what sorts of games get produced. If instead people buy games, then they offer up their vote (in money) as to what sorts of games developers should design, and publishers should publish. So gradually games are going to slowly shift more and more towards those games that sell more units, during which time the pirates' preferences are completely irrelevant.

Pirates don't matter. People that buy games matter.

 

[Zaphod]

but there is a margin of potential sales that are lost.

I don't think anyone would argue against that. However, weigh that number against the real cost of developing, licensing and deploying DRM; crazy-ass devaluing anti-piracy campaigns; and the marginal loss of customers due to such factors. Not to mention the certain gain in some segments of these markets due to the the distribution efficiency and marketing effect of piracy.

I don't think anyone knows how all this adds up together, but I personally believe that content producers (and content right holders) would have been better off in the long run by not venturing down the DRM path at all. These days, many/some of them are certainly moving (albeit slowly) towards more sensible business models, and I don't see that as much as capitulation as I see it as common sense.

 

[Acert93]

Once again, though, pcchen, pirates don't matter. They aren't customers, so they're irrelevant. People need to focus on designing their products for paying customers instead of attempting to force DRM crap through paying customers' throats.

If you make a relevant product with high demand that cannot be pirated (or at least easily) you can convert a % of lost potential sales into sales. So no, they aren't irrelevant. They are only irrelevant when markets develop devices that make piracy easy, in some cases even easier than purchasing a DRM-free product at a brick and mortar.

 

[Acert93]

I don't think anyone would argue against that.

No, that is what Chalnoth said.

people that pirate products are completely irrelevant to the market. They place no strain whatsoever on companies' bottom lines (except, of course for those that buy/sell pirated products: but there the law needs to step in).

Of course pirates are quick to dismiss points (like the observation of changing consumer trends, increase in piracy, PC/Broadband market penetration, etc) that are inconvenient to their goal. Yes, it sucks as a consumer to have DRM shoved down our throat--one reason I have little interest in BDR/HD DVD. But, yeah, piracy has no strain whatsoever on the bottomline, never has, never will, so lets not have any sort of protection

 

[Bouncing Zabaglione Bros.]

We saw in the music industry how DRM failed to stop piracy, and in fact pushed customers away from legal music purchases and toward piracy because of the hassles caused by DRM. In addition, the bad reputaion of DRM also rubs off on your product. People don't want DRM for fear their products become unusable as DRM servers get turned off or an Ipod gets lost or damaged.

What makes gaming special that they are not running into the same problems? We've already seen cases where DRM and the susequent circumvention gives a game a reputation for being buggy, damaging sales and reputation.

Really, DRM is a lose-lose, just an extra cost and hassle for the paying customer that actually drives those paying customers further towards piracy. And at the end of the day, it doesn't even work, as games are pirated almost at launch day, with even the newest and hardiest DRM schemes broken within days at the most.

 

[pcchen]

Once again, though, pcchen, pirates don't matter. They aren't customers, so they're irrelevant. People need to focus on designing their products for paying customers instead of attempting to force DRM crap through paying customers' throats.

Unfortunately, things are not always this simple. You can't just split people into "pirates" and "non-pirates." You need to prove that the sales will stay the same or even higher when there's no DRM. It's not obvious.

For example, we can think about a hypothetical situation: there's something on the floor, probably someone lost it. Of course, most honest people won't touch it, or they'll send it to the police, instead of keeping it to themselves. However, how many people are honest? Will it be the same, if that "something" is extremely valuable (for example, one hundred thousand dollars)? Or it's in a remote place where no one is watching? It simply won't be the same, compared to, say, if it's in front of a security camera, or it's not as valuable.

So, the publishers, assuming they are rational people, they are just trying to find a "DRM factor" which will maximize their profit. When you use a strict DRM, you lose some customers because they don't like it or their systems are incompatible, etc. but you also bring some customers who don't or can't defeat the DRM. On the other hand, when you use a lighter DRM (or even DRM free) you gain some customers because they like it or they won't have incompatibility issues, but you also lose some customers because they'll just pirate it.

Of course, some people will argue that DRM is ineffective because there's always a cracked copy available online. However, in many cases cracked copies are not always a clean cut. I won't go into details, but many cracks are just not "simply works" cracks.

How do we know where the maximum profit is? Is it on the side of DRM-free, or on the other side? We don't know that. Maybe publishers know, or they think they know. Microsoft decides to put DRM into Windows is probably not without their reasons. However, as most people know, DRM (especially strict DRM) are harmful to consumers. Therefore, to solve this problem, is to move the curve to make the maximum profit is on the side of DRM light or DRM free. Without this, just asking the publishers to go DRM free is pointless, they'll just follow the money.

 

[pcchen]

We saw in the music industry how DRM failed to stop piracy, and in fact pushed customers away from legal music purchases and toward piracy because of the hassles caused by DRM. In addition, the bad reputaion of DRM also rubs off on your product. People don't want DRM for fear their products become unusable as DRM servers get turned off or an Ipod gets lost or damaged.

What makes gaming special that they are not running into the same problems? We've already seen cases where DRM and the susequent circumvention gives a game a reputation for being buggy, damaging sales and reputation.

As I said before, the difference is that in music industry, most music are distributed through a non-DRMed media, the good old CD Audio. Therefore, those DRM-ed music stores are doomed to fail because people can just legitimately get their music from their CD, without the DRM hassle. This is clearly different from games and other softwares.

 

[_xxx_]

If you make a relevant product with high demand that cannot be pirated (or at least easily) you can convert a % of lost potential sales into sales.

See bold part. That's the core of the problem. As long as anything can be pirated, we will have the situation we have now. And what is "easily" in this case? Opening Emule or torrent search and entering the name of the app/game/movie is as easy as it ever gets for anyone, it only takes one guy to crack and release it.

Joshua: you're wrong with your assumptions. The real potential buyers are people like me - no pirated stuff but not ready to buy flawed, opressing products either.

 

[Bouncing Zabaglione Bros.]

As I said before, the difference is that in music industry, most music are distributed through a non-DRMed media, the good old CD Audio. Therefore, those DRM-ed

Is it? I thought downloads had overtaken disc sales? In no small part to the industry pushing low quality DRM product that self destructs when someone decides to take servers offline. The CD appears not to be the preferred medium by the customer or by the industry who thinks it's too easy to rip.

music stores are doomed to fail because people can just legitimately get their music from their CD, without the DRM hassle. This is clearly different from games and other softwares.

But can we? Sure, I can buy a CD, and then as soon as I make a copy for my wife to listen to in the car or my Ipod, the industry tells me I've done something illegal and I'm a criminal. And so the customer gives a big "FU" back to the industry for trying to remove their rights to the thing they bought, and gets pushed towards pirate product.

Just like Chalnoth's original posting of the cartoon at the start of the thread, it's about the way the industry treats their paying customers, and how the paying customers learn to treat the industry in the same antagonistic way. They treat us like theives, and we treat them like greedy, lying, cheating, SOBs - and we pay them for that privilege. Heck, no wonder people think that not paying is worth it, as the relationship with the publisher stays the same regardless. Being a fan of a particular genre (of games, music, whatever) is something that happens despite the actions of the publisher, instead of because of it.

 

[KimB]

Unfortunately, things are not always this simple. You can't just split people into "pirates" and "non-pirates." You need to prove that the sales will stay the same or even higher when there's no DRM. It's not obvious.

I think the burden of proof is entirely the other way around. No, it's not obvious. There's increased cost in developing/deploying the DRM. There's increased hassles to paying gamers who buy the DRM-locked product, making DRM-locked products gain a worse reputation. In fact, in some cases it's both easier and more convenient to go with the pirated version, provided you have a bit of technical knowhow.

So there are clearly some forces that go both ways in pushing people to/from piracy. And before punishing their own customers, companies really should demonstrate that doing so actually helps them. Otherwise they're just shooting themselves in the foot while hurting their paying customers at the same time.

Of course, some people will argue that DRM is ineffective because there's always a cracked copy available online. However, in many cases cracked copies are not always a clean cut. I won't go into details, but many cracks are just not "simply works" cracks.

Right, so this is why I have little problem with minimal DRM like, say, CD checks. It's the nasty rootkit and online activation stuff that gets on my nerves. These minimal DRM products have similar difficulties in hassle for pirates to the more sophisticated versions, but don't have the problem of penalizing paying gamers much (usually).

The new place that many companies have taken the piracy issue that I fully support, however, is in the delivery of new, udpated content only to registered owners of the products in question. Online services are another good option. Spore, for example, really has no need whatsoever for that shitty rootkit junk: they have an online service. All that you need is what they're already doing: require game registration to sign up for an account (and some limited number of accounts per purchase, like 5 or some such). That would provide paying gamers with no penalty whatsoever, but ensure significant hassle to pirates.

How do we know where the maximum profit is? Is it on the side of DRM-free, or on the other side? We don't know that. Maybe publishers know, or they think they know. Microsoft decides to put DRM into Windows is probably not without their reasons. However, as most people know, DRM (especially strict DRM) are harmful to consumers. Therefore, to solve this problem, is to move the curve to make the maximum profit is on the side of DRM light or DRM free. Without this, just asking the publishers to go DRM free is pointless, they'll just follow the money.

Windows is in a different ballpark, though. It's a monopoly product: almost everybody uses it, pirates and non-pirates alike. They clearly have nothing to lose by going as far as they can on the DRM. So I'm personally willing to forgive them on this particular issue, but I'm not willing to pay for a new Microsoft OS that doesn't have added value for me.

Games and music are quite different: each sells to a relatively small subset of persons. So market forces can more easily handle the piracy issue just by not favoring the pirates.

 

[pcchen]

I think the burden of proof is entirely the other way around. No, it's not obvious. There's increased cost in developing/deploying the DRM. There's increased hassles to paying gamers who buy the DRM-locked product, making DRM-locked products gain a worse reputation. In fact, in some cases it's both easier and more convenient to go with the pirated version, provided you have a bit of technical knowhow.

So there are clearly some forces that go both ways in pushing people to/from piracy. And before punishing their own customers, companies really should demonstrate that doing so actually helps them. Otherwise they're just shooting themselves in the foot while hurting their paying customers at the same time.

Well, I think it's relatively simple: almost all major publishers deploy a certain degrees of DRM in their games. Not to mention that many publishers are considering abandoning PC games in favor of consoles, just because of DRM issues. For them, consoles have the best of both worlds: they have built-in DRM which is quite difficult to crack (most requires a physical modification to the console which can void warranty), and they are not that annoying to customers.

Right, so this is why I have little problem with minimal DRM like, say, CD checks. It's the nasty rootkit and online activation stuff that gets on my nerves. These minimal DRM products have similar difficulties in hassle for pirates to the more sophisticated versions, but don't have the problem of penalizing paying gamers much (usually).

The problem is those nasty rootkits are actually originated from CD checks. You see, CD checks are quite easy to defeat. In early days, people just try to burn the game disk. Later, people uses CD emulators. Or just use cracked executables. That's why game developers opt for more crazy DRM schemes. Basically, most game developers have no resource to develop their own CD checks (or other DRM systems), so they buy it from others, such as Macrovision.

Actually, this is why I think the failed trusted computing initiative is actually good. With trusted computing game developers can easily provide an almost impossible to crack game executables (because it's encrypted) so CD checks don't have to rely on stupid rootkit schemes to protect them. Unfortunately, many people freaked out on many incorrect assumptions and now it's completely dead.

The new place that many companies have taken the piracy issue that I fully support, however, is in the delivery of new, udpated content only to registered owners of the products in question. Online services are another good option. Spore, for example, really has no need whatsoever for that shitty rootkit junk: they have an online service. All that you need is what they're already doing: require game registration to sign up for an account (and some limited number of accounts per purchase, like 5 or some such). That would provide paying gamers with no penalty whatsoever, but ensure significant hassle to pirates.

I agree with that. Spore is a specially disappointing example, as one will want to use its online capability to have the full game experiences. To my understanding, currently cracked Spore games can't access the server (I'm not sure about this). It's unfortunate that a game with essential online elements opt for such stupid DRM schemes. This is just like, say, if World of Warcraft performs CD checks.

However, not every games can be protected with online elements. Although it can force to use online checks (like Steam), but there are also people who don't like this.

Windows is in a different ballpark, though. It's a monopoly product: almost everybody uses it, pirates and non-pirates alike. They clearly have nothing to lose by going as far as they can on the DRM. So I'm personally willing to forgive them on this particular issue, but I'm not willing to pay for a new Microsoft OS that doesn't have added value for me.

Actually, I think it's quite the opposite. Most Windows sales are actually done through OEM channels. I believe that retail versions of Windows are actually the minority. So I don't know why Microsoft insists on making a DRM scheme on Windows. They can easily go after those OEM who sells pirated copies of Windows.

I think the only reason that Microsoft make WPA is to prevent "casual piracy," that is, to those who bought one retail copy of Windows (and Office) then installed on several computers. I think this is actually what Microsoft is going after.

Another issue I forgot to mention is the cost of customer services. This is actually probably the most important issue for many publishers and developers. For example, we received many e-mail services requests and later found out that these are from pirated copies! Those users do not know their copies of the software is pirated (it comes with a product they bought), but that still causes us a lot of trouble and increases our cost significantly. This forced us to discontinue providing direct customer service anymore, and customers will have to go through the retailers for service.

 

[KimB]

Well, I think it's relatively simple: almost all major publishers deploy a certain degrees of DRM in their games. Not to mention that many publishers are considering abandoning PC games in favor of consoles, just because of DRM issues. For them, consoles have the best of both worlds: they have built-in DRM which is quite difficult to crack (most requires a physical modification to the console which can void warranty), and they are not that annoying to customers.

But this isn't about how many pirates are out there, rather about how many paying customers there are. Yes, consoles have the advantage of being very low in piracy. This doesn't invalidate the may PC sales. As long as there are paying PC gamers, as long as it's profitable for publishers to ship PC games, they will do so. Getting upset over people that pirate their games and stopping their PC sales out of spite is just silly.

The problem is those nasty rootkits are actually originated from CD checks. You see, CD checks are quite easy to defeat. In early days, people just try to burn the game disk. Later, people uses CD emulators. Or just use cracked executables. That's why game developers opt for more crazy DRM schemes. Basically, most game developers have no resource to develop their own CD checks (or other DRM systems), so they buy it from others, such as Macrovision.

Right. My point is that taking that extra step to the rootkits and online activation was wholly unnecessary. They're still cracked, and often just as easy to pirate for the savvy user. These things can, however, make users find that pirating is actually more convenient.

I agree with that. Spore is a specially disappointing example, as one will want to use its online capability to have the full game experiences. To my understanding, currently cracked Spore games can't access the server (I'm not sure about this).

I'm pretty certain that you need a valid CD key to register for a Spore account. So yeah, this was a mind-bogglingly stupid move on EA's part.

However, not every games can be protected with online elements. Although it can force to use online checks (like Steam), but there are also people who don't like this.

Well, this is just one of those ways in which the market can push these things. Many PC games, for instance, release patches. It makes perfect sense to me to require registration of the game to obtain said patches (as was the case for the recent The Witcher Enhanced Edition). I don't see how it's that much overhead to have the checks on installation or download of the updates.

Actually, I think it's quite the opposite. Most Windows sales are actually done through OEM channels. I believe that retail versions of Windows are actually the minority. So I don't know why Microsoft insists on making a DRM scheme on Windows. They can easily go after those OEM who sells pirated copies of Windows.

I think the only reason that Microsoft make WPA is to prevent "casual piracy," that is, to those who bought one retail copy of Windows (and Office) then installed on several computers. I think this is actually what Microsoft is going after.

That's a fair point. But I think you're mistaken: I suspect that it's the East Asian markets where piracy is extremely rampant where Microsoft is really concerned.

Another issue I forgot to mention is the cost of customer services. This is actually probably the most important issue for many publishers and developers. For example, we received many e-mail services requests and later found out that these are from pirated copies! Those users do not know their copies of the software is pirated (it comes with a product they bought), but that still causes us a lot of trouble and increases our cost significantly. This forced us to discontinue providing direct customer service anymore, and customers will have to go through the retailers for service.

That's a good point, but it's just another way to make use of user registration.

 

[Frank]

Console games are pirated just as much, kids simply collect much more games than adult PC users. And they make great gifts.

 

[Sonic]

Frank, you are wrong about console games being pirated just as much. The majority of console games to pirated games ratio is much lower than that of the PC. At least in Europe, Japan, and North America where the majority of people can afford the games. Not sure about China, India, and other markets that are emerging. Still, I'd imagine piracy for PC games to be higher than that of consoles.

I personally despise DRM as it isn't really digital rights management, but more like digital restriction management. It makes a complete mess with the games and completely turns me off to it. While I don't pirate games any more (I used to when I was younger and think many here have in their time) because I have the money to spend on the games and systems I want I will not buy a PC game with really restrictive DRM. Being an Apple owner too also makes it less optimal to buy PC games so most of my gaming comes in the form of WoW and console games.

Consoles really are the best forms of DRM out there. It is a closed platform that a developer can buy a license to develop for (the only drawback I guess is buying the license and having the console manufacturer decide if they will allow you to actually sell the game) with a set of tools that have been worked on by many thousands of people. There is no need to target a multitude of different configurations so it helps out in that regard also. Developing multi-platform games can be a bit trickier but even then there are enough tools out there to help streamline the production of the game where it will be a win-win for the developer to do so.

There is little doubt publishers are not only greedy sons of bitches, but will do much to protect their bottom line. For instance I will not buy games from EA not because of their DRM on their PC products, but because they really do not give a shit about consumers and will do anything in their power to make sure competition is non existent.

 

[rashly]

One of the biggest problems I see with DRM is the lack of control the people have and the shift of power to big corporations. It's not too big of a deal when it comes to games, but when you look at operating systems it becomes very important.

Bill Gates always said one of his main goals was to get China to pay for Windows. DRM could do that (with the whole trusted computing thing). It'll either get China to pay or push them to FOSS.

But lets say Microsoft gets China to pay (or any country) and still has 90% of the marketshare. Does anyone else see the problem with a corporation having the killswitch on all software in a country? That equates to more power than most millitaries.

Having control and freedom of software is a very important thing to our overall freedoms. This will be an increasingly more important thing in the future. I'm not really a FOSS advcate or anything, but I see it becoming more important as the trusted computing platforms take off.

 

[Davros]

Do you know what happens to games that are returned to shops (along with overstocks ect)
no?
neither do I
but i do know that after going god knows where they are put onto pallets and shipped to a warehouse where they stay for a while before being delivered to the local prison
what!! prisoners get free games!!
Now before you go get yourselves arrested they are sent there to be destroyed - bah

Now as someone who worships at the altar of gameing goodness i feel it is my holy duty (my sacred crusade) to liberate some of these slices of goodness from their firey death

 

[pcchen]

But this isn't about how many pirates are out there, rather about how many paying customers there are. Yes, consoles have the advantage of being very low in piracy. This doesn't invalidate the may PC sales. As long as there are paying PC gamers, as long as it's profitable for publishers to ship PC games, they will do so. Getting upset over people that pirate their games and stopping their PC sales out of spite is just silly.

They probably think it's not worth the effort. Yes, maybe it's profitable, but the profit is just too small. At least that's what some publishers perceived.

Right. My point is that taking that extra step to the rootkits and online activation was wholly unnecessary. They're still cracked, and often just as easy to pirate for the savvy user. These things can, however, make users find that pirating is actually more convenient.

That's why I talked about "light DRM." When we talked about possible DRM schemes in my company, I always think it's bad to have too much restriction. For example, what EA did to Spore is a bad example. 5 installation times is just not enough for most people to feel comfortable, not to mention the original 3 times. In my opinion, there should be a timer, for example, one can install a certain times in, say, one month. One month after the first installation time, you get an additional time for another installation. Additional checks can also be done when playing the game, maybe randomly. For example, if an installation "expired" by other installations, the game may refuse to start. Furthermore, the DRM scheme should be removed after a certain time, when the retail sales of the game is no longer significant.

Well, this is just one of those ways in which the market can push these things. Many PC games, for instance, release patches. It makes perfect sense to me to require registration of the game to obtain said patches (as was the case for the recent The Witcher Enhanced Edition). I don't see how it's that much overhead to have the checks on installation or download of the updates.

Making patches work only with valid serial numbers is a simple method but it does not work very well. There are many ways to get the "pirated patch" as how they get the original pirated game.

That's a fair point. But I think you're mistaken: I suspect that it's the East Asian markets where piracy is extremely rampant where Microsoft is really concerned.

Well, it could also be a reason, but to my understanding pirated Windows XP is extremely widespread despite the WPA. Of course, it does cause some headaches for those pirates such as when SP2 came out. Also Windows Vista is not very popular in China, probably due to the same reason. We also reduced our sales in China because the piracy rate is just too high there.

I think, it's still most important to solve this problem by "moving the curve." That is, to make the paying customers think it's good they paid for the game, so the point of maximum profit is on the side of no DRM or light DRM. Draconian DRM schemes is, of course, not the answer. However, you don't expect the publishers to abolish all those DRM schemes over night. We have to encourage them to go for lighter DRM, actually, much lighter. And there need to be real sales figures to support it. Otherwise, if a publisher goes to light DRM but suffers from the sales, then maybe they are actually right, DRM will help sales.