If You Want To Compete With Free, This Is What You Need To Know
from the not-just-cash-money dept
When it comes to competing with piracy, one of the talking points of copyright maximalists is that content creators “can’t compete with free.” These people complain that because pirates don’t have to cover production costs, competing with them is a losing venture. What these people have not learned, despite our many attempts to teach them, is that price is not the only cost considered when consumers choose between buying legally and pirating. Over at Gamasutra, one expert blogger, Lars Doucet, has shared a very profound look at four “currencies” people consider when making such a choice.
The problem with most piracy debates is that the only “cost” they discuss is money-dollars.
This is wrong because there are at least four currencies involved here, not just one (money-dollars).
I propose the following:
- ($M) Money-dollars
- ($T) Time-dollars
- ($P) Pain-in-the-butt-dollars
- ($I) Integrity-dollars
Lars explains what these are as follows:
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.
Using these new variables in the consumer decision-making process, we can see quite clearly that even though the pirates have content creators beaten on the money-dollars aspect, there are still three other currencies through which content creators can compete. So let’s take a look at these other currencies and see exactly how content creators can leverage them.
First, we have Time-dollars. This is how long it takes the consumer to get from deciding he wants the product to enjoying it. Any road block in this process increases this cost. So the goal as a content creator is to reduce that time. The easiest way to reduce the time cost is to take your content to the consumer. The internet is an amazing tool to do just that. People spend a lot of time online and use a variety of tools on it. For movie and television, people are spending their time on Netflix, Hulu and Youtube. For music, they are spending their time on Pandora, Spotify and Grooveshark. For games they spend their time on Steam, Kongregate and Impulse. These and many other places online are where the customers are. If the content is not there, they have to spend time looking for it elsewhere, thus driving up the cost in Time-dollars. If they can’t find the content they want quickly and legally, they will be more inclined to find it quickly and illegally.
Next, we have Pain-in-the-butt-dollars. This is how hard it is to get from wanting the content to enjoying the content. When most content creators attempt to compete with pirates, they often choose to battle through this currency. This is where laws like the DMCA and SOPA come in. These laws are conceived as a way to increase the $P cost of piracy. Unfortunately, by creating these laws, the $P cost of legal content has also risen. With the DMCA came the anti-circumvention clause, which prevents owners of legal content from bypassing DRM which increases the $P cost of content. We have learned repeatedly over the years that the $P cost of DRM is often far too high for legal customers and pirates have been able to bypass it, thus dropping the $P cost of the illegal offerings. If content creators truly want to compete through the $P cost, then they need to offer convenience for their paying customers. The more barriers put between the paying customer and the content, the less likely they will value the legal offering.
Finally, we have Integrity-dollars. This cost is probably the most ethereal of the four. This is based on how the consumer feels when either buying the content or pirating it. If content creators want to compete through this currency, then they need to learn how to be more human and open with fans. If the consumers would rather support pirates than the content creators themselves, then those content creators certainly have a $I cost problem. Along with being the most ethereal of the four currencies, this is also one of the easiest to be swayed by the costs in the other three currencies. For example, if the fans like a content creator, but they feel he charges too much and it takes too long to get the content legally, the $I cost of the content has just gone up. Even worse, if the content creator lashes out at fans and treats fans as criminals, the $I cost of the authorized content goes way, way up, because people don’t want to support the artist.
While this is definitely not an exhaustive look at the currencies used by consumers when making their purchase decisions, it is one of the most spot on analyses of the topic. So when we ask content creators to compete with piracy, this is what we mean. To leverage the non-money currencies at their disposal. After all, the content creators are the ones who actually control these costs.
Filed Under: business models, compete with free, currency
Comments on “If You Want To Compete With Free, This Is What You Need To Know”
What the world would look like if it was run by D&D nerds.
one of the talking points of copyright maximalists is that content creators “can’t compete with free.”
It’s not really that they can’t compete with free, it that they don’t want to do any real work to compete in general. They just want to “create” and expect people to just hand them money.
They are the equivalent of people who mooch of the welfare system and treat it like a handout.
Unfortunately, like the welfare leeches, they undermine the credibility of the system and ruin it for everyone.
Re:
It’s not really that they can’t compete with free, it that they don’t want to do any real work to compete in general. They just want to “create” and expect people to just hand them money.
Indeed. Basically, their response seems to be “yeah we could do all that, and you’re right it would probably work – but we shouldn’t have to! So please fix it for us mommy”
I kinda feel the $T and $P are interchangeable. How long something takes to get and how hard it is to get are really, really closely related. Other than that, I think this is a really good analysis of the issue.
This could be known as the four factors test of piracy vs. buy
We have the 4 factors that determine fair use, I think we now have the 4 factors that determine if we pirate or if we buy. I think the 4 factors that determine fair use should now include a 5th factor that is an equation based on the 4 factors of pirate vs buy. If the total cost of pirate vs buy is too high, then pirating should be ok.
Re:
I see your point but disagree a little bit. Look at the windowing for movie releases. There is a lot of time spent waiting for the movie to hit the retail shelves and another 28 days before it hits the rental shelves/queues. So it is easy to get, but you have time to wait.
I$
Finally, we have Integrity-dollars. This cost is probably the most ethereal of the four. This is based on how the consumer feels when either buying the content or pirating it. (…) if the content creator lashes out at fans and treats fans as criminals, the $I cost of the authorized content goes way, way up, because people don’t want to support the artist.
One of the reasons I$ cost is high is the fact that most of the public doesn’t feel they’re supporting the artists. They’re filling the purses of the middlemen instead. Also, there’s the feeling that big hits are already rich and don’t need any more money. That’s why some people may pay for old fashioned CDs that an indie band sells after a concert but won’t buy Madonna’s album – even if I’m a big fan, I know she’ll only get a few cents from that sale, which mean nothing for her.
This could be known as the four factors test of piracy vs. buy
Now we just need an app for easy side-by-side cost comparison of the pirate vs “buy” methods of acquisition on a per-media-item basis…
This could be known as the four factors test of piracy vs. buy
Yes, we could crowdsource the ratings of each piece of content and each factor. Beside each content, we could show either of two icons. A cash register for a buy rating and a Jolly Roger for a pirate rating.
I would write the app and get rich but then I am afraid it would just get pirated. 😉
This could be known as the four factors test of piracy vs. buy
Actually… That’s a good idea… What’s a good way to learn how to make an app?
This notation can sum up a lot of DRM and other problems, even those not relating to piracy.
For example, let’s figure out the true cost of a heavily-DRM’d game. The total cost for the consumer is
$M +$T +$P +$I.
Let’s put actual numbers in.
Game cost $M is $50.
Time cost $T for most games is pretty low if you download them, and we don’t normally worry too much about windowing and stuff for video games. Manufactures have done a decent job of making games available quickly, so $T is under a dollar. Lets just say $T is 0 or close to it.
DRM hits hard at pain-in-the-but costs. You can’t load it on all of your computers, and you may have to deal with the need for 100% reliable internet connections. Even then, servers may go down. There is also a risk factor that goes into $P. What if I my computer dies and I loose my $M investment? What if the company rewrites their DRM policy and leaves me out in the cold? What if there is something I don’t realize about the DRM that I don’t know about? $P is high for a lot of modern games. Let’s say it $P=50.
For the game companies, I am sure they would argue that the $I Integrity cost for a purchased game is 0. However, it isn’t for a lot of gamers. Just go take a look at r/gaming in Reddit. You will find posts like this one: http://www.reddit.com/r/gaming/comments/q2n36/stop_buying_ea_games_or_stop_complaining/ . A lot of gamers hate EA because of the DRM. For these people buying a game from EA or other heavy DRM sources results in guilt from supporting the DRM system. I will put $I at 5. It probably isn’t a lot, but it is there. It is more for some people, and less for others. It may be small now, but it could grow with time.
So the ultimate cost of a DRM’d game is 50+50+5. Unfortunately we don’t have a good way to equate the units so we can’t just add them. The lesson that the game companies need to realize is that inconvenience is part of the real cost that customers factor into the purchase. I have no doubt that the companies do studies about what would happen to their sales numbers if they doubled or halved the $M cost of their games. But how many of them take into account what the sales figures would be if they doubled or halved the $P and $I factors.
Even worse, if the content creator lashes out at fans and treats fans as criminals, the $I cost of the authorized content goes way, way up, because people don’t want to support the artist.
Or if the supplier (e.g., Sony) decides to include a rootkit on the media, in which case large numbers of people will never, ever buy anything from that supplier again — no matter who the artist is, no matter how much they like them.
Sony of course would rather blame pirates than admit that they betrayed their own best customers. I’m still waiting for an apology in the traditional manner from their Cxx-level executives, all of whom have shamed and dishonored their ancestors, their families, and themselves.
Re:
$P also relates to cost after the fact. It’s the reason I don’t buy ebooks, DRM’ed anything, and use f/loss software. I *want* to be able to buy ebooks, but the $P cost is way to high for me — which (for me anyway) also affects drives the $I cost far too high.
Re:
Listening to the ‘Fantasy *fill in sport here* Team’ chatter every monday morning, it already is.
At $1 a song, i might buy 2 or 3 every once in awhile. At a quarter a song, i’d spend $100 right now. The record labels should consider that one.
This could be known as the four factors test of piracy vs. buy
Wait, so your idea is that if the “cost” is too high, then it’s OK to just take what you want?
And you guys call the maximalists entitled?
Re:
I have said this for a long time. At $1 a song or more, it is too expensive to build a music library worth having. At $0.25 or less, you could get a decent library pretty quickly.
This could be known as the four factors test of piracy vs. buy
Nice try troll, but try reading what I actually wrote next time. I said if it is too high, it “should” be ok, not that it “is” ok.
Also, the idea behind these costs is if the cost is too high, many people will pirate, rightly or wrongly. Lower the costs and many of those pirates will likely become paying customers.
I have also stated here many times that I do not pirate anything, mostly due to the I$ part of the equation.
barriers
another barrier that i experience both as a consumer and as a potential content producer is some sort of common currency that does not involve putting a credit card number into each website on the internet. i suppose paypal is the most likely candidate for a solution to ths problem though the barrier of giving ANY website personal and/or financial information is very real for me. to sell something at a cost that competes with free, so say $1.00, does it really make sense to ask a customer for a a credit card number, or paypal? to make it worthwhile, the transaction needs to be larger, and thus further away from free, in real dollar amounts. it seems to make more sense to charge once for a subscription in this instance.
Re:
Yeah, I want a +6 on my D20 market crediblity.
Re:
Actually, I believe the numbers can be equated:
($M) Money-dollars
($T) Time-dollars
($P) Pain-in-the-butt-dollars
($I) Integrity-dollars
$M = Actual cost
$T = Actual cost * 2
$P = Actual cost + $T
$I = $M + $T + $P
Simple way for people to understand this:
The more effort and time you put into making the game inconvenient and more of a pain in the ass, the less actual money that people will spend on you as your integrity is known. Just a thought…
Not a convincing argument
First of all, unless you have a signed contract valid in court, as a “content creator” you aren’t getting paid. You are working for free. You are spending hours producing content and giving it away.
Second, there’s a huge difference in scale among “content creators”. Your local garage band may be similar in quality to Foo Fighters in your opinion, but the fact is that they aren’t. What people actually like and are willing to pay for matters. In short, content creation is a competitive marketplace.
This could be known as the four factors test of piracy vs. buy
You are looking at the wrong end of the market. The equation is mainly if you are looking at the content creation end of the market. If you ramp your costs up too high, you are not going to have many people buying or using your product.
Sounds like a sharp guy
I guest-wrote something back in 2010 very much along the same lines. I think Lars did a better job polishing and presenting the idea though.
Re:
That is called elasticity, and content creators rarely understand the concept of lowering the price to increase the profit.
The common argument is that the content is soooo valuable that lowering the price would be stepping over dollars to pick up pennies.
Guess what? If the record labels set up their own online music store like iTunes and then set the prices at $.25 or $.10 per song, then yes they would probably crush iTunes overnight and rake in a ton of cash ( and get your $100).
There are a lot of people unwilling to pay $10 for 10 songs who would be willing to pay $10 for 100 songs.
Maybe the RIAA should start counting overpricing as lost sales.
Best article of the year, and it’s only February. Right on point.
Where is the RISK dollars? The amount of risk you assume when you break the law, that is a factor.
barriers
Well, you do realise I hope that when you buy digital media online, you’re not mailing them real money, you’re giving them digital money. And the only way to do that is to have a bank account and the only way for them to take the money out of your bank account is to have your credit card details.
If you don’t give the companies any financial information whatsoever, there’s no way for them to get the money you owe them.
Re:
Like Lars and I said, these are only four of many many more currencies considered when a consumer chooses between purchase and piracy.
Let’s consider Risk though. There is a bit of risk involved in both legal purchases as well as piracy. If a product has DRM, there is a risk that the content will not work properly when you use it because your computer or other electronic device is not compatible. There is also the risk that the DRM will actually harm your computer. There is a Risk that down the road, the content creator will no longer support the product and the DRM attached thus removing your use completely.
Now the risk of piracy. For one, you have the risk that you are getting a botched copy, meaning it is not complete. This is easy to rectify and is pretty low. There is a risk that the product you download has a virus or worm attached. Depending on what type it is, this could be a pretty high risk, however it can be mitigated by an aware community. There is also the risk that you might get sued by the content creator. However, that has become very unpopular with content creators and the risk of getting sued is getting lower and lower by the day.
I hope that helps with that aspect.
Re:
That’s included in $Integrity. Do you want to be seen as a thieving pirate, or as a legitimate customer?
This can also be referred to as the “Brand identification” concept: say fro example, two rival software companies are available for your workplace. One is completely free-to-use, but has complex instructions and a decent support team. The other, however, has a much simpler interface, but it costs $100,000, and has a track record of treating its customers like shit in your industry.
I’m guessing that the free-to-use one would win out, for the most part.
This could be known as the four factors test of piracy vs. buy
http://developer.android.com/guide/
This could be known as the four factors test of piracy vs. buy
While it is never okay to just pirate something (meaning there is always an integrity cost to piracy), that cost can quickly be justified as the other 3 costs increase for the legal product.
So for our sake, let’s say that the $M cost of a legal product and the $I cost of a pirated product are always equal and always static.
So for a legal product with a $50 $M cost, the pirated version has a $50 $I cost.
Your goal as a content creator is to leverage your control of the other costs so that the $P and $T costs are lower than the pirated copy. So if you can cut the $T and $P costs of the legal offering to as close to Zero as possible, you can mitigate any advantage the pirates have as long as your $I cost remains 0
So for the costs of a legal version:
$M – $50
$T – $0.5
$P – $0.5
$I – $0
and a pirated copy at:
$M – $0
$T – $0.5
$P – $0.5
$I – $50
It is pretty easy to convence a person to purchase rather than pirate. But as soon as you start driving any of those costs up, whether it is $T, $P or $I, you are making it far easier for the consumer to choose piracy.
The power is in the hands of the content creator. Don’t forget that.
Sounds like a sharp guy
That is pretty sweet. I am glad that more people have been thinking along these lines. Thanks for sharing.
Re:
And at the lower price people would save $T because they would rather just click a checkbox and pay for a digital file instead of ripping every cd in their physical collection.
This could be known as the four factors test of piracy vs. buy
you can mitigate any advantage the pirates have as long as your $I cost remains 0
Every time I see a new story about how a record label is cheating an artist for millions of dollars, their integrity cost skyrockets.
On the other side, pirating some infinitely copyable bits and using the money I would have spent on it instead on something (merchandise, concert tickets, direct donation, whatever) that better compensates the actual artist has a zero or even negative integrity cost.
I acknowledge that it is possible I have rationalized two wrongs into a right, but I’d like to see the rationalization on the label’s side for cheating the artists they claim to represent.
This could be known as the four factors test of piracy vs. buy
The problem is on the expression “take it” when is more like “do it yourself”.
I can copy something, I can find a distribution channel myself and even do it on my own, what do I need those other people for again?
Just like garbage if it is out in the open in public space people can go there and just take it, laws saying otherwise are just laughable.
Re:
Yeah, but then you have people like my wife, bless her soul, who are more than happy to pay $18+ for that shiny, plastic package with a disc inside because it has liner notes and might have lyrics and stuff included. She actually got mad at me because the last “album” I bought her was a Wal-Mart download that I burned to CD afterwards.
She absolutely doesn’t want downloads at any price, and will never get on board with the digital revolution, and is the perfect customer in the mind of the typical RIAA executive.
Integrity Cost
I disagree. The integrity cost represents how good or bad one feels about acquiring the content in a given manner. If the fans like a content creator the integrity cost of a legal purchase goes down, not up. An expensive and time-consuming legal purchase option has high monetary and time costs; those parameters do not affect integrity cost. In this case the high monetary and time costs may outweigh the lower integrity cost and make a legal purchase less attractive than pirating, but the integrity cost is still low.
Re:
Kind of like tech in general. Computers didn’t really take off until they got cheap enough. Once the price hit a certain point, they took off like a rocket.
Prices on digital goods need to get down to a low enough point.
I pay purchase 1 $40+ game per year, but I purchase 5+ $15 games per year.
Re:
I think he was implying that there is a cost to the risk that the publisher will sue you for copyright infringement or you could get arrested for theft. Doesn’t matter if the charges are legit or bogus; there’s still a cost to defend yourself against them. If the charges stick, the cost is increased even further, so you have to consider the probability of that too. See: Vimeo, Jammie Thomas, Joel Tennebaum.
Integrity Cost
I don’t agree with you. Let’s look at a recent example from Nintendo.
People love Nintendo. People love JRPGs. Unfortunately, Nintendo decided back in 2010 to not release several highly anticipated JRP titles in the US. So although Nintendo was liked because they are Nintendo, they increased the cost of those games in several ways:
1) The Increased $M cost to purchase an import copy of the game.
2) The increased $T cost to ship the game.
3) The Increased $P cost to mod your North American Wii to play PAL games.
4) Each of those increases added together increased the $I cost of the game as people were upset with Nintendo for not releasing the games legally.
With all that in mind, if someone is going to go through the trouble to mod their Wii, it would be far quicker and cheaper to download an ISO of the game.
Granted, Nintendo has made amends in recent weeks and is bringing two of these games to the US this year. However, the $T cost is still high as one is coming out in the US 2 years after Japan and the other is coming out 1 year after Japan.
I hope that helps you understand where I was coming from.
This could be known as the four factors test of piracy vs. buy
I see exactly where you are coming from and understand completely.
Re:
At this point, if they decided to compete with free, they are so far behind the curve they can not catch up. Everyone will be suspicious of them, wonder what they are doing, repeat the same old patterns of consumption, and they will fail.
Economics is not just about a business plan. It is also about changing old habits. These habits can take a huge amount of time to change on both corporate side and the client side.
Think about these simple things.
Grandma and Grandpa going to the movies every Sunday. How do you get them into downloading a movie onto their 24 inch tube TV? (Lost cause)
Think about the kids who have been taught downloading is evil. Not many kids believe the BS propaganda. The ones that do will not download. (Lost Cause)
Think about the average person who doesn’t know or want to know how UltraViolet works. If there is even one glitch they will walk away and never come back. They will not do research to figure it out. (Lost Cause)
I could go on for pages and pages creating a wall of words similar to war and peace. I won’t. I will mirror your words …
“please fix it for us mommy” is the only option they have.
Re:
Sorry you must take a -2 penalty on your roll for being an anon, that means you need to roll a natural 20 in order to succeed, good luck!
This could be known as the four factors test of piracy vs. buy
This would be a case where the $I of buying from a “legitimate” source where your $M isn’t going to something you want to support is actually higher then the $I of piracy. So, just because you buy from a legitimate source doesn’t always mean that the $I = 0
Re:
You listed several extreme cases though. When the risk of being sued is 1:1Billion, that is actually really really low. Meaning that Risk cost will not have as much weight to it.
My sister just sent me 1 credit from her Audible account, which I used to buy the latest Discworld book on audio.
First I had to create an account. Then I had to download and install two separate programs. (I’m still not sure what they both do. I think one downloads content and the other is a player and database. If I have to have both anyway, why not put both into one program?) Then I was able to download the content, but I had to tell it what format I wanted to use it for. I tried to get something to burn to CD, but I didn’t see an obvious way to do that; I guess I need to go through iTunes.
I tried getting a version for a specific device; they have a long list. The only one I have is a Garmin GPS (which can’t compete with the free Google GPS on my T1 — oops, sorry, different rant), so I brought it in from my car and plugged it in. Oops, I can’t hook THAT Garmin GPS up to their program, only specific models.
So I went online and tried to find how to convert to MP3. Some suggested a multi-step process starting with burning to CD, but I skipped that in favor of a direct conversion program. I tried a few, the one I settled on seemed to work but the free download copy only converts a minute, and they all cost $50 for the full version. So I *ahem* went onto a popular bittorrent site and obtained a try-before-you-buy license.
Turns out the output skips occasionally. Seems like it uses iTunes to play the track while it captures the output. Well, hell, _I_ could have done that, though it would take a bit more work. But I’d have more control over the process. The possibility is still up in the air.
So I’ve grabbed my stash of CD-RWs (why waste a CD-R blank?) and will try the burn-then-rip method.
In the meantime, two days later I still can’t play the damned thing properly on my car stereo. And it would have cost $26 if not for the gift. Plus $50 for a converter that doesn’t work, but I wouldn’t have found that out until I’d payed for it.
The $P cost is rising pretty quickly. Between that, the extra $M to buy a good converter/DRM stripper (or to buy a licensed player, e.g. an iPod), and the $Q (quality cost — it’s encoded at something like 32kb/sec, and yes, I can hear it, even at my advanced age ;), I’m inclined to say that Hell Will Freeze Over Before I Actually Spend Money At Audible.
Sorry, Sis. It was a nice gift but perhaps you should offer the other two to my daughter, who already owns an iPod.
Around two years ago I bought a legal, licensed, legitimate, dead-dinosaur version of the previous book, Unseen Academicals, at a book store near my parents’ house, where I was visiting at the time. It wasn’t until later that I discovered that, due to pretty but not very good packaging, the CDs were scratched and not all would play through without skipping. Returning the “book” to the store required a problematical 16-hour round-trip drive, not to mention that I’d gotten the last one in the store. So I cleaned them the best I could and put up with it.
I love the series and want to buy them all, but the $I cost is skyrocketing every time I do. Oh, not actually. The copy of Monstrous Regiment I was originally given was pretty much unlistenable, so I found a cassette version (new in the box) online, which was pretty inexpensive, and at the time I had a cassette deck in my car, so I could just play them directly. I did digitize them later. They sound pretty good.
Just for a bit of perspective: despite all the advances in technology, the best experience I’ve had so far of the books-on-audio that I’ve purchased was on a 50-year-old format (originally intended for dictation because of the limited quality). Of the formats it’s given me the least trouble.
CDs may have higher bandwidth and dynamic range, but cassettes don’t skip. Ponder that.
barriers
I agree with you, Bruce. Giving credit card numbers to umpteen different online retailers just plain old sucks. It’s not that I don’t trust online retailers (okay, I actually don’t), it’s that they can be compromised.
I trust precisely three online retailers, in this order: newegg, Steam, Amazon. And I like this arrangement. I can buy pretty much any computer equipment or gadget that I like. I can buy pretty much any game that I want. And I can buy pretty much whatever random thing that I want, like a Halloween costume.
And I haven’t had to put my CC details into a computer in over two years, save for when Valve deleted my CC after they got compromised. With only three hands in the cookie jar, my risk of being compromised is much lower than if I had thirty retailers that knew my CC. Even if my own PC were to be compromised (not easy since I run Linux on my financial computer), since I never enter my CC number they wouldn’t have enough to charge my account.
In fact, I really wanted to buy the Louis CK digital download. But unfortunately for Louis, PayPal is not on my short list of trusted online retailers. P$ fail.
AMEN!
Your experience is quite similar to my girlfriend’s. is going to college and recently they started using “online textbooks”.
She has to go to a web site. Sign up for an account. Put in credit card details. Just to buy the book. Then download another app to look at the book. Sign up for ANOTHER account to do her homework. Sign up for ANOTHER account to get supplemental material (charts, etc).
And she can’t sell the book back at the end of the year now. In fact, she only has a “license” to use the book, and her license expires in six months. There are also limitations on how much of the book you can print out.
FFS, at this point I find myself wishing she could just get a simple textbook.
Similarly, I refuse to buy any games that aren’t on Steam. Screw you, EA, I don’t want to sign up for Origin. I don’t trust you. I will skip your games until you cave in later and sell them on Steam. And if I can’t play your game without signing up for an account on Origin, I won’t ever play your game.
So Which Of The Four Kinds Of Dollars is Bottled Water Worth?
Bottled water being the canonical example of ?competing with free?, of course.
So which is it? How can we measure the value of bottled water, exactly, to explain why people are willing to pay for it?
Sounds like a sharp guy
Ditto. I mentioned similar ideas in comments before, but this version is more straightforward.
The obvious answer is $Q cost and $I cost. Depending where you live, tap water tastes gross and can make you sick.
Wow! Thanks for the response :)
Hey guys! This is Lars, the author of the gamasutra article.
First – a big thanks to Mr. Zachary Knight for posting this! Second, thanks to everyone who commented. This is turning into a really interesting discussion!
You guys have already taken this tiny little seed of a theory into way more interesting places than I had imagined, so I don’t have much to add to the conversation except this:
First, and most importantly, I want to emphasize I don’t see this as a be-all, end-all theory, and I want to give credit where it’s due and mention that I am NOT the first to have had this basic idea (there’s plenty of “prior art” examples being brought up in the comments here and elsewhere).
Second, the “four currencies” is a catchy phrase and an easy way to frame the discussion, but I’m sure in actuality there’s no end to the number of “currencies” people can come up with, and what each one ultimately means. For instance, I originally conceived of “Integrity-dollars” as a kind of mixture of “Morality/Guilt-dollars” and “Fear-of-legal-action-dollars,” but since these values are subjective in the first place, feel free to think of them however you like, in whatever way best aids communication.
Third, the examples I give in my article are from a pretty small sample set – single-player PC games, and so there’s some unstated assumptions that people have (rightly!) pointed out, the most prevalent one being that the $I cost of buying “from the source” is always zero, when in fact it’s often higher than that if you don’t like how “the source” behaves, and can be negative (ie, giving you integrity “credit”) for causes you want to actively support above and beyond the product/service they provide.
Fourth, I don’t believe everything can ultimately be reduced to economics, but in general it’s a really powerful tool for modeling and understanding human behavior, so that’s all this idea is – a new(ish) way of looking at the debate, rather than me trying to come up with some magic formula 🙂
Feel free to mutate/share/remix this idea in whatever way you feel. I created those little dollar images from a super quick google searching, so when I have the time I’ll try to put together some versions based entirely on CC or public domain images and then release them under a CC license.
So Which Of The Four Kinds Of Dollars is Bottled Water Worth?
Assuming that by “free” you mean “tap”, it can be any of the above.
First, tap water isn’t always free, but it’s still damn near close by comparison. But then there’s the fact that, IMHO, most tap water taste like ass! Even though most bottled water taste like the bottle it’s been stored in for who knows how long, it’s still better than ass. Overall, I would give “free” tap water higher $I.
$T can sort of vary depending on location. Getting a glass of tap water is about as simple as getting a bottle from the fridge. Otherwise, access to drinking fountains (tap water) and beverage vendors vary a great deal, but more or less about the same. I’d consider them a tie.
You can always fix the taste issue of tap water by installing a water filter at home, which is what I do. Even though it does increase $M somewhat, it’s still less than bottled. Also, $I is highly dependent upon the filter brand. Overall, having tried many brands and types over the years, I would give filtered tap water a far lower $I. $P is somewhat higher though, as you have to periodically replace the filter, and you can’t take it with you unless you bottle it yourself.
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And that’s perfectly fine. I’m the same way with books; I’d rather have a physical hardback book in my hands then an E-Book any day. We want something that’s a finite good and cannot be replicated on the internet for $0. But we’re talking about two different markets, the physical market and the digital market.
So Which Of The Four Kinds Of Dollars is Bottled Water Worth?
Interesting little factoid about water I learned when my dad was working with the water authority. Tap water is required by law to match a vary high standard before it can be pumped to a house. Bottled water doesn’t have to meet anything near as high a standard. It’s actually safer and healthier to drink the tap water (As long as your house pipes are good) then bottled.
Oddly, that relates to this article. It’s a little fact that few people know just like how the legitimate music services are supporting a company that’s all for screwing the consumer and artists. It changes the I number ever so slightly.
This could be known as the four factors test of piracy vs. buy
>Wait, so your idea is that if the “cost” is too high, then it’s OK to just take what you want?
And you guys call the maximalists entitled?
The maximalists have tended to believe that the difficulty, integrity and cost involved in actually tracking down real pirates is too high, so they think it’s okay to demand settlement cash from anyone who can’t afford to defend themselves. “When you fish with a driftnet, you’re bound to catch a few dolphins.”
So, yes – we’ll call the maximalists entitled, thank you very much.
Not a convincing argument
Your local garage band may be similar in quality to Foo Fighters in your opinion, but the fact is that they aren’t.
How exactly is that a “fact?” They could be as good, worse, or better, depending on the listener.
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Which is the model the allofmp3 (remember them) used. The cost of a track was based on the MB size of the track, and you chose the kbs quality of the track and encoding, and hence the size.
My understanding is that they did remit royalties to the Russian collection agency, but the label’s etc. never claimed it. My guess is that they were afraid to legitimise the business model and would be unable to impose artificial constraints. Also, the artists would rise or fall based solely on the merits of their music, and not by the promotion of the label.
To the labels, allofmp3 was evil incarnate and needed to be crushed at all costs, and it was.
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So what you are saying is that with better enforcement, the risk would get high enough to be a factor.
Great! Can you explain that to Mike now, he never seems to grasp it.
barriers
… technically that last step is ‘credit or debit card details’.
here, at least, there’s a number of debit cards set up to interact with the credit card system. just instead of having a ‘credit limit’ it’s a ‘how much money do you actually Have?’ limit. and any transaction shows up Immediately on your back account’s transaction list (web-banking is useful like that.)
little bit riskier but lets you bypass all the nonsense with credit ratings and avoids getting you into debt (set up the account it’s tied to not to allow overdrafts. which is… the default here anyway.)
it also has most, though not all, of the protections against other people using it without your permission that a credit card has. (from memory the biggest difference is that you have less time to catch it before they write it off as not their problem and you’re out Actual Cash while they sort it out, rather than ‘credit’. YMMV on the details of course.)
not that that Really changes your point any, but still.
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enforcement at that level is not technically possible.
if it Were technically possible the methods required would cause open revolt.
not really an issue.
much better for all concerned to instead acknowledge infringement as a fact and then use the far more effective practice of ignoring it and/or routing around it. (much like the Internet does with censorship, actually…)
AMEN!
this kind of stupid is why i buy my books in the one format which has none of these problems:
Paper and Ink.
the only downside to this is when the book in question is self published by an american author and the only international seller is amazon. the T and M costs go through the ROOF as i can either pay ~70NZD or more (depending on how fast i want it, exactly) to have it show up in a reasonable time period (less than a week) or i can pay a sensible amount ($10 or less) to have it go by ship and take anywhere from roughly 3 weeks (if i’m super lucky) to five MONTHS, with no information as to which it will be, and, given some of the issues with transporting things by ship and some dubious confluences of insurance and shipping policies regarding who’s responsible for what, there is an, admittedly small chance that it’ll literally fall off the bloody boat, in which case i not only do not get my book i don’t get my money back either. (please note that amazon’s cost to ship to Australia is closer to $20 and the cost of literally putting the thing in the Standard Post from Australia to NZ is closer to $5. they could employ a few people in Australia to do Just This and Still cut the shipping costs in half while killing the time difference. hell, as is, when available it is cheaper to order the same product from a British supplier, paying noticeably more, then pay for it to go by Royal Air Mail. the price is still reasonable, though more than sending it from the USA by ship. at standard rates that’s 1-3 weeks for it to get here if my memory of instances where i’ve done just that is anything to go by.)
I also generally buy my games from Gamersgate (doesn’t require ANY random crap. may or may not need an account in order to buy stuff, can’t remember, but having one is more convenient than not if you don’t.) they also very clearly Mark which games have DRM on them (and the more common/nastier DRM is marked by Name. ‘other DRM’ is always a bit of a risk though as there’s no indication as to what it is. the vast majority of the time it’s less of a menace. occasionally not.)
i pretty much refuse to buy Anything from EA anymore. well, except second hand console games. on the basis that EA gets NOTHING while the brick-and-mortar games shop i patronize (which i actually LIKE due to their spectacular customer service.) gets a decent amount And i get the game cheaper.
and if the developers i liked actually put their games out on non-sony platforms with any reliability i’d not buy ps3 stuff either. (unfortunately, there are entire Genres that US publishers and developers don’t even Bother with… which the Japanese do. due largely to misplaced nationalism, so far as i can tell, combined with general corporate dickery, they only publish them on sony consoles. (well, some publish on nintendo, but the quality and nature of nintendo stuff is so compleatly unpredictable unless you’re the sort of obsesive fan who reads every gaming news site in several languages every day that i don’t even want to touch it most of the time.)
So Which Of The Four Kinds Of Dollars is Bottled Water Worth?
that, obviously, depends quite highly on the country you’re in. (and possibly state.)
also, the Flavor of tap water is dependent on the mineral content. which is dependent on location, and there’s a Lot of different mineral mixes which still meet those high standards. many of which really do taste pretty bad. (they’re not unhealthy or anything. just taste terrible.)
then there’s a bunch of places where the tap water really IS bad and bottled water’s a lot safer.
(Christchurch, NZ used to have some of the best water in the world, along with Kaiapoi, which is a bit north. a bit further still and you got to places where the water was actually sometimes quite suspect and no good for drinking without filtration. anyway, the kaiapoi and christchurch water was very good, barely any noticeable taste… unless you went from one to the other. then it was quite a noticeable difference. but still a non-issue.
during the earthquakes christchurch’s water was quite suspect, but never badly compromised and is back to being good. however, for some completely unknown reason, despite being perfectly fine to drink, the water, at least in this part of Christchurch, now intermittently tastes like pencil shavings. … i’m really not sure what to make of that.)
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Probably mostly chaotic evil
Not a convincing argument
“Second, there’s a huge difference in scale among “content creators”. Your local garage band may be similar in quality to Foo Fighters in your opinion, but the fact is that they aren’t.”
‘Fact’? The quality of a musical act and their material is a ‘fact’? Really?
“What people actually like and are willing to pay for matters. In short, content creation is a competitive marketplace.”
So music that doesn’t sell as much is objectively lower in quality to music that sells more? Really? So Lady Gaga is the greatest musician in the world?
I guess this means that McDonald’s makes the best hamburgers, right? I mean no one else sells nearly as many hamburgers, right? The market has spoken!
But of course, to anyone who knows anything about food, this is quite irrelevant, because these people evaluate the quality of food based not on its creator’s market share, but on their experience while eating it. This is, in fact, the way most intelligent people evaluate the things that they care about.
Finally I should note that while ‘content creation’ can be related to the activities of a competitive market, it is not itself a market at all. e.g. Bach wrote very little for a competitive market, and if he were around today, he would sell much less than the Foo Fighters.
Do you really want to go on record as saying that Bach is less good than the Foo Fighters because his music doesn’t sell as much?
This could be known as the four factors test of piracy vs. buy
So, just because you buy from a legitimate source doesn’t always mean that the $I = 0
Yep. We even see this with physical products. Although I would change “legitimate” to “legal” in this case:
Look at what happened after the oil spill in the Gulf of Mexico. Many people chose to drive past BP gas stations, even if other competitors were higher priced or less convenient.
totally biased nonsense. art doesn’t make itself
yet another glib attempt to polarize the issue, couching all the “righteous” fans on one side. total BS. self-appointed, self-righteous curators are making ad revenue using content that was invested in by the creators. then they try to vilify the creators, who cannot recoup the actual dollars because of these self-appointed middlemen. it takes actual dollars to make art, not pain in the butt dollars. what a total con. articles like this help no one. they just obfuscate and polarize in the most biased manner possible. go away, so art can thrive.
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Yes, because I don’t know about you, but I personally have more faith in anyone who registers their own unique fake online name on this website than the people who just take the default fake online name that site gives them.
I$
You’re right, but if you don’t take the money and say buy a Madonna concert ticket or some piece of her merchandise, then arn’t you cheating her out of the few cents on top of that?
Integrity Cost
Those arn’t really $I factors though. They all increased the overall cost of the game, but they don’t effect $I directly. They do however make the $I of downloading the game illegally APPEAR that much smaller compared to the overall costs of importing the game or waiting for them to debut in America.
So Which Of The Four Kinds Of Dollars is Bottled Water Worth?
Another interesting factoid, most bottled water (the cheap stuff) is from municipal water supplies.
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Ignoring the argument with blinders on, like always.
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You make no sense.
What I think you are trying to say is that the record companies are the creators and the internet is “the middlemen”. Which is utter bullshit.
The internet is the new marketer and distributor. We (creators) don’t need the record companies anymore. What we need is internet marketing and business experts.
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The name is not the point. Creating an account and posting while logged in creates a link to your profile, including a record of your other comments. This gives the user credibility because, fake or not, his current identity can be connected to a history of posts which provides context to the current comments.
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Let’s not forget the risk that there’s a possibility that a refund for the incompatible software is refused, and support for rectifying any damage or ill-effects of said DRM is likewise unavailable. It’s not above pro-DRM people to say, “Oh, but piracy. Suck it up.”
The risk of risking your money and computer is a real factor in the decision.
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That’s right, I don’t care if you are Alice, Bob, Billy-Bob or Vernon from Topeka. I’m more interested if you are the same “Endtimer” who said something particularly witty (or dumb) last week.
But some random and well-named ‘Anonymous Coward’? What value should I give their pronouncements, especially given the amount of ad-homs and dumb arguments they use.
I actually have to give kudos to darryl and out_of_the_blue for admitting themselves… and coming back for more! At least they make us think.
So Which Of The Four Kinds Of Dollars is Bottled Water Worth?
How can we measure the value of bottled water, exactly, to explain why people are willing to pay for it?
As mentioned, $Q – quality. Also convenience, the inverse of which is inconvenience, so $P.
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either i missed your point altogether or you made it very poorly. each of your arguments falls flat when examined closer.
for example, grandma and grandpa go to the movies every sunday because they want to. when people reach that stage of life they choose their entertainment based on what they like to do. i am old enough to be a grandparent (got off to a late start, however) and so are most of my friends. we are very savvy about our entertainment choices. even my mother has a big screen tv and is also very savvy about her entertainment choices. she watches netflix on her computer, and i didn’t show her how to do it.
my teenage kids get their music from the easiest source (usually pandora) not because it is legal, but because it is easy.
you got me on the ultraviolet thing. what the heck is that? but that probably plays more to my argument than yours.
don’t ever believe that because you are young that older people are stuck in our ways. people change when they see value in changing.
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Actually they wouldn’t; at least not from me. Their karma (what is directly related to determining their $I) is so bad from years of anti-consumer and anti-artist crap and the kinds of nasty things they push through governments that I effectively feel death of that company is the only answer. It must end, go bankrupt and be replaced by new players with better business models and reputations.
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And there are a lot more of them than there are welfare leeches. Because while welfare leeches get the opprobrium and hostility of those around them, and are generally embarassed…. these people are PROUD of being leeches.
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The risk of a botched copy is very high with “legally” purchased music (look up “brick wall limiter”) and with “legally” purchased DVDs (look up “replaced music” and “cuts”).
The risk of a virus or worm is very high with anything from Sony and a lot of computer game manufacturers.
The only thing the publishers have to sell is authentication, and *they aren’t providing it*. Pirate copies generally have better authentication of origin and accuracy than “official” copies these days, which is certainly swaying the computations waaaaay off against the publishers.
It’s different getting stuff direct-from-artist.
AMEN!
I would outright refuse to use a purchased “online textbook” and would frankly confront the professor. And then the department head. And then the college. I might sue.
AMEN!
Colleges should *really* not join this level of stupid. It will make people uninterested in taking college courses. Professors are now starting to put fully free courses online (the UK has been doing this for years), and this sort of bullshit is just enough to make people start reconsidering the value of doing the courses the way the college wants.
The value of a college degree then becomes just a credential, and one of diminishing credibility. At that point, very bright people who have *already learned the material from free online sources* will start copying homework unrepentantly in order to avoid paying for the electronic bullshit. At this point academic integrity will actually go into disrepute due to the copyright bullshit.
There is no end to the amount of trouble caused by the copyright maximalists.