Futures Group

Another example of how stronger regulations promote (and profit) deviancy.

How Strong Copy Protection on Videogames Promotes Piracy
By Ben Kuchera 05.26.09  (article from WIRED online)

With high-speed internet connections and BitTorrent now common, it’s easier than ever to download the most popular PC games … illegally. Publishers are fighting back against the pirates with increasingly strict copy protection. Caught in the crossfire are legitimate paying customers: the PC gamers. They are people who, generally speaking, are technically sophisticated enough to download illegally, but who choose to buy instead. And they have started to revolt.

The Boston Tea Party of this particular revolution took place with the September 2008 launch of Will Wright’s highly anticipated Spore. Wright is the legendary game designer behind the popular Sims series of games, and Spore was supposed to be his masterpiece. The problem was that the game had to be activated online before it could be played. The title could only be activated a limited number of times before the game shut down, which rankled customers with multiple computers. (Imagine buying a CD that you could only play on a few stereos, and one starts to understand the anger.) Even worse, the game installed a program called SecuRom that had the potential to change the behavior of other programs on the gamer’s system, and there was no disclosure of what the program was, what it did, or how to remove it.

Because of the unusually strong copy-protection, gamers fought back. Amazon.com was filled with one-star reviews for the game, and many of the would-be buyers seemed to find the moral high ground in pirating the game instead of purchasing it legally. After all, the pirated version was SecuRom-free, and could be used on any number of systems. Downloading a cracked version of the game from a pirate stopped being something that felt a lot like stealing, and started to seem like plain common sense. It was a way for gamers to keep their hard-drives free of a program that looked suspiciously like malware.

Electronic Arts, Spore’s publisher, had pulled out the big guns in an attempt to protect its massive, estimated $35 million investment from pirates, and ended up alienating the people who support the company: its customers. Other gaming executives have gotten the message, too. “What really miffs gamers is when they purchase games legitimately and are then made to feel like pirates through excessive or invasive DRM measures,” says Ron Pessner, general manager in Microsoft’s Interactive Entertainment Business. Even the Federal government has taken notice. The Federal Trade Commission recently held a summit in March of this year to explore the issue of digital rights management, and how it may be hurting consumers.

“We’re at an important crossroads; one which will define ownership, use and even fair use going forward,” says Hal Halpin, president of the Entertainment Consumers Association. “That software publishers and developers are aware of the rising tide of discontent regarding intrusive DRM isn’t a good thing, it’s a great thing.” Halpin, lobbying for the gamer at the FTC summit, argued that publishers should be required to disclose the level of DRM on the game’s packaging. That way, everyone is aware of how invasive or benign the copy protection added to the game will be upon installation. Even if the FTC doesn’t take up the proposal, the issue has gained a lot of traction in the video game press. Since Spore, the inclusion of a program like SecuROM in a new video game is so controversial that it’s nearly a story unto itself.

Nearly lost in all the hoopla over SecuRom and install limits is the larger issue: how much damage is piracy really doing to the gaming industry? We will never know if without SecuRom and the subsequent buyer revolt Spore would have been a larger success, but it’s worth looking at numbers for the industry as a whole. According to the PC Gaming Alliance the size of the PC Gaming industry in 2008 was $11 billion dollars in sales worldwide. That’s roughly equal to the console market, where piracy is extremely rare. (Typically pirating a console game requires physically modifying game hardware, or buying third-party add-ons for consoles or portables.) While it impossible to know how big the industry would be without piracy, numbers like these suggest that piracy may be a non-issue. One thing is for sure, the PC gaming industry is remarkbly healthy… unless they manage to alienate those who keep the business alive: the customers.

Main themes from conference speakers centred around mobile technology, data visualization/ real-time data, urban city future (mainly on changes in transport systems & infrastructure) online communities & inventions.  Pictures from LIFT conference, and videos of sessions are online.

There was an interesting presentation by Jorg Jelden of Trendbuero on Fakesumption – the consumption of fake products. He analyzed why consumers knowingly and deliberately purchase fakes, and raised questions for companies to consider. Global trade of fakes was twice the volume of Walmart’s and usually backed by organized crime. Consumers, particularly in emerging markets, considered fakes good-enough solutions to the originals. They also saw themselves as brand consumers, so it was not a good idea for companies to try and sue or punish them. Could we think of new ways to integrate such consumers instead of penalizing them? How could we convince them to pay for the premium? Companies would need to bridge the brand gap between marketed brand value and consumer trust in them.

Baba Wame from Cameroon shared candidly on how women in his country were using online dating to try to find white husbands. Then Frank Beau spoke about a project called Metromantics (finding love in the subway) where his team analyzed how people interacted in the subway, and how Metro of the 21st century might look like.

Clive van Heerden of Philips Design Probe shared youtube videos of prototype projects, such as sensing clothes, electronic tattoo (very cool video!), and biosphere home-grown food.

The closing highlight of the conference was Vint Cerf, legendary pioneer of the internet, who shared his observations on how the www had grown, key changes to the internet platform, and his personal project on inter-planetary internet. Brilliant!

One interesting session during the recent 4th European Futurist Conference was a presentation on The Illicit Global Economy by Nils Gilman, a consultant with Monitor Group, and lecturer at Berkeley. Nils spoke on the concept of Deviant Globalization, and 7 rules or lessons to be glanced from different deviant economies.

Prior to the Conference, the organizers interviewed Nils for his thoughts on the topic: http://www.european-futurists.org/wEnglisch/aktuelles/2008_08_29_Interview_Nils_Gilman_meldung.php

Nils presentation slides were clean and concise. 1 picture, 1 rule, 7 times. It was a refreshing break from the wordy, lengthy slides by most of the other speakers.

Deviant globalization occurs in parallel with the legitimate system in the world today. Smuggling, drug traffiking, organ trading, and transnational crimes have always existed, but grown more globalized, in tandem with the integration of markets and economies. The global economy structure is not designed for equi-growth distribution. Where there are market failures and arbitrage options, opportunistic behaviour will definitely drive the fast-growing deviant economies. Nils predicts that if we constructed an investment portfolio of deviant industries, it would outperform Wall Street.

Governments need to realise that deviant economies are permanent features of the globalized world. They are neither irritants, nor something to be eliminated. Instead, they should be properly managed through a regulatory framework, and not law enforcement. One of Nils rules suggests that when a deviant industry is policed, the amateur players fall out, and the remaining ones turn professional. Further enforcement only forces the deviant industry to innovate their modus operandis. There may, in fact, be opportunities to learn from such innovations. One example is the deviant software industry, aka piracy and hackers.

Deviant policy implications are obviously a blindspot for policy makers. Yet there is no way to foretell or clamp down all deviant outcomes. What do deviant industries mean for a well-ordered and well-enforced society like Singapore? Could we be opportunistic and turn deviant activities to our advantage?