Thursday, February 19, 2009

Clarification of My Opinion on Piracy

I believe that "piracy" (aka file sharing) can help push for new business models. Here I will explain, give examples, and provide links to business models that I believe prove my point.

The world changes, and so does people, their needs, and subsequentally the businesses. I believe that the businesses cater the consumers - not the other way around. If you believe it's the other way around, you might succeed for a while, but eventually when the world does change while you stick to old methods you will start to lose.

Some understand this and adapt, but yes - it is risky. Many simply want to cling to old methods, because hey, they are proven to work. Yes, they did work, but that is changing. People once made money on selling ice for people to keep their food cold, but times changed, technology changed, and a better option emerged. It may seem as a silly example, but it really isn't. The world is constantly evolving - society, economy, values, trends. Change is inevitable. So, don't mistake proven to have worked in the past with will always work, because that is the same as saying we must do all we can to stop the inevitable changes in the world.

As I've mentioned, there are already examples to new ways, new business models, that have emerged because of the evolution of technology and demand of the customers. Customers have started demanding simplicity and accessibility and freedom to choose what they want, in contrast to being fed with only the latest and most hyped products that can be found in stores.

One example I always point at is Steam. It is simple - you can browse plenty of games, download game demos, read information and interact with a large gaming community. If you like a game, you can buy it online, and with a single click download and install the game, and play it. After you have payed for it, it is yours, regardless of what computer you are on as long as you are logged in to Steam. The prices are usually reasonable, but since it's not Steam who puts the price tags on individual games some can in some absurd cases be even more expensive than in the ordinary stores...

Today, I got a link from a friend that I found most interesting (thanks Henrik). It is a video presentation by Michal Masnick (Editor at Techdirt blog, President of Floor64) where he explains how Trent Reznor and NiN (Nine inch Nails) have succeeded in a business model where they give away their music for free online (sharable by the fans) and yet make money. It is a very interesting presentation, it's just 15 minutes long, so if you have a little extra time on a lunch break then why not take a look.

Connect with the fans + give them a reason to buy = you will get things sold. It's a simple model really, provided that you manage to fulfill the equation.

And actually - similar concepts can be seen in many games already.

Take Dreamlords The Reawakening for example - it connects to fans by having a free and downloadable game and a community, and it offers in-game benefits for those who decide to buy those benefits. If the fans are engaged in the game enough, and the benefits are good enough from an online game perspective, then people will buy those benefits.

Look at Aeria Games, who also use that concept. All their games (if I'm not mistaken) are free to download and play, forever. You don't have to pay anything in order to play them, if you don't want to. That is quite a nice way of connecting with your fans, as well as inviting new ones (especially in trying times such as these) as it also provides free publicity - the product's name is spread via word of mouth. They have a great community, and then they offer in-game benefits for those who find it worth the money - and people do pay for those extra benefits. Not all of them, maybe not even the majority, but they don't have to.

These business models are risky, simply because if you are unable to connect with fans (they might simply think your game sucks, or that you as a company suck), and because even if you do connect with fans, you might fail to provide with a good enough reason to buy something (you would probably fail if your model was based on selling physical copies of the game disc, with the game title written by hand with a marker pen, shipped in kitchen plastic bags... or maybe not?). But the same risk is present for old "proven" methods as well. Your marketing might fail and/or your product might fail.

For "offline games", the method could actually be similar to that of Trent Reznor's in the presentation. I'll throw an example... Spread a copy of your game freely, connect with the players via a community or similar, and make them interested in you and your game. Then, you can provide the service of playing that same game over fast and stable multiplayer servers for a fee, or you can sell a nice special edition box containing perhaps an art booklet, a hard cover story pocket book, and maybe something that is signed by the developers. Things with a more intimate value that simply can't be copied. That is the reason to buy, anyway. Don't forget to successfully connect to your audience as well and make them interested in the game AND in you. Right now, I believe that you are more likely to touch the heart of most gamers if you show you are on their side and not on the distant huge-corporation-people-permanently-in-suits-fighting-piracy side.

Remember, you cater them. Not the other way around.

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