Wednesday, May 18, 2011

Thomas Pain and One Shot Economics

So I was browsing the Kotaku comments section today and found a verbal back and forth that involved a great discussion; piracy. As some of my friends may or may not know, I believe that all information should be free and easily available, with payment options for those that wish to do so. This article really brings this to light, by exploring how these facilities, rather than being vilified, could generate revenue.

This is a great point as a major inaccuracy with the piracy argument is that for every copy pirated that is a sale lost. That is not true at all, as many people who pirate would not have looked at the information in the first place and many others who use the media buy it if they like it. Some people pirate after purchasing a music CD because the DRM is to much of a hassle, thus making it nearly impossible to put the files on their iPod.

A good read. Here are some choice lines, but do yourself a favor and read the whole thing.

UPDATE: Cheers to Netflix's Ted Sarandos for making a good statement about piracy. Here's an excerpt of the interview:

"What are you doing to combat piracy?"
One of the things is we get ISPs to publicise their connection speeds – and when we launch in a territory the Bittorrent traffic drops as the Netflix traffic grows. So I think people do want a great experience and they want access – people are mostly honest. The best way to combat piracy isn’t legislatively or criminally but by giving good options. One of the side effects of growth of content is an expectation to have access to it. You can’t use the internet as a marketing vehicle and then not as a delivery vehicle.


"The pattern of sharing, copying and stealing as a way to generate sales is not new. The Internet may make it more apparent than ever before, but it’s at least as old as Thomas Paine’s Rights of Man."

"They are thinking of their business in the terms of one-shot economics. One-shot economics views their game as a bullet in a gun, and they have only one shot to hit the target. The target is, of course, that the game has to make a lot of money. It can’t fail, and can’t only acquit itself. It must be a hit, or else the developer will be destroyed.

This quickly leads to ARPU (average-revenue-per-user) obsession."

"One-shot economics mostly don’t work because the developer or publisher makes the mistake of thinking that all sharing is the enemy (torrenting, second hand sales, rentals, borrowing in the school playground etc) because these activities take away from the one shot of ARPU that they need. In so doing, they actively work against the most powerful potential weapon in their arsenal: Seeding."

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