Published on July 5th, 2012 | by Stephen Crane1
Europe’s Software Ownership Ruling Presents New Problems
Earlier this week the Court of Justice of the EU ruled that end users do, in fact, own purchased software and have the rights to resell them. It’s a landmark case in dealing with digital property, and will certainly prove interesting.
There are some uncomfortable and interesting questions that come of this, however. We’re dealing with intangible goods that, if they’re downloads, don’t degrade or depreciate whatsoever. The license I buy today will be the same quality of license 5, 10, or 15 years in the future. This concept is vastly different than pre-owned sales as we know them now.
For just about all consumer items as we know them, there is a reasonable amount of depreciation. Cars lose value just for leaving the dealership, CDs are considered unreturnable after opened, and books can’t be returned for equal value a few weeks after purchase. As time goes by, in most circumstances, the value continues to drop. My 30 year old paperback of The Divine Comedy isn’t going to fetch as high of a price as a brand new one. The same applies to all consumer goods. That’s because time erodes and lessens the inherent quality and value of most goods.
The same has applied to video games. There is an active market for used games because CDs scratch, cartridges wear down, and if you’re okay with that you can purchase a game for a decent discount. The risk of damage, and the decay over time is the reason we can get these games cheaper.
Without that decay, however, we are presented with a few problems. How do retailers price used digital licenses? It obviously can never be more than the current price for a new copy, but what incentive to retailers have to price used licenses lower? Retailers could even just cycle those licences back into their “stock” of new licenses and collect an even more significant profit. That, of course, would be immoral and possibly borderline illegal. Retailers can also price pre-owned digital copies at only a $1 discount.
The quality risk present in the current used game system for physical copies ensures that even if a retailer has used copies on hand, a percentage of the population will always buy new. We always value new games higher than used, so a pre-owned title has to be priced lower.
By upending this balance, we risk severely hurting developers, publishers, and consumers while retailers line their pockets. Without the risk, or any significant difference in value, customers will not have the incentive to purchase new games, which means money doesn’t reach the developers. This will make the PC a significantly less viable market, as a lack of a used game market is one of the PC’s greatest strengths in the eyes of developers.
An unfriendly market towards developers, unfortunately, only encourages a stronger focus on DLC and attempting to monetize from users who buy used. We’ll see more examples of EA’s Project Ten Dollar as developers try to build around retailers and vice versa. Consumers will end up caught in the crossfire.
So what can be done? Well it’s up to consumers to favor developers and retailers who come up with fair, consumer and industry friendly practices in the future. We need to take the time to really sort out whether or not our favorite developer is getting screwed over and whether monetization schemes are friendly for us. Here’s a good video breakdown of Project Ten Dollar and how that could have been implemented in a consumer friendly way.
The bottom line is, the EU’s ruling on property rights of purchased software is ultimately good, but it opened up a minefield of continuing questions the software developers will have to consider in the future. Consumers aren’t powerless in this minefield, however. What we purchase and what we say can change business practices and show that we care about how we are treated. Money and our voices are our best tools.