Penny Arcade Turns Traitor: Says Used Game Purchasers “Pirates”

by Christopher Harbin

I’m stark raving mad right now.  I’ve never been much of a hot head.  And over the years my old age has tempered my immediate reactions, but I went from Calmsville to Livid City after reading Penny Arcade’s latest comic without so much as a stopover at Smoldering Anger Junction.

The comic was commenting on a new trend in video games.  Recently, game publishers have locked more and more content that was traditionally included in a game behind an online pay wall.  For example, earlier this year, EA Sports started preventing those purchasing used games from playing online by including a one-time use code inside new packages.  Some publishers have even put content included on the physical media behind a pay wall.  So you have to pay someone to get at content on the disc.  I have no doubt that you will soon see console publishers putting the entirety of their content behind a one-use code.  For years, PC gamers have had to engage in various workarounds to sell their games.

Copyright – particularly the first-sale doctrine – looms over and informs every part of this discussion.  See, when you buy a work, under the Copyright Act, you own it.  You’re entitled to do what you please with it.  You can burn it, resell it, keep it, devise it, trade it, or gift it.  Just like the rest of your personal property.  Underpinning every publisher’s shady little move with respect to digital goods is the veiled threat of bringing down the mighty beast of copyright infringement upon those that defy them.  I have pounded the table on this subject before, but copyright owners view copyright law as an understanding only between themselves and the government – consumers, that is the public, be damned.  Remember, just three years ago the RIAA maintained — in court — that consumers have no right to rip their CDs onto their MP3 players.

And Penny Arcade buys into this paradigm hook, line, and sinker.  The gist of their latest comic – and the narrative that accompanies it — is that purchasers of used video games are not customers of the publishers.  While this is sort of correct – used games don’t put money directly into publishers’ coffers – it’s not actually correct.  Which we all know is the best kind of correct.  Let’s get at this from another industry:  auto sales.  One reason people buy Hondas, Toyotas, and Volvos is that they hold their resale value better than other comparable vehicles.  Thus, at the original sale, they command a premium price.  So it’s obvious that producers do in fact see value in used car sales.  DeVoy sums up the criticism to Penny Arcade’s shoddy argument best: “Only idiots think they buy products from their producers, LOL!”  Indeed, DeVoy.  If game publishers are worried that they aren’t getting a “fair” cut of used game sales, they can do what every other industry does.  Price it up front.  Let the market decide.  They should not be able to wield the mighty sword of copyright law in a way other industries don’t get to do.

Tycho even goes so far as to say that those who buy used games are pirates.  I find this kind of rhetoric wholly disingenuous – especially coming from Tycho who often prides himself on distilling substantive wheat from the rhetorical chaff.  But here Tycho has completely failed and comes off looking like an industry shill.  When one buys a used car, have they burned and pillaged the auto industry?  Why should video games be treated any differently?  Don’t even bring up the fact that digital goods don’t physically degrade:  1) even MP3s degrade after many copies; 2) under copyright law you aren’t allowed able to keep a copy and transfer a new one to another – that’s infringement and; 3) books that are kept well physically degrade far after the economic value has been extracted.

Tycho and Gabe are by far some of the smartest and most engaging commentators on the games industry, but their latest comic is a prime example of what happens when quasi-journalists become too close to their industry.  Tycho even admits it:  “You meet one person who creates games for a living, just one, and it becomes very difficult to maintain this virtuous fiction [that buying a used game isn’t piracy.]”  They start putting faces to products and thinking of the little beating hearts in cribs inside the homes of developers.  It’s certainly a noble thought.  But in propagating this logically-flawed and rhetorically-misleading argument they cosign big media’s efforts to erode our rights.  Shame on you, Penny Arcade.

Update:  The always brilliant Bill Harris takes a more tempered view

Cyberblogging soulmate Mike Masnick hit this issue about 9 seconds before I did.

25 Responses to Penny Arcade Turns Traitor: Says Used Game Purchasers “Pirates”

  1. Brian Seiler says:

    One note from an interesting discussion that I had that you might be able to weigh in on:

    “2) under copyright law you aren’t allowed able to keep a copy and transfer a new one to another – that’s infringement”

    This does not imply that it is infringement to make a copy and transfer the ORIGINAL to another owner, as exemplified by businesses whose stock in trade is to take receipt of your CD catalog, translate it all to MP3, and ship you back a portable drive with all of the music encoded to it essentially for free (making their money by then reselling the CDs you sent them). No act in this sequence is illegal. The transcoding of CDs to MP3s is protected fair use of your own copy of the material (with the business acting as your proxy, because in this example you are apparently too busy or incompetent to manage the translation yourself), and your right to pay for the service by trade of your CDs is protected under First Sale.

    Setting aside the DMCA for the moment (its restriction against breaking encryption complicates the situation considerably), would that then imply that it would be legal for me to burn a copy of a game and then resell the original of that game?

  2. THQ is doing something different than Ubisoft’s idiotic Assassin’s Creed 2 DRM that made people log in to servers to play the game at all. The one time use code is for multiplayer only. If you don’t want to play Smackdown v. Raw on Live, you’re free to get the used edition. Even then, you can purchase a code for an extra $10. Seems to me, they are really just incentivizing the purchase of a new copy with included features that the used copies don’t come with.

    Also, I think you’re overstating the case on what Penny Arcade said. Tycho was making the argument that from the point of view of “rewarding the creator”, there isn’t much of a distinction between buying a used game and piracy because they both make the creator $0.

    Lastly, I will bring up the fact that digital goods don’t physically degrade, despite your admonition not to. Your point about digital files degrading with each copy and not being able to send a copy and keep the original are well and good. But the physical discs that games come on don’t really fit in with this argument. Unlike a car or book, my copy of Red Dead Redemption is in the same condition after 120 hours of play as it was on hour 1. I could resell it and whoever bought it would be getting the same product as the new one at a much lower price. Then he can do the same, and so on. Even books that have been read carefully start show signs of shelf wear after they have been read…

    • Lolzreview says:

      Thanks for your thoughtful comment.

      I am persuadable w/r/t online-functionality as there is some ongoing support that goes that is not proportional to all gamers. But it seems to me this support cost is paid for at the original sale. If nobody resold their game to others, the only bottom side would be natural attrition of gamers. That is, they get bored of online play. It seems unfair to me for publishers to charge used-game purchasers a “sorry about your lack attrition” tax.

      But we all know that online functionality is not the end of the digital rights slippery slope. It’s hard to say with a straight face that publishers would limit this initiative to MP when many AAA titles do not have a MP component whatsoever.

      Even though they are making a moral argument rather than a legal argument, when they agree with THQ’s basic premise that used gamers are “cheating” someone, they do so at the expense of the public.

      If they one believes developers should be paid more for the works they create, my argument holds still water. Price the original sale accordingly and let the market decide. So if the developer’s back-end deal is premised on net profit, a higher price point would reward them accordingly. If the back-end deal is based on unit sales, I’m terribly sorry for them, but I’m not sure why consumers must pay for this with their first-sale rights. And of course we must note that the whole thing is premised on the assumption that more sales means higher paid devs. I’m skeptical of this, of course, and I believe that publishers are the only ones that benefit under this scheme. Yet another way intermediates pervert copyright law to interrupt the bargain between authors and consumers.

      Lastly, all this talk about physical degradation misses the point that the value of a book, a CD, or a video game is not in the physical integrity of the media but rather the content that is on it. The economic value of a copyright has long been extracted before protection runs out. The value of Red Dead Redemption goes down precisely because the value of what is protected by copyright is worth less. That’s the nature of intellectual property.

      Copyright on newly-created works runs about 95 years. Do we really need yet another way for copyright owners to control downstream uses? Copyright is not quid pro quo. It’s incentives. When we let media companies define our rights, we shouldn’t be surprised they don’t have our interests, nor the interests of creators, in mind.

      Thanks again for your comment.

  3. MikeZ says:

    I’d actually say as far as video games go, digital media degrades far faster than physical media.

    The worn out paperback book on my nightstand published in 1985 contains far more of its original value than any computer game that I bought in the ’80s. The technology updates are still driving old games into obsolescence. That might not be the case in the future but right now it certainly is.

  4. You lost me here:

    “1. even MP3s degrade after many copies”

    Maybe if each copy is a re-encoding of the prior version; but if you’re just doing straight on file copying — as I assume most people do — there’s no degradation — bits are bits; they’re the same on my hard drive or my iPod or yours…

    Past that, spot on brother.

    Everything old is new again.,,307436,00.html

  5. Vinnie says:

    First off I would like to say that I agree wholeheartedly with your post. I was incensed with the seemingly thoughtless comments from PA (a site that I had come to truly respect for their probing analysis of issues).

    Second, for individuals who claim there is no devaluation of the game over time I think that is missing at least two issues. 1. Purchasing the game on the date of release is accompanied by a whole host of emotional and personal judgments that don’t have strict economic value. If it was truly the case that it didn’t matter when you purchased a game there would not be a rush to purchase games as soon as they come out, they would have exactly the same subjective value on day 1000 as on day 0, but that is obviously not the case. The used game buyer is forced to wait (not always but often) and even risk not being able to find a used copy at all, these are value losses for the used game buyer. 2. Multiplayer degrades over time. I have purchased a number of used games late in their lifecycle (sometimes as short as 6 months after their release) to find the multiplayer options deserted. I understand that this is a cost of buying used games (and unfortunately I don’t have any other option if i want to play games). Therefore there is actual depreciation of used games and it often happens very, very quickly.

    Third, speaking of multiplayer it seems that developers are really going to shoot themselves in the foot if they use one-time-codes to hinder access to multiplayer. Games like MW2, COD, and Halo are built around deep multiplayer experiences (the first two more than the third), and keeping individuals from accessing it (or at least making it more difficult to use or more expensive) will make them less likely to purchase the games. This will even hurt the multiplayer community which benefits from having very large player bases.

    In sum, I am glad that PA has started a debate, I just hope that they take the time to analyze their position from more than one viewpoint.

  6. James says:

    interesting post. should we not be discussing alternative models for redistributing the profit made by Gamestop et al on their used game sales?? Something similar to the European Resale Rights Directive, as a method of, um, taxing video game resales and returning some profit to publishers/devs?? – – Potentially difficult to enforce, yes, but an interesting model, still lets everyone buy used games, rewards the creators, bit of a compromise for retailers etc…

    • Lolzreview says:

      Hi James,

      In our current system, I am not in favor of resale rights because copyright properly viewed is not quid pro quo for authors, but rather an incentive to create the work in the first place. As authors are already given enough incentives to create these video games already, I see no need to add another inefficient incentive into the mix.

      Also, American copyright law has a long history of alienability and forced royalty rates would only place a barrier for those seeking to sell their copyrights.

      If we are worried about developers not being paid enough from their publishers, why isn’t the market the answer? Adding onto an already obtuse copyright system seems like the wrong thing to do.

      However, in the context of complete copyright reform, resale rights might be appropriate if other incentives, such as the length of a copyright term, we minimized. I’ll have to think more about it — it’s an interesting idea.

  7. Tony says:

    I want to see the used game market go away so that Gamestop no longer has a reason to exist. Once they bankrupt, you consolers can start your used game market up again. I’ll root for your team at that point.

  8. Robert C says:

    I, too, was dismayed by Tycho’s take. And it’s not that I object to these sorts of incentives to get people to buy a new copy. Obviously, it’s in the publisher’s interest to do so and it’s not clear to me that there’s anything wrong with it.

    The part that bothered me is the idea that there’s something unethical about buying a used copy that annoys the shit out of me. I really don’t understand that idea at all.

  9. […] a recent GChat session about his recent video game post (reprinted with permission), Christopher Harbin – who endorsed Obama just two years ago […]

  10. Aquarion says:

    I kind of disagree with you about used cars. The used car industry doesn’t kill the new car industry, partly because cars degrade, so people want used cars less. But also, because they *all* degrade, and while a car manufacturer won’t get a penny from the sale of a used car, they do get a steady income from people buying parts for one. In fact, there is a trend towards custom components and apple-style sealed engine units so that not only do mechanics have to get the parts per car, they also have to be specially trained in how to repair each new model.

    You could argue that DLC fills in this nieche somehow, but until you require DLC to continue your game, I’m not sure it fits. The things that fit into that “must do this to use the software” hole would be patches.

    So, by this logic, they sell the new games, don’t care about the used ones, and charge per patch. Or per league update (hello, EA Sports).

    The argument usually boils down to “Used games mean the developer doesn’t get paid” vs “New games are too expensive for me”. This is not a solvable argument because both sides are completely true, it depends on whose side you stand on, and you won’t generally shift people across the line.

    Personally, I stand on the no-used-games side of the line, not because of any copyright issues, but simply because if games producers aren’t getting money for selling games, something is wrong.

    So, as as a thesis: game producers should get some money out of used games sales.

    How should that happen?

    Below the producers, there are three transactions. The producer sells to the distributor, the distributor to the store, the store to the customer.

    A used game sale is between the store and the customer, the distributor has done their job, and so isn’t on the hook here. This leaves three people to possibly give the producer money for a used game sale: Producer (zero sum game), the store or the customer.

    Currently, the producer is attempting to get it out of the customer by one-time DLC charges (Project $10) that don’t negate the game entirely, but do provide an incentive to buy it new (and, by the side, a disincentive to buy it used. Most games multiplayer community doesn’t last long enough for the used discount to be more than $10, so used game + multiplayer >= new game inc. multiplayer.)

    Other ways they could do this would be with a non-transferable code that gives you a permanent 30% off all DLC and downloads for that game. So there’s nothing in the box you that changes between free and used, but the new buyer has an incentive to be so apart from the aesthetic “Shiny clear film to open” reason.

    The second option would be to charge the store, the producer to get a cut of every second hand game sale. This would enable the publisher to track used sales (and possibly prove to each other that game prices *really are* too expensive). On the plus side, this takes the cost out of the consumer and means the evil corporations don’t make as good a profit from selling second hand items, but on the minus side it’s completely illegal in most places due to the aforementioned legal rights to resale, which mean that the store is under no obligation to enter into such an agreement, cannot be contracted to do so, and therefore won’t).

  11. Neil says:

    I don’t find myself on either side of this debate just yet…still weighing the various factors…however, wanted to point out that I think many folks are taking Tycho’s comments a little out of context. He didn’t equate reselling games to piracy on an ethical level, rather he stated that IF ones goal is to reward the creators of a product with money, then buying used seems no more effective. He poorly chose to use the word “better”, which out of context can be taken very many ways, in context he tells you exactly he thinks would be “better”. If reading the whole paragraph, it seems clear he isn’t making a statement on the ethics of buying used.

    For me, I’m sympathetic to the following point: if a developer/publisher wants to provide content only to those who purchase new, then that’s fine to me since those folks are their direct customers. It’s an incentive to purchase new, and I’m fond of incentives as a means to encourage folks to act in certain ways.

    The problem with incentives is that the folks who don’t receive them don’t see them as incentives. Rather they consider it the case that they are being short changed. Any time you provide an incentive to one group, there will be another group that doesn’t receive it. It’s two sides of the same coin, just depends on which side your perspective is from.

    • Lolzreview says:

      You are not being fair, especially in light of today’s comic/comments, that Tycho was not making a moral / ethical judgement. “Pirate” and “Cheat” are loaded terms. Tycho’s implication was that if you buy used game instead of a new game, you are being enriched by directly taking away from the developer in a way that is morally wrong.

      • Neil says:

        I disagree, in fact, I take quite the opposite view from todays post. It seems to me that he is specifically trying to point out that he recognizes it isn’t illegal, just that from the perspective of a developer, a person buying used games and a pirate are indistinguishable. In context, they are identical (from a developers perspective) on a monetary level. I base this on the following: “What I have said is that the end result of that purchase from a developer perspective must be indistinguishable. ”

        The point being that in both cases a person is playing the game without the developer having received any compensation. Is that ethically wrong? No. But as he stated in the initial post, he wants to reward the creators of these products by giving them money.

        Also “Cheat” is not a word he used.

        Perhaps my own bias is entering my reading, but as for his last paragraph, where he talks about “free money”, or what you refer to as being enriched. The point that I see, and sympathise with, is the following: if we consume games without providing compensation to developers (be it by purchasing used, renting, or pirating), what does that mean for the future of gaming in general. Developers will need to find other means to earn money or they won’t continue to make games. Personally, I don’t look forward to the alternate methods of revenue streams they devise…and I certainly want the good developers to continue making games. Today he talks about sustainability of the medium, and this is what I think he refers to.

        • Lolzreview says:

          THQ called used gamers cheats. Penny-Arcade agrees with them. They essentially cosign their use of the word.

          Way to totally miss Tycho’s concluding paragraph:

          “That bit up there is the part I can’t resolve: the moral dimension contained within the purchase. Yes, I’m giving somebody money when I buy used. Is that sufficient? What is the end result, and what systems am I sustaining by doing so?”

          He’s absolutely making a moral judgement (which is why he distinguishes the legality from the morality issue) that it’s morally better to support the “system” of development rather than Gamestop’s system of secondary sales.

          • Neil says:

            Hm, if I sympathise with somebody elses comments (or as Tycho puts it, have a different reaction than most), I would hope folks wouldn’t take their words and ascribe them to me. He actually doesn’t voice agreement with the THQ statements, just notes he has a different reaction, then goes on to explain his viewpoint.

            I did miss his use of the word “moral” in that paragraph…

            But still not convinced he is equating the two practices on an ethical level. From the quote you post, the disagreement I have with your interpretation is on whether he has made a judgement at all. He states quite clearly he has not. And it’s the lack of judgement on the topic that leaves him with unease.

            Indeed, many folks have moral codes that they apply to themselves, but do not expect others to follow. Until somebody actually points their finger my way telling me I’m doing wrong, I give the benefit of the doubt that they haven’t judged me.

            At the end of the day, I’m finding myself having a debate on the viewpoints held by another person, based on two very brief pieces of writing. I’m clearly not qualified to say exactly what he thinks, just what I thought he was saying. All that I really meant to point out is that many folks are arriving at certain conclusions about his beliefs, despite the evidence that folks are reading considerably different messages from his posts (take you and I for example).

            Perhaps he is judging others on a moral level…then again, maybe he isn’t. Guess it isn’t clear cut enough to say one way or the other…

          • Neil says:

            This post not so much on what Tycho thinks as much as what my own thoughts are now.

            Since you mention the Gamestop system of secondary sales…this is actually where I currently have my strongest reservations.

            Generally when folks discuss the used market, they cite a cycle where an individual sells a product then uses the money from that sale to purchase another game. The notion being that money from used games sales _eventually_ makes it to new sales.

            I don’t disagree with the above, in fact, it generally makes sense to me. However, the complication for me is actually Gamestop.

            Here is a company which purchases the used game from an individual for something like $25 and sells to another individual for ~$50. $25 go straight to their pocket. Granted, they facilitate the exchange, but that seems like quite a premium for that service. Contrast with something like ebay, where most of the money goes to the individual and ebay takes very little.

            In the Gamestop case, there is quite a chunk of money that isn’t revolving back into the purchase of games, when compared with a direct (or near direct) sale. This to me is a system that I have a really hard time supporting. If I ever dealt with used games, I feel strongly that I would avoid Gamestop at all cost…simply because when they are in the loop, a considerable amount of money is coming out of the pool.

            Closest comparison in my mind is used car dealers…and they obviously have quite a large markup in general…however, it’s nowhere near Gamestop from a percentage standpoint.

  12. ScottC says:

    Not a copyright lawyer, so maybe I’m completely wrong. But this seems like you’ve internalized the first sale doctrine as some sort of moral truth. Copyright law does not preempt the field for creative works. Just because the first sale doctrine allows you to resale items that you own does not mean that copyright holders have to neatly package their goods in a complete, discrete, physical medium (understanding that it has to fixed in tangible form to receive the copyright). For example, if I were to create a video game, I could charge people to come to my house and play it and refuse to let anyone buy it. Nothing in copyright law says I have to make additional physical copies of the game and sell them to people. Game publishers can put their entire games behind online pay walls and charge people monthly subscriptions to play. My brother knows this better than me as he’s spent countless hours playing Final Fantasy. I don’t think the first sale doctrine means that you can insist on one and only one method of distribution or that the only way publishers can try to recoup money for what would be downstream sales is to build that into the initial price. They’re free to use alternative distribution schemes. Taking the automobile example, cars can be sold or leased. If Honda wanted to, it could refuse to sell cars to people. Just because Honda is prohibited from restricting your right to resale a car once it is sold to you does not mean that they aren’t allowed to lease the vehicle as an alternative.

  13. […] The Legal Satirycon takes Penny Arcade to task […]

  14. […] are now reaping the benefits of scattering themselves on the rocks beneath. Myself, In Mala Fide, The Legal Satyricon, and The Willarium all seem to have noticed this trend and consequences quickly become apparent. I […]

  15. cenkoyunus says:

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  16. […] targeted at a market segment with needs less intense than those at the top of the market.  As previously noted on this blog, this is a damaging proposition for consumers, whose software purchases will always […]

  17. […] cut off at the first sale to licensed goods.  Prior discussion of this development is available here.  A similar process of requiring the content to be accessed as part of a program – rather […]

  18. price comparison…

    Penny Arcade Turns Traitor: Says Used Game Purchasers “Pirates” « The Legal Satyricon…

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