Very few parts of the entertainment industry are actively trying to serve consumer needs, instead they are almost universally holding on to business models that no longer make sense in the internet age.

Fundamentally, consumers want their entertainment on demand. They want to get their entertainment cheaply and easily. The majority of tech savvy consumers have experienced downloaded entertainment and they like it.

iTunes is great. The browsing experience is good, buying is easy and delivery is instant. Now that DRM is slowly being phased out, buying music through iTunes is increasingly a decent alternative to piracy.

Just to be clear, I don't condone, nor participate in piracy, but that's because as someone who has worked in the entertainment industry, I can't bring myself to download other people's work without paying for it. Not if there is even the slightest hope that the actual creators of the works get to see some benefit from my enjoyment. That doesn't stop me feeling slightly miffed that a horde of consumers do pirate entertainment and would consider anyone who did pay for it to be a mug.

The following total revenue breakdown for 2003 shows where the Western music industry get most of their money. (taken from Wikipedia)

The paying consumers are essentially subsidizing those who don't. In an ideal world, prices would be low enough and access to legal downloaded entertainment (whether music, films or games) would be ubiquitous enough that everyone would rather do the honest thing and support the artists they like.

But how is that possible?

There is a digital class system that powerfully promotes piracy. Residents in the US have access to vastly superior online content distribution services; Hulu, Pandora, Netflix, Rhapsody etc.

In the minds of global consumers, the internet has flattened the world market, leaving only language barriers between people from different countries. When a consumer from country X is unable to get entertainment that is easily available to buy in country Y, they feel like second class citizens and look for other ways to get it. Invariably this means piracy.

As history has abundantly shown, class systems lead to resentment and revolution. The world over, potential consumers of entertainment feel perfectly justified in obtaining illegal copies of entertainment because they have no alternative available for them to obtain it legally.

Much of the problem lies in international taxation. A truly global marketplace is difficult when every country wants to get their cut of the sale. Until the world governments make life easier, global marketplaces will be difficult and complex to set up. Even when such market places have been created (such as iTunes) the sense of inequality is still present when UK residents see what a large taxation markup they must pay in comparison to US consumers.

Ignoring localization issues and taxation issues, you still find rights holders that do not distribute their work worldwide. A large proportion of iTunes content is only available in specific territory locked stores. Conventional (and I think wrong) wisdom looks at the current scale of international marketplaces and disregards those where piracy is rife. This only exacerbates the problem and if the entertainment industries don't wise up and actively work to distribute their content worldwide and on an equal footing then their primary markets will also collapse.

Because the class system works the other way too. If the consumers in the big entertainment markets see that the rest of the world is getting the same content for free, then they will also feel justified in pirating. Who wants to be the mug?

Next Week: Piracy part 2: Digital distribution of games.

Tags: copyright, IP, piracy

So you have a great idea for a game. You believe that it could be big, huge maybe. You have the ability to pull it off and (lets just say) the team to make it happen.

But will you benefit from it as authors do from their work?

The Intellectual Property of your game will belong to its publisher. Benefits from merchandising, cross media exploitation and licensing will go to the publisher not the author. Even if you own the development studio, your position will not be much better. You can negotiate a cut of these extra benefits but it will be unlikely you'll be able to secure the rights to them unless you can self-fund.

The publishing argument is this: The publisher spends the marketing money to make the IP successful and it's the marketing rather than the game itself that leads its success. The publisher is in essence is paying to make the game a brand and expects to take all the rewards for doing so.

Now you could also argue that the originators and leaders of the project are not really responsible either; it's the gestalt of the team that makes a game what it is. This is absolutely true, but they are even less likely to share in the success of the IP.

The question is, how can you, as a designer, programmer or artist, actually benefit from your work beyond your pay cheque?

There are a few studios that have grown large and wealthy enough to define their own terms. Those that can, are run by astute business men and therein lies the answer; a creative worker who is not also a great businessman will aways be taken advantage of by the people with the funding.

Does that mean that ideas are worthless? I have heard some business men argue that that's exactly the case. Ideas, I hear, are things that everyone has. There's a constant influx of young people bursting with ideas, willing to give them away just for the chance to make what they want to make.

But what does this do to the industry as a whole?

it makes many of the developers I have met keep their ideas to themselves. Thousands of potentially brilliant game ideas that will never see the light of day because no avenue exists for them to be made without the originator being left out in the cold.

The path to self publishing, to keeping the rights to your ideas, is open only to those who can self fund, or those who can build a business plan that circumvents the mainstream computer game development process. Iphone development is one of those and finding venture capital backing is perhaps another.

The film industry works slightly differently. Much of the cast and crew are given royalty deals as standard that are honoured for many years after the film's release. The writers, actors and artists who work on a film benefit directly from its success, receiving residuals from companies that they have not worked for in years.

I have never heard of a games company that continues to give royalties to ex-employees, few even promise them at all.

When I owned Confounding Factor, each of my employees received a royalty agreement that promised royalties even after they left the company (on the condition that they stayed until the project's completion.) Of course, Confounding Factor never made any money (which was my fault) so sadly it didn't do them any good. But it was at least an attempt to be a bit fairer.

People call the games industry young and in this respect I think it most shows its immaturity. Not rewarding the creative people who make games, is probably one of the main reasons why originality is so hard to find when you go to your local game shop.

Google expects its employees to have their own pet projects, they expect their staff to allot a small percentage of their work time to developing these new ideas. If google uses these ideas, they can result in very large bonuses for the individuals who invented them.

Perhaps a similar scheme could help open the creative floodgates that I think are blocked in our industry at present.

Tags: IP, copyright, game design, royalties, franchise