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Used Game Buyers Are Customers, Not Cheats Or Thieves

I'm a big fan and longtime reader of webcomic Penny Arcade, and more times than not I find myself in agreement with Tycho's rants, which I enjoy just as much as the comic itself (if not more).

However I do find myself on the opposite side of the issue of used games, which is odd since by and large I don't buy used games. Out of all the Xbox and Xbox 360 titles I own (I'm not a PC gamer anymore, and I don't own another console) I think perhaps two or three titles I bought used out of a collection that spans some 100 games or so.

Tycho picks up some of the objections to statements by developer THQ's Cory Ledesma earlier this week, to the effect that gamers buying from the used market were "cheating". Some of these objections were phrased as "disrespectful to THQ's customers", to which Tycho responds that buyers on the used market are not THQ customers. This is wrong in a number of important ways.

Notwithstanding the significant rights granted by the doctrine of first sale, it is reasonable to believe that if it became illegal tomorrow to sell a game one had bought new, either to GameStop, another dealer, or third party individuals, the sales of new games would drop. Some people have gaming lifestyles that exceed what they are able or willing to pay for at new release prices, and subsidize their habits either by selling their own games on the used market to recoup expenses so they can buy more games, or by eschewing new releases at launch time and buying games used for discount prices.

If this practice became impossible, there are some gamers who would buy fewer used games, and THQ's revenue would likely drop as a result. In short, the used game purchaser is subsidizing the new game purchaser, by reimbursing them for a portion of the new purchase price. The guy who bought the game for $40 is giving some of his money back to the guy who bought it new for $60. Some of the purchase price has been siphoned off by the secondary market, but the secondary market certainly does consist of customers. That is one way in which used buyers are still customers of the developer, even thought the relationship is indirect.

Another way is through warranty obligations. Whatever warranty or guarantee of quality that applies to a product does not expire immediately when the good is sold. The fact that I did not buy the product new does not invalidate the warranty. This is perhaps less of an issue with video games, to which the only warranty that applies is to the media itself, which is probably quite limited, but the principle still applies. If I buy a used car still within its factory warranty period, the manufacturer must honor that warranty. I am still a client of the manufacturer, even though the relationship is indirect, and my funds reached the manufacturer through a third party (the initial purchaser).

Another way is through marketing concepts like mindshare. Just because I bought a Ford used, rather than new, does not make me something other than a Ford owner or a Ford driver. I made a choice for that mark, and my choice benefits that mark, indirectly through the price I paid to the initial purchaser, which follows a chain back up to the official dealer and the manufacturer, but simply being seen in my car, and by answering "Ford" when people ask what kind of car I drive. If I had pirated... I mean, stolen my car, then some of these things would still be true, which is one reason why some software developers tolerate a certain level of piracy, especially with respect to markets that have lower ability to pay than developed countries. (Some-- not all, but some-- of those vendors could remove the incentive to pirate by lowering their prices to suit those less developed markets, but that just creates opportunities for arbitrage by importing grey market goods from cheap markets into expensive markets where unofficial dealers exploit the price difference as their margin. In this way, developers are incentivized to develop DRM restrictions not to stop piracy, but to enforce arbitrary price differences between regions. Microsoft does this with Windows and movie studios do it with DVD releases.

Still a third way is through licensing. In their attempts to exempt their industries from the doctrine of first sale, the content producers have attempted to describe their relationship with their clients as one of licensing, rather than sale. You don't purchase a movie, a music album, or a video game, you purchase a license to use that content on particular devices, in particular ways, and under particular restrictions. These attempts have largely failed, mainly due to a ruling that says that since the transaction resembles a sale (I buy an item in a box and bring it home, much as I would have if the item had been a book, or a board game, or a blender) and therefore the first sale doctrine still applies.

What if it didn't, however? What if the transaction really was a license? In that case, the used sale of a game would be a license transfer in which all the obligations between the buyer and seller move from the initial purchaser to the secondary purchaser. This is a two-way street. In short, there's no way in which one can construe the transaction of "buying" a game as a licensing agreement, and not have secondary purchasers fully qualify as "customers" of the developer. That funds have only changed hands one time between the developer and the intial purchaser, and one time between that buyer and the used buyer, is completely irrelevant.

The only ways of obviating this are practical, rather than legal. Make games downloadable, and restrict them to use only on authorized hardware and authorized users, the way that XBL downloadable content works, the way Steam works, and the way PSN works. You can't sell any individual downloadable title you've bought from these electronic systems because there is no physical way of doing so, short of a potentially DMCA-violating DRM circumvention mechanism. Even here, however, the restrictions are not absolute: you could sell all your downloadable content, on your console, as well as your login credentials, as a comprehensive system and I fail to see how that user would not be a customer, both of the console manufacturer and the developers of the individual titles included in the transaction, or how any of the parties in the transaction would even recognize that this had happened. Nor should they, nor do they have an interest in doing so. The initial purchaser has given up use of the property. A new owner has assumed the rights and privileges that go with that property. The relationship now exists between the developers and manufacturers and the new owner, not the old one.

What about gifts? A new game I purchase and give to someone else as a gift is equivalent to "used" even if I've never opened it. It has changed hands twice: from the vendor to me, and from me to the end user. It was not purchased by the owner. The owner paid nothing for it. From a legal perspective, this is virtually indistinguishable from a used sale for $0. Is the person I give this game to a "customer" of the developer? I think most people would agree that they are. If they are not, who is? What if I don't own a game console and don't play games-- am I still a customer, since I'm the one who paid for the title initially? What makes this true is that they are in legal possession of the product, and are using it-- not how much they paid for it or whether they were the initial purchaser or not. This does not magically change if I have used the game before giving it away, if I have opened the package or not, or if money did change hands. The developers customers are, in any way it is meaningful to define as "customers", those in possession of the title at any particular time. Restricting that definition only to those with a direct financial relationship with the developer essentially means they have only one customer: their publisher. Their publisher then has a limited number of clients: their distribution channel. End users are in all cases only clients of the store from which they bought the title. Their relationship to anyone else further up the chain is indirect. The only difference is that the chain between a used buyer and the developer has a few more links in it than that between a new buyer and the developer. In many cases, some of these links are the same: GameStop sells new games as well as used ones, as do online vendors like Amazon. If this practice is so unconscionable, and so detrimental to publishers and developers, why do they simply choose not to work with distribution channels that also sell used product? If they can't enforce such an agreement, the discussion of the morality of the market is pointless. If it's not legal to enforce such an agreement, then discussing it is downright deceptive.

To cry foul at the existence of the used market and liken it to piracy is, at best, a misunderstanding of the economic realities of the situation, and at worst, a deliberate misconstruing of the situation as a way to place the fault for poor financial performance on the customers. The situations are not comparable-- financially, legally, or morally. A used sale has no more of a 1:1 relationship with a lost new sale than a pirated copy does. In fact, there is much less of a relation, in that the used buyer has identified the good as something of worth and has volunteered to pay for something which, by expending a certain amount of effort and setting aside any moral qualms, he might almost as easily have acquired for free. The developer should not abandon the relationship with those who put down hard-earned money for their products. Legitimate market mechanics like secondary sales have placed a limit on the shelf life of their products because people are willing to part with old games in order to buy new ones, or because some buyers value those products at less than launch day MSRP and are willing to wait a short while in order to get a discount.

Buying a used game is not cheating. Claiming that you would have sold more copies if it were somehow wrong or illegal to buy and sell used games-- that's cheating.