I have mixed feelings about this. The PDF market gave us our start but DAMN, people really do share the crap out of our work. We would have made moves to go tangible a long time ago ourselves but we never found that kind of backing to make it possible and distribution is just a nightmare for small publishers (discounts to distributors are disgustingly high). I'll be watching this whole WOTC fallout VERY closely in the coming year.
.[/quote]

Obviously, anybody in the digital content business is rightly concerned about piracy issues. However, I think it's important not to fall into the trap of the RIAA mindset where one download = one lost sale. That's just not realistic. I'm not in the "scene" myself, but I know people who are, and an awful lot of them just semi-mindlessly collect whatever's available in their area of interest. They never even read/watch.listen to most of it. It's just about having the biggest possible pile of stuff.

I don't have a crystal ball, of course, so I can;t say what proportion of illiegal downloads represent lost revenue, but I think don't think it's a lot. The bottom line is that people who steal from you by and large were never going to be your customers in the first place. I think the worst response any content company can make is to adopt some absurd and ineffectual DRM solution that only penalizes legit purchasers, not that you've suggested WWG would be going in that direction.

-Curry

I'm a little late to the discussion, but let me just reiterate and expand on what's been said about piracy;

It's a grave error to equate each act of digital piracy with a lost sale. I understand and appreciate that it is a problem, but it's so intrinsically tied to the very nature of computers and the internet, that you cannot combat it with punitive and restrictive measures unless they become horrifically draconian. Short of monitoring all net traffic (since its legality can only be ascertained with said monitoring) or somehow closing off the ability to publish things online to all but a select (and - again - monitored) minority, it's pretty much impossible to put much of a dent in it.

Instead, it has to be part of the business plan of any modern digital creator, and you still have some very effective measures that can reduce it to manageable proportions. A business based on copyable digital files of any kind has a few major fields to focus on:

Goodwill

It cannot be stressed enough that you have to make people want to pay for your products. Exactly how you go about this varies depending on what it is you sell, but anyone who continually produces quality work can surely gain some fans and supporters who might - if they wanted to - be able to find your product online for free, but choose not to because they value what you do. And it is possible with the global reach of the internet to build a community large enough to make that sustainable. The more niche your field, the harder it gets, of course.

Nonetheless, it's possible to harness this goodwill in various ways. Simply to sell your product and rely on the fact that there are enough of them out there to make it worthwhile is probably the easiest, but you can also do things like have presales (aka The Marillion Method) to finance the product even before it is released. Or you can offer periodic add-ons free to buying customers, which brings me to my second major factor:

Convenience

The free time of a working adult is precious, and however easy torrenting and other kinds of file sharing has gotten over the years (and I really blame the slackness of the major media companies for letting this flourish and develop without coming up with any viable alternatives for over a decade), it's still not a trivial task to find what you want online. Having a one-stop destination for your particular file needs is always going to be less of a hassle than hunting around on various torrent sites.

Having files pushed to your hard drive or an email link sent out immediately upon release will always trump the online hunt-and-peck for anyone who doesn't have the time or energy to go searching.

Of course, there are plenty of other factors, such as price point and product quality, but I still think the watchwords are Goodwill and Convenience, and that they are extremely powerful tools when leveraged correctly.

Look at Rifftrax, for instance. In spite of the fact that their business model is built on people buying MP3:s and syncing them to movies on their own (making convenience a major negative issue for them; it's far easier to just download an already synced pirated film), they still make enough to support four or five employees, as far as I can tell. They succeed primarily on goodwill - and arguably price point, their stuff is incredibly cheap for what you get IMHO. They even have a page where people can donate if they feel guilty for pirating their stuff, although I have no idea how much they make that way.

Understand that I'm not trying to trivialize piracy, but I don't see how it's going to go away short of more or less shutting down the internet (and banning large portable hard drives and memory sticks to boot). It has many downsides and is absolutely a problem, but it's the price you pay for the internet being what it is, so you have to find ways of working with it and leveraging the many advantages it also brings.

Now, I may be preaching to the choir here, but I think WotC's handling of the PDF issue is incredibly dumb, because it's only going to piss off those who've already bought PDFs from them in the first place; people who have not only been proven willing to pay them for digital content but may well prefer it to printed materials. And where are they going to go next? Many will most likely feel slighted - whether rightly or wrongly - and just move to piracy. I understand the willingness to get out of PDF sales (even if I think it short-sighted and dumb), but there are ways of handling it without alienating your customer base.

I'll stop typing now.

Good post. Your point about goodwill can't be emphasized enough.

We should get a pool going on how long it takes after the release of _Arcane Power_ for it to show up scanned on the innertubez.

Nice post, Teaflax. Your points are well taken.

As far as goodwill goes, I would say that WWG has taken a most important positive step just by creating and maintaining this forum where the staff interacts with their customers. That kind of community-building takes time and effort, but it really breeds customer loyalty and that's the most valuable commodity in the world, especially on the Net.

By contrast, I have a set of buildings that I bought from a WWG competitor. The buildings are very nice, but the company is evidently run by a bunch of disorganized monkeys because their website has been broken for over a year now and there is essentially no way to contact them. Guess whose product I spend more time promoting, and guess who I've made repeat purchases from?

-Curry

The Game's the Thing - : The Big PDF Controversy.

Some good points made.

The Auld Grump

To thumbnail my thoughts; I'm just bringing this up as another way to look at the puzzle. Overt piracy or the "everything digital should be free, should be mine!" mindset is a sociopathic condition. If you were able to modify the course of that attitude, you could potentially remedy the syndrome. In that VERY idealistic world, the lost sale is then converted into a reformed pirate who is now a supporter. Will that ever happen in mass? NOPE! . Do some people "try and buy"? Sure that happens, but I've never seen evidence to support it as a positive growth device.

Yes, there's multi-millionaires like Trent Reznor who can afford to release free albums on bittorrent to his already monstrous and firmly established audience but for the little guy, that's just not practical. That only works if you're already huge and have a leg to stand on while you play mad scientist. I'm not saying its not possible to leverage a living that way but its extremely rare. Kinda like winning the lottery or becoming a Youtube celebrity

I think the whole WOTC thing is a great opportunity to reflect on what digital content is and what value it actually has. In a weird way, I think its a positive event. Suffice to say WWG won't be giving up its digital roots any day soon (in fact we have BIG news about that coming soon) but If I'm being human and honest with you I'd say we'd certainly be better off with some tangible product extensions out there. Maybe one day

One thing that was said in that interview which rings very true to me was something like "20% of your customers make up 80% of your sales". I see evidence for that in spades.

On the whole digital production vs product cost/worth issue, again this depends what kind of business it is, how big they are and what distribution channels they have available to them. A pure digital content producer relies 100% on digital sales and although there's no product packaging or shipping loop involved, there's an entire digital distribution infrastructure which costs time, money and manpower to maintain (many times its a custom system developed from scratch and requires constant care and attention). Roll in other production costs, software, time, development, staff and it all adds up to something that does eventually translate into product pricepoint. I don't think people really understand how complicated the endeavor is. This is why the whole issue is so terribly complicated. There's many scales of business and they are all effected in different ways depending on a whole host of factors.

If we can get past the current culture of entitlement we might see positive change. While digital content producers should make every effort to keep prices low, if a user can't afford a song, CD or a piece of software then they should work for their money and buy it when it's realistic to do so. This is exactly where the whole psychology is out of sync with reality and its already causing a huge socioeconomic problem.

The best WWG can do is to constantly engage our core fanbase, keep our pricepoints as low as possible without exceeding a line which helps us to continue to keep our quality standards high (dev time). We've essentially given up on the whole piracy issue because frankly, at this stage its so huge and so out of control there's nothing we can do about it. All we can do is keep our message clear; "We are small. Support us if you like the product or we will die". Without that 20% support ratio, we really wouldn't stand a chance (and thankful for it we are ).

I also think that WotC might have burned off any remaining goodwill among the folks who notice what shows up on torrents. That the folks who might have reported finding them in the past might not be willing to take the trouble now.

Ah well, hopefully WotC will learn from experience - one of the things that I noticed on The Game's the Thing is that PDFs have had an upsurge of interest following WotC taking out their frustrations on the folks who were willing to buy PDFs in the first place.

The Auld Grump

It will be intersting to see the impact of all this on sales of 4E licensed (what is the replacement for the d20 OGL called?) products.

The whole D&D add-on market has been struggling to cope with the changes WotC have introduced (4E, canceling the OGL, and now dropping PDF sales). With the level of uncertainty tis has created, suppliers won't be in a hurry to ramp up development of 4E license products.

This shaping up to be the battle of Goliath and the 100 Davids. In the red corner we have WotC/Hasbro, with the D&D brand, the biggest marketing budget, and the best physical distribution. In the green corner we have the rest, with relatively unknown brands and much lower marketing budget, but better prices, better PR, wider product options, and the online distribution channel.

Normally, I'd say the big brand would win out. But WotC have picked a poor time to step back from the low-cost online market. Now, if the market were to rally behind a brand with a serious chance of competing with D&D - which, to be honest, means aligning with Pathfinder (go Denny ) - then things really will get interesting.