It’s been an ironic – and potentially revolutionary – week for digital goods. It started out with the revival of rumours that Microsoft may be looking to crush the used video game market with the release of its next Xbox console and it ended with the revelation that Amazon has acquired a patent to sell used e-books. These two bits of news couldn’t be further apart, even though they’re essentially dealing with the same thing.
In the case of video games, rumours have been circulating for a while now about both Sony and Microsoft implementing technology into their next-generation consoles – expected this year – that would make it impossible to play used products. It’s no secret that game publishers hate the used market, estimated at about $2 billion in the U.S. alone, because they don’t get a penny of it. Moreover, there’s bitterness over retailers like GameStop, the biggest player in used games, because they devote so much floor space to used games in spite of the huge marketing dollars spent by publishers on new products.
And so the latest rumours peg Microsoft’s next console as requiring an internet connection and a one-time activation code to play games, which would effectively kill off buyers’ ability to resell their games.
On the flip side, Amazon’s patent has the potential to be – if you’ll excuse the cliche and the pun – game changing. It could eliminate perhaps the last remaining gripe about how physical books are superior to e-books because you can resell them (okay, paper books also have a certain smell – perhaps Amazon is working on that too?). It could also revolutionize all digital goods.
At the core of that no-resell complaint is first-sale doctrine – the notion that if a consumer buys something, they should have the right to do what they want with it, including resell it. The problem with most e-goods so far, with the possible exception of music, has been that digital rights management locks have generally made resale impossible. Without that right, it’s been possible to argue that the consumer doesn’t really own the product they’ve bought.
Ironically, Amazon hasn’t helped itself in the debate, with instances of locking users out of their accounts and thereby denying access to products that were rightfully purchased.
Still, by enabling resale of e-books – a technology that could certainly be applied to other goods, including movies and games – Amazon would dramatically change the market for them. Wired has a good roundup of the possibilities; some observers fear the company has no intention of reselling e-books, that it merely wants to block others from doing so, but intellectual property experts see no evidence of that.
Publishers would likely hate such a move for the same reason that video game makers do – they wouldn’t get a cut of it. And with Amazon already selling e-books for less than they’d like, their products would become available for even cheaper.
The irony, of course, is that it’s been proven over decades across different media that the used market is good for the primary market because it motivates and enables people to buy more. If Microsoft and Sony do indeed move to kill used products without a corresponding cut in the price of new stuff, it’s safe to assume that gamers will buy less overall.
The solution in both e-books and video games therefore seems obvious: publishers should work with the retailers to find a solution in which they get a cut of the resale. That way, everyone wins.