Legal Opinion: Licensing a game instead of buying it isn’t necessarily a bad thing

Steam End User Agreement

By on July 25, 2013 at 2:27 pm

Last year, the EU Court of Justice found that publishers could not oppose the reselling of software licenses. On these grounds, a German consumer group decided to sue Valve to try and make the gaming giant allow Steam users to resell their games. Hooray.

However, when we reported this news story, all 61 comments revolved around whether games should be sold as licences in the first place. So that’s what we’ll be looking at today. We’ll start by examining at why licences are used in games, look at why they end up badly, and then finish with how they could be improved.

Is it about my cube?

Games are sold as licenses due to the unsuitability of selling all the different assets that go into a game.

For example, when you buy a car, you buy all its parts in their entirety. You own the wheels, the body, and everything between. You own all these parts because the person you bought it from owned them, and had the right to sell them all to you. Hence, when you buy a car, you can do whatever you want with it–even crush it into a cube.

However, a game is made up of thousands of different assets, all potentially owned by different people. The music may be licensed from someone, the art from another. A game may use a trademark, such as Lord of the Rings, or Lego. Even the game engine used to power the code may be licensed. The Unreal Engine is a good example: Epic Games licenses this engine to other developers.

When it comes time to sell the game, the publisher is not free to simply hand the game over in full. They can’t just hand you the source code (even if it’s compiled), the art assets, and the music and say “This is now all yours to do with as you want”.  You simply don’t have the freedom to turn someone else’s art into a cube. As such, unless you’re prepared to negotiate with everyone involved with the game’s production, full ownership rights are inappropriate.

Licences are just contracts

Licenses are often maligned for implementing DRM, or taking away reselling rights. However, licenses are just contracts, and don’t have to be written this way.

In our recent interview with Good Old Games, GOG mentioned it sold its games with a license, but trusted that if a gamer wanted to give a game to a friend, then they could hop in their Goggomobil, give the game on a USB stick to their friend, before deleting it from their own computer.

In contrast, Ubisoft assumes that the deletion bit won’t occur, so imposes DRM to stop the world being taken over by ever-replicating copies of Assassin’s Creed. Both GOG and Ubisoft use licenses, but both have very different DRM practices. In short, licenses do not mean DRM must exist.

Removing the right to resell a license is often justified on the grounds that publishers would not make any money if games were allowed to be resold a week after release, since a game license does not depreciate in value. However, if gamers are looking to sell a license after playing a game for a week, then that just suggests the game is too short in the first place. The problems of reselling a game are game design, and have nothing in relation to the actual form of the license.

On the contrary, giving publishers an incentive to make a game that people don’t want to resell would actually improve the quality of games. They would have competition to make a better product. I wouldn’t, for example, ever want to sell my copy of Skyrim, even if I could.

How licensing could be improved

The real problem is that publishers are not taking full advantage of the flexibility afforded by licensing to find solutions that would work for both publishers and gamers.

So let’s look at a few potential solutions.

The first is to use licenses to make games cheaper, in recognition that licenses impose many costs. For example, I have a license from Adobe to use their inDesign software. I’m quite happy this is a licence, for I’m paying $20 a month instead of the full retail price of $1,000.

Games could easily use this model to garner more impulse sales. Rather than being only sold at full price, a game licence could just give access to a game for a month at half price. This would be a far better price for gamers that just want to try the game on impulse, and given the experience with the Steam sales, perhaps lead to more sales for the publisher. It would also lead to longer-lasting games, if the publisher had every incentive to have people stick around for longer than a month.

On the other hand, licenses could be more expensive. The current model for more expensive games is to market a game as a “collector’s edition” with a fancy box, statue of the main protagonist, and charge $150.

However, instead of packing the game with cheap statues, a collector’s edition could come with no DRM and the ability to resell. While some would say that gamers should not be paying more for no DRM, others would value a DRM-free game at more than the usual crap statue and soundtrack, and publishers would surely recoup any lost costs from piracy.

Licenses could allow resale rights by providing a service where the original gamer pays a small fee ($5) to unlock the license so it can be transferred to another person. The gamer would still recover some of their costs from the sale, and the publisher would be compensated for having to provide the reselling service. Nothing is wrong with having to pay the publisher to do this, since they do incur costs from having to transfer the license.

All of these are just examples. The main point is that since licenses are just agreements made up by publishers, they have plenty of freedom to come up with terms that work for everyone. This is where the discussion of licensing, DRM, and everything else related needs to go.

21 comments (Leave your own)

The idea of paying less for a game, but then you can only access it while you’re paying for it, basically a subscription, is in a lot of ways a fairly logical progression of games as a service, and I don’t think it’s a matter of if someone will try this, just a matter of when.

Games like Call of Duty and Battlefield that have a good portion of the player base only buying it for multiplayer, may be better suited for that, if I could pay $5-$10 a month to play Black Ops 2 multiplayer, I’d probably have paid for a month or two to play with friends, but I know I won’t play enough to justify the full purchase price.

 

Their already doing this I think. Check out “gamefly” or what ever their called…. They do a subscription service with free pc games as part of the package.

 

Their already doing this I think. Check out “game fly” or what ever their called…. They do a subscription service with free pc games as part of the package.

 

How does this compare to say buying a movie on DVD? A movie contains lots of assets in terms of music, CGI tech, etc, but none of that interferes with the practice of reselling a DVD once you’ve watched a movie.

 

I’m a fan of Playstation’s take on the subscription model; $70 bucks a year and I’m getting 3 PS3 and 2 Vita games a month (plus other perks). The offered games also need to exceed a 70 rating on metacritic, so you’re not lumped with some cheap, dodgy title to ‘fill space’. Admittedly, you probably won’t always get the genres/products you’re interested in, but because they pop up you’ll give them a go anyway no doubt. There have been plenty of games I’ve been surprised by, as well as games I’ve wanted to play, but not enough to justify spending $60+ on.

If they multiplied the price and you were able to pick a new release per month, or even able to fill those games with the ones you wanted, would it be viable? I understand they have to talk with publishers before going ahead, but if the cost increased, perhaps it would be an incentive. That said however, like most gamers these days, I have a backlog long enough to last me a nuclear winter, so I’m completely okay with getting games as they come instead of having them day 1.

 

There’s no reason that assets licensed to developers/publishers should force those publishers to license the resulting product to consumers – that licensing is a level removed from the end user. Designs are provided to manufacturers under license all the time, and the terms of those licenses allow the manufacturer to produce goods that are then sold to consumers – there’s no trickle-down licensing.

It has always seemed to me to be a practice squarely aimed at side-stepping first-sale doctrine (or equivalent per locality). Name me another industry where the sole method for consumers to obtain products is by license.

 

The only new thing with modern content is that it’s at a point where there’s no necessary medium any more. When we bought books, we didn’t get the right to do what we liked with the content, but we could still sell it on as what we were buying was access to the content. Even with cars we don’t get the rights to the design. It’s the lack of physical medium and the use of DRM that’s alien to how we think about the product. We used to be able to onsell our licence to the content (e.g. used books, used cds) but we are being restricted through technology of something we could do before.

It’ll interesting to see what “solutions” licence holders come up with, but consumers have a legitimate grievance on this issue. One can sympathise with the game industry, but when it comes to licence agreements we don’t have the power to negotiate. It’s either agree or get denied the product. It’s why we need advocacy groups to ensure consumers aren’t being taken advantage of.

 

I quite like the idea of subscription gaming. I imagine steam would have something like prepaid “tiers” for either hourly access to games, or access to a limited number of games based on the subscription tier. The games that you play during that month of subscription earn money from Valve (or whoever you use as your service) from having been played and the delivery service of course takes their massive gouge cut as happens with everything nowadays. ;)

As a bonus, the F2P model (TF2, Dota2) wouldn’t be affected by this at all. It would also encourage people to try new games. That Indie title you where looking at, but couldn’t be bothered putting the $5 down for? Why don’t you just try it out? The developer will earn some $$ for your time and every month you can use whatever remains of your subscription, whether allotted games or hours, to try new things.

An issue I see with this is that, in my opinion, it would encourage harsher DRM measures. (Yes, I’m aware Steam is already DRM) If publishers aren’t earning the ‘big hit’ from up front sales, they aren’t going to want to risk their games being pirated by those not choosing to use a subscription service. I believe the reason why services like Spotify are so effective vs Piracy is that its more convenient to listen free with the occasional add break between songs than to go downloading all the music that might momentarily take your fancy. I REALLLLY don’t like the idea of advertising creeping any further into games however, so I imagine there would be a huge DRM drive to protect the product against those trying to play without subscription.
(Basically: Imagine every game requiring constant online verification to regularly check your subscription credentials.)

 

As someone who doesn’t have as much time for games as I used to or would like, I hate the idea of a subscription model.
It would feel too much like paying for something which I’m not using.
Currently I buy games in the hope I will get around to playing it “sometime soon” which invariably means that I spend way more than I will ever consume.

 
Patrick Vuleta

When I wrote licensed assets meaning these games become licensed, I was thinking of the concepts of true ownership and what that entails.

While the words in a book, or the script of a DVD are copyrighted, you can’t do much more with these than make hilarious Downfall parodies. You don’t get the Adobe Premier files or whatever they used to make the DVD.

Conversely, the tools exist to rip the game models, textures, sounds, and music out from a game, cut them apart, and use them in projects. All you need is an RDB extractor or somesuch.

This is why games get licensed, compared to designed goods like cars.

And I don’t see the point of arguing for “ownership” of a game if you’re only arguing for resale rights, because that’s a very half-assed form of ownership. Ownership means totality. You get everything, for ever and ever.

If you don’t want to pay the hundreds of thousands of dollars true ownership of art assets, music, and source code is worth, then I guess you just want a license to resell. ;)

 

Sorry, but licences are not just contracts. They are backed by the power of the state in the form of the copyright act and the rights and penalties it creates, which go well beyond the private rights ordinarily available under private contracts.

Mr.Vuleta needs to move beyond the idea that because the law works a particular way, that way is a reasonable framework for discussion.

The point about a game involving a bundle of rights is also a bit silly. When you buy a car it also includes the exercise of copyright, patents and designs owned by others. When you sell your car the use of that intellectual property passes to someone else. There’s no reason a game is any different.

 

A ‘licence to resell’ is just an assignable licence, which is not an unusual concept.

I think the distinction you are trying to draw between games and other products is a false one. Many products include the theoretical capability of reproducing the product or the ip embodied in the product. That doesn’t prevent resale. Eg I buy a book, in theory I could copy the words out of it. This would be a breach of copyright, but does not prevent resale.

 
Patrick Vuleta

Thanks for the comments. :)

Licenses are indeed contracts in that they give freedom for the publisher to set different terms. The main point I wanted to make there that the publisher is free to *not* impose DRM with a license, or allow resale. The reason they have specific laws behind them is that publishes invented the terms of the licenses in the first place, then sought to codify these terms. But it doesn’t have to be this way — the laws do not impose a mandatory requirement for DRM.

I find the idea of a car being the same type of IP assignment as a game somewhat perplexing, because unless you have a factory, you cannot reproduce any of the car designs.

Likewise for books. While you ~could~ photocopy a book, what would be the point? You can’t do anything with a stack of photocopied pieces of paper, and the cost and effort involved is excessive.

Digital goods, games especially, do not have any of these natural burdens. You can easily reproduce any of the game assets. Copyright holders do have a right to expect this not to be the case.

There are also game licenses that help gamers. Where would aspiring game developers be without the Unreal Development Kit? It’s almost freeware in that the licensing costs to use it are quite small. Same goes for licenses for modding kits for other games, like the TES Construction Kit.

Without licensing, these would just not be offered. Bethesda is not going to allow you to create a mod for Skyrim then sell it, and so should they not. I do not think it is unreasonable that you’re expected to not sell a mod for a fee, or that you have to pay a small royalty for any profits you make from using the UDK.

Where I would like to go is to get away from the kneejerk reactions that licenses are inherently bad and look at how they can be, and are, being used for good. Otherwise we just throw the baby out with the bathwater and lose all the current benefits of licensing, for not really much gain.

 

I like statues :(…

 
Patrick Vuleta

Well I suppose a statue of Leliana would be OK.

 

excellent article

 

I appreciate the content of this article and how it ties in nicely to the comments made by community members in this article: http://games.on.net/2013/07/german-consumer-rights-group-believes-resale-case-against-valve-will-happen-this-year/

It’s a shame people are content with purchasing their games from Steam, and then complain that their rights as a ‘consumer’ are being abused when we discuss digital licenses and reselling.

 

jez:
How does this compare to say buying a movie on DVD? A movie contains lots of assets in terms of music, CGI tech, etc, but none of that interferes with the practice of reselling a DVD once you’ve watched a movie.

Movies and music are licenced much the same way games are.

 

Patrick Vuleta:
Thanks for the comments. :)

Licenses are indeed contracts

Sorry, but I don’t think that is quite right.

You can, of course, grant a licence by a contract. But a licence is a statutory concept:

http://www.austlii.edu.au/au/legis/cth/consol_act/ca1968133/s136.html

“licence” means a licence granted by or on behalf of the owner or prospective owner of the copyright in a work or other subject-matter to do an act comprised in the copyright

We don’t have to have a contract for this to occur, and indeed licences can arise by implication.

The reason they have specific laws behind them is that publishes invented the terms of the licenses in the first place, then sought to codify these terms. But it doesn’t have to be this way — the laws do not impose a mandatory requirement for DRM.

Actually, the reason there are laws controlling copyright and licensing is because after the invention of the printing press in the 1600s the state decided to regulate the copying of books and other texts, which at that time was not something the law controlled. Nothing to do with publishers “inventing” anything.

I find the idea of a car being the same type of IP assignment as a game somewhat perplexing, because unless you have a factory, you cannot reproduce any of the car designs.

It is philosophically identical. You are being granted a bundle of rights which includes the right to use certain intellectual property, but not the right to copy that intellectual property.

The fact that it’s harder to exploit the intellectual property embodied in one type of product when compared to another doesn’t change the nature of the assignment of rights.

Copyright holders do have a right to expect this not to be the case.

And that is a totally unrelated issue to the assignability of particular rights granted under a licence.

I don’t think a single person is suggesting that when you buy a game you should have the right to take all of the game assets and resell them (although query whether you should have the right to make mods for your own use using those assets).

But there is no rational reason other than protecting profits to prevent someone from assigning the rights they obtain under a licence, which do NOT include the right to exploit the licenced material to create new works or to sell copies of that material.

I.e., there is no reasonable basis to prevent a person who buys a licence to use a game from selling that licence to someone else. That is a totally different issue from the question of what the current holder of a licence is allowed to do under that particular licence.

Where I would like to go is to get away from the kneejerk reactions that licenses are inherently bad and look at how they can be, and are, being used for good. Otherwise we just throw the baby out with the bathwater and lose all the current benefits of licensing, for not really much gain.

Licenses are neither bad, nor good, they are just things. But the terms on which licences are granted in relation to games are frequently anti-consumer and unreasonable insofar as they prevent you from assigning your rights under a licence to someone else.

PS – not meaning to sound hostile, I think it’s an interesting issue. But I think you have to carefully separate the concepts. For example, these are all different issues:

1. Does the ease of copying affect the legal, philosophical, or practical rights attaching to the sale of a licensed product?

2. What, as a consumer, should you be able to do yourself in realtion to a digital product which you have purchased a licence to use?

3. As a consumer, should you have the right to assign your rights under a licence to someone else (as you have always been able to do in relation to, e.g., a book, CD, or other reduction to material form of a copyright work by physically transferring the embodiment to them)?

 
Patrick Vuleta

Licenses are covered under contract law. That’s why there are so many questions about the enforceability of EULAs, because there are issues with how and when both parties accepted. If licenses could just magically come into being without offer and acceptance, EULAs would not be contestable.

Licenses can also fail for want of consideration, which is a contract issue, and another thing that needs to be considered for onerous software licenses. But that’s neither here nor there.

As to reassigning rights, well that is a license right. As I wrote in the article, I don’t have an issue to this. I also wrote that the typical justification used to prevent reassignment is perhaps flawed:

“Removing the right to resell a license is often justified on the grounds that publishers would not make any money if games were allowed to be resold a week after release, since a game license does not depreciate in value. However, if gamers are looking to sell a license after playing a game for a week, then that just suggests the game is too short in the first place. The problems of reselling a game are game design, and have nothing in relation to the actual form of the license.”

It seems that you’re saying that reassignment should be an inherent, incontestable right. For that to happen we’d have to have such in our consumer laws.

While “Should this be in our consumer laws” is an interesting question, it is a bit beyond the scope of what I was writing about.

 
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