Capitalism FAQ: Should You Respect or Abuse Your Customers?

No one likes to see a winner kicking the loser on the ground (unless we really, really hate the loser). We accept within our society that there are differences between people: that some will be more powerful or wealthy than others, and that’s just part of life. One of the limits on our acceptance of some inequality is the visceral rejection we have of abuse, of excessive exercises of power that do more to satisfy a desire to exercise power than actually further some external cause.

So, that’s one reason to be unhappy with Taylor Swift and Katy Perry right now.

These two ladies, through their lawyers and legal entities, are making great efforts to enforce intellectual property law against their fans— the very people who support and adore and ultimately finance their lives. There is good reason for us to judge harshly the multi-millionaires who attack the average citizen, but this is not a blog on Marxism or justice or truth. I’m here to write about law and video games.

So, let’s compare two approaches to intellectual property law in the 21st century. Let’s compare the business models and legal approaches of TS/KP with RiotGames, Inc. The framework to keep in mind is that most intellectual property laws don’t have to be enforced. There is no rule that you have to go after people for copyright or trademark infringements (generally). Yes, there are some sacrifices you make by not enforcing some of your rights, but it’s still a choice.

Though neither of them would like it (I guess they’re in some kind of feud, because being rich, acclaimed, and famous isn’t enough to overcome basic human failures), I’m comfortable using TS and KP interchangeably for this analysis. They offer the same goods and services for pretty much the same prices. So, their business model is $1 songs on iTunes, monetizing YouTube music videos, $100 concert tickets, royalties for radio and online audio services, sponsorships, appearances, and merchandise. They (with their enormous business operations) make musical products and sell them in the same way that musicians have since radio (with basic adaptations of the same model for television and internet).

RiotGames, Inc. develops, publishes, and maintains one of the most played video games in the world. Riot does not charge anyone to play the game. They do not charge for downloading, registering, playing, or for any other use of the game permitted by the EULA and TOS agreements. They will accept money for optional, purely aesthetic enhancements to the game, but this is the extent of their revenue (not counting their e-sports operation, which is distinct from the game and heavily guarded by NDAs that make analysis and explication difficult, if not impossible).

It seems obvious— even intuitive– that the business approach which demands more money would be the one to allow fans leniency with intellectual property. After all, KP/TS take in millions each year, so they certainly don’t need the extra potential money from meager merchandise sales to cover their expenses. Of course, for reasons we don’t need to explore, TS/KP are hell-bent on making sure their fans get no enjoyment from their manufactured musical entertainment apparatus without permission and a fee.

Equally intuitive is the idea that a company that gives away its only product must certainly be cautious and guarded with its intellectual property. That company needs alternative revenue sources, and almost everything it does is only recognized in a world of strong copyright and trademark protection. And yet, RiotGames has actively encouraged fans to interact with their work in every medium of creative expression. They even created a venue for fans to share and display their art, music, videos, poetry, and sculptures.

Here we have two different models, laid out for comparison. There are several questions worth asking: Which model is ethical? Which model shows respect for the fans, for the art, and for the artist? Which model engenders a sense of community and mutual appreciation? Which model will thrive in the 21st century?

For those who feel that, at the end of the day, the bottom line on the balance sheet is what matters, and should be what guides and justifies business and legal choices, here are those important numbers:

KP: 110 million

TS: 180 million

RiotGames, Inc: 624 million (2013), maybe over 999 million in 2014.

GG.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s