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Would you buy a used game from these people? - October 14, 2008

The Dallas Morning News ran an item the other day, based on earlier reporting by the videogame enthusiast Web site Shacknews.com about the growing trend among game publishers of using various devices to discourage people from purchasing games in the used-game market.  Epic's Gears of War 2 and EA Canada's NBA Live '09, for instance, contain one-time codes that allow the original owner of the games to access additional levels online. Once the code has been used, however, it is permanently disabled, so that any subsequent owner of that copy of the game cannot access the additional maps.

Needless to say, gamers are not amused to be given the finger by the companies whose products they're buying. But the moves reflect game publishers' long-standing frustration with the market for used games, which they see as pre-empting sales of new games while providing no additional revenue to the publisher.

Under U.S. copyright law, publishers cannot actually prohibit the sale of used copies of their work. Section 109(a) of the Copyright Act, known as the first-sale doctrine, provides that "the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord."

But that hasn't stopped publishers of various stripes over the years from doing what they could to discourage them, including cutting off marketing and advertising support for retailers who engage in them, as several records labels attempted to do in the 1980s.

The purpose of the first-sale doctrine is to ensure a robust market in copies, so that the work contained in those copies can circulate as widely as possible consistent with the copyright owner's exclusive right of reproduction, display, performance, etc.

Since game publishers are not actually preventing the resale of copies, they can probably skirt any legal trouble with the first-sale doctrine, at least according to a couple of lawyers Media Wonk consulted. But by doing what they can to undercut the residual value of those copies, they are certainly attempting to subvert its purpose.

The most striking thing about the game publishers' tactics, though, is the similarity of their premise to the strong objection raised by the movie studios to the initial emergence of the video rental business: the belief that a market consisting of transactions to which they are not party not only do not benefit copyright owners but are actually harmful to their interests.

It's like arguing that no benefit accrues to car makers from a robust market in used cars. Without a market for used cars, however, either as trade-in toward a new car or for cash, the price of new cars would certainly decline. That's why high-end carmakers frequently advertise their models' high resale values.

A similar dynamic is almost certainly at work in the game business. Without the used or trading market, prices of new games would come down because those copies would have less value to the consumer. Ultimately, the entire game economy supports sales of new games, whether publishers participate in those secondary transactions or not.

The game publishers' attitude is also consistent with the studios' insistence that every use of their work be expressly licensed, including making backup copies of your own DVDs.

For organizations that frequently express a preference for "market-based" solutions to industry conflicts over government mandates, the content companies seem at times oddly distrustful of the marketplace.
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