158: Piracy and the Underground Economy

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Wavecutter:
I like how he equates piracy with survival. You don't need video games to survive. You can't eat a video game and a video game wont keep the rain off your head or feed your babies.

You steal because you are too cheap or lazy to accumulate the money needed. Period. End of story.

actually no he's equating the making of money from selling pirated games to survival. says so right in the article many times

i'm guessing since you're so high and mighty if anyone looked at all the stuff you've ever owned they will not find one ill-gotten item? my guess is you'll find lots

"These people make no effort to hide their wares, nor do they make any bones about the fact that these games are "copies," the more politically correct term for pirated material."

No in fact when we go to a store and buy DMC 4 original you just purchased a copy, not DMC 4. Capcom still owns DMC 4, you are now authorized to use a copy.

Loved the article, for me a brazillian I was very found of your reality. The main problem for the gaming industry is that every generation is becoming more expensive. 30,00US dollars PS1 games, well for me now 59,99US dollars plus taxes (120,00 dollars converting 190,00 R$).

They (gaming industry) must find a way to make games be around 30,00 bucks. And don't come with -wait to the prices fall! They could make 30,00 dollars right away or no money at all.

http://www.youtube.com/watch?v=Pc0mfw4EFEU

unangbangkay:
Not if the publisher makes it worth their while. Illegally burning a game doesn't always work out the same way as buying a game legit for slightly more. A game that doesn't work or has a bad crack may not sell as well as a game that does work, needs no crack, and has multiplayer.

I know several vendors who switched suppliers (piracy rings) because the suppliers weren't providing good copies (bad CDs, broken cracks, etc). If a publisher can tap the network and offer a supplier a better option, a supplier may well take it.

Even pirate rings can make the better choice if it's worth it. As for judging whether it's worth it or not, I'm not a CFO.

That really sounds like there is an real opportunity there for digital distribution to cut out 'the middle man' aka 'pirate', as it were - perhaps not directly to the customer in nations where we are developing better connection bandwidths, but it definitely sounds if a vendor/retailer there can and does shop around, why not deal with them directly, sell them the access to the legit copy and make a profit where there was none before, even if the margin is smaller.

Its not like local pricing doesn't happen in digital distribution, its an issue on Steam where Australians (unjustly IMHO) pay more to download a game from the service then Americans or Canadians (we just have to pay the currency exchange Steam presents us with) - though as I understand it, Steam does not set those prices.

So, it seems perfectly valid that one could sell directly to the vendor by offering a more reliable service at a competitive price of what the "competition" is selling for. What's better then fewer bad cracks bundled? How about no cracks at all. ;)

I don't know how relevant it is as a solution to the problem, but in Steven Kent's Complete History of Video Games, there's a discussion of the early days of Atari and how they dealt with what Nolan Bushnell called "the jackals", people who flooded the market with knock-offs of Atari games. Basically his solution was to flood the market back by constantly developing new games. Obviously this isn't an entirely analogous situation. For one thing making an arcade game that plays just like someone else's isn't illegal in and of itself(though many Atari knockoffs illegally bore the Atari name). Still, it seems like a good illustration of how a business can succeed by outperforming bootleggers and offering something they can't offer consumers. Basically it seems to me that any time, money, and effort being spent on pursuing pirates could potentially be better spent on finding ways to make a more enticing product. Hell, maybe you could come out on top by spending that money on bribing pirate to stop cracking your games(ok that idea is a little crazy).

One thing I'm wondering about is why so many seem to think it makes no sense to sell games for much less in developing nations. If it's a game you've already released in a larger market, say Japan or North America, presumably the plan was to recoup your development and marketing costs on sales in that market. This means that, minus expenses of opening a new market, additional sales are gravy. What are the costs of taking a game you've already released in the US and selling it in the Phillipines? Pretty much all of the development work is done excepting any translation which should be relatively minor by comparison. The only other costs would be marketing it and actually pressing and distributing the discs. I can't imagine that marketing and manufacturing a game for a developing nation costs the same or more than it does for North America, so why does selling the game for the same price still make sense, given that much of the cost has already been covered? Where is all this money going that a publishers can't lower their prices?

Or join the growing internet wave of artistic, democratic, communism 8D ( *checks deviantart for new messages*) As always, I have to give props to the escapist for a brilliant article that looks at a popular issue from a different angle.

I can't help but think that most people here who are condemning the whole idea of piracy outright are those whom aren't familliar with piracy at all (ie: people living in first world countries, earning >$50k/year).

I was from Msia, and during my time there, it was much easier to get pirated games than original ones, and even then, only older titles. In fact, to get an original game would probably mean doing some travelling, which may be hard if you're a secondary school student without personal transport, or relying on public transport which is absolutely crap.

Of course, then we get to the much debated issue of cost. Since some guys here said that it is fair to compare drugs dealing to piracy, let me put it this other way:
Should we just stop treating everyone with HIV/AIDS just because they cannot afford such treatment?
Okay, maybe you'd say that was a matter of life and death.
How about treatment for a debilitating disease, such as arthritis? Should we deny hip and knee replacements because people cannot afford them? Maybe we should tell them that they should live with the pain accompanied with every movement, because the right to a surgeon's time could only be accessed by the rich.

Tell you what, lets just restrict all the "luxury" items from the west from developing nations. The people living there just can't afford them at the prices people in developed nations are paying anyway, and its something they can live without.

And lets see what happens: A huge divide comes between the rich and poor nations. I can't imagine that doing any good for world peace.

Okay, so I admit, I bought tons of pirated games in my time in Msia. However, once I've moved out, and could afford original games, I have bought originals instead. I admit to still downloading pirated games, mostly for demo purposes.

I do buy older games without "demoing". I have enough spare income to do so, but not for AAA titles.

I doubt harnessing pirate networks to be the solution to the problem at all. Like mentioned, if they had a choice of distributing the real thing for $1 cost, or copying for $.20, they'd go for $.20. However, if game developers were distributing to the retail outlets which were selling for $5 apiece, and offering them legit copies, which they would have to sell for $10 apiece, I think consumers would prefer to pay $10 for a legit copy. Retailers would also prefer to stock the legit copy too.

I doubt that will happen though, since it would still have the problem of these games being "exported".

I can see another solution where the above scenario is played out, but have the games being "ad-supported". That way, you can export the game, but you'd be stuck with an ad-riddled copy of the game (which might make you watch a 10sec ad clip each time you die/load a game/etc).

Or just do away with the whole distribution system, and have games being totally ad supported, as has been talked about recently. In-game ads, built into the game itself paying for us. If they were free to consumers this way, there's no need for pirates.

CanadianWolverine:

unangbangkay:
Not if the publisher makes it worth their while. Illegally burning a game doesn't always work out the same way as buying a game legit for slightly more. A game that doesn't work or has a bad crack may not sell as well as a game that does work, needs no crack, and has multiplayer.

That really sounds like there is an real opportunity there for digital distribution to cut out 'the middle man' aka 'pirate', as it were - perhaps not directly to the customer in nations where we are developing better connection bandwidths, but it definitely sounds if a vendor/retailer there can and does shop around, why not deal with them directly, sell them the access to the legit copy and make a profit where there was none before, even if the margin is smaller.

I don't presume to know a whole lot about games publishing or distribution but this idea makes a lot of sense to me.

By reducing the price of distribution by reducing the unit price and the need to import copies of the game, the distributors can pass a (hopefully large) cost saving on to either resellers or end-users, depending on the distribution model in a particular country.

Even developing nations have some form of high-speed Internet with which they could connect to a publisher or studio's website from where they could purchase licenses (bulk purchasing could also be an option). Bandwidth usage in developing nations is typically very expensive compared to first-world countries so downloading DVD images from the publisher or studio's servers is impractical. But a single copyable disc could be imported by a distributor or reseller and licenses to copy and sell that disc could then be bought online.

EDIT (Forgot to say this, though I meant to): Publishers/studios will have to make it illegal/in contravention of the special copy + sell license for distributors and/or resellers that make use of it to sell outside their locality (don't know if that's a word but I use it to imply that a distributor might supply the resellers of multiple countries). I think this is the case with normal distributor agreements anyway because why would someone have to "secure the rights" to distribute something otherwise?

Second verse

On the "Piracy is stealing, piracy is wrong, we don't care what you pirates have to say" topic: I think your average anti-piracy proponent buys into the straw-man analogies presented by the games industry without thinking further. Your average pro-piracy advocate is just seeking justification for his sins ;-)

The word 'pirate' itself conjures an image that most people liken to classic thievery and IP (software, movies, music, etc.) piracy just isn't measurable in the same terms. If you steal someone's handbag (as those trailers on DVDs will have you believe), or a television out of the storerooms of LG/Panasonic/Sony then you deprive the victim of being able to gain utility of the stolen item. In particular, the TV manufacturer can no longer sell the stolen equipment.

To actually steal a game you would have to gain access to (hack) the publisher/studio's computers, copy the game in whatever form (source, disk image) and delete enough of it from all the computers with a copy of it to make it unusable to its creators/IP holders. Stealing a game disc from a store is still, naturally, stealing, but that's not what's being discussed here. Please note that this is not a *legal* discussion but a philosophical and ethical one. This analogy is still not perfect but it is much closer than "copying == stealing."

This is getting too long... So I reckon I'm just going to post it and see if it generates some interest/response before spending more time on writing stuff people don't want to read :P

Wavecutter:
I like how he equates piracy with survival. You don't need video games to survive. You can't eat a video game and a video game wont keep the rain off your head or feed your babies.

You steal because you are too cheap or lazy to accumulate the money needed. Period. End of story.

This is a dangerous, elitist, and offensive stance to take.

In China, the average wage is much lower than say in the States - but that's okay, because the cost of living in China is much lower than it is in the States. For a semester, breakfast cost me 25c, dinner rarely ran more than $2, and I could find decent clothing for at the very most $5 (if I wanted to look in non-tourist stores). This isn't about impoverished people, homeless and in rags, wanting to play their shiny new PS3. This is about even the growing middle-class in areas like China and the Philippines and India, who otherwise are fairly well-off.

They have TVs, they have DVD players, they have computers - all of which are sold at prices fitting to the region. Cars? Price fit to the region and the average cost of living.

These are all luxuries, just like video games. These are luxuries that these people have - again, people who have a decently high standard of living in these developing nations - but they have because they're price-adjusted to the region they're sold in.

When I can get clothing for $5 and a good meal at a restaurant for $2, a $60 game is just absolutely ludicrous. Again, this isn't about someone living in poverty determined to play games, this is about people in developing countries who can *afford* many luxuries, but video games at standard retail prices are still out of reach.

For that matter... if they *did* start selling official copies of the games at $5 in these areas, would gamers import? Sure, some would. But I think you hugely overestimate how many would even *know* about it, let alone go through the hassle of importing all of your games from say Thailand when you can get it earlier just by walking down the street to a game store.

I don't get why people keep talking about low cost copies being exported to other regions. Is that really a concern? Seems to me that the majority of game developers are in North America and Japan, and that their primary markets, where then games will be available first, are North America and Japan. I can already get a game late for significantly less than retail because used copies are so widely available.

As to the argument that piracy isn't really stealing because it leaves behind the original, I think you're missing the point. To a software company the software isn't a tool or a piece of entertainment, it's an asset for making money. If everybody already has a copy, that asset is effectively worthless.

teknoarcanist:
Or join the growing internet wave of artistic, democratic, communism 8D ( *checks deviantart for new messages*) As always, I have to give props to the escapist for a brilliant article that looks at a popular issue from a different angle.

Hey, can I get some of that credit? Or sarcasm, as the case my be. I jest.

Thanks for all the well thought out comments guys, I think I'm starting to see some of the weaknesses in the article now. If ever I do talk about this idea in detail once again, I need to make the distinction between the "people who make a living off of piracy" and "their market". There exists an overlap between the two, but for the purpose of calrity I could have done a better job of making them distinct from each other.

Also, I kind of assumed that people would understand that there would be region coding, and that these 5 dollar games would be specific to regions that are deemed applicable for that pricing. Next time I should just say it outright.

In the "Piracy is like selling drugs argument" I still fail to see how you can put two and two together. Erin made the most sense in comparing the two, but the bottom line is that their only similarity is that they are illegal and their practitioners can get into a load of shit for doing what they do. But seriously, on the list of heinous things to do, I think drug dealing far outweighs piracy. Piracy doesn't kill people, drugs do. Drug dealing can probably be compared to illegal arms dealing, while piracy can most easily be compared to stealing. And for everyone that throws out the "oh so even if it's bad if there are positive economic benefits let's make it legal" arguments, say hello to the tobacco industry.

Do you see how ludicrous this is starting to get? Let's stop comparing crimes here. I'm not smart enough to know what it's called, but in debating there's term for those kinds of arguments, which in layman's terms means "that shit don't got nothing to do with each other."

This is my argument in the most simple and pure form:

Piracy exists because people can't afford legit games. An underground economy has sprung up to sell people illegit games for prices they can afford. That economy supports the livelihoods of people in that region. Clamping down on this economy and rounding up the pirates will amount to naught, because people still can't afford legit games, and like an earlier commenter said, they'll probably just go out and play football/soccer (which may not be a bad thing, to be honest with you).

Lastly, I'll throw out another number at you guys, to put things into perspective. Taking the ratio of $60 (current gen game) to $3400 (annual Filipino income) and applying it to the annual American income of $46,000, you get the number 782. Imagine paying $782 dollars for a game, plus shipping costs and taxes that the vendor passes on to you.

very good points...

ive personally dont think ive ever played pirated games, but i have used pirated videos(like tv shows and licensed animes) and music

the music, its just all ive ever been exposed to. my sister always downloaded music off limewire. i dont have a car, i dont have a credit card, and i dont have any music stores anywhere near here. so, when i think of buying music, why wait hours-days to go to the store to pay for a cd with several song i dont care for just so i can get one song i want, when i can get that same song i want for free instantly without even having to get up

and the videos, its more of a lack of accessibility that drives me to piracy. like my favorite show, i absolutely love it, but i dont have cable,so i cant watch it. my choices are either watch it on the internet, or dont watch it at all...

This is a very interesting perspective. I've heard that companies like Microsoft have started making low price versions of Windows for sale in Asia in an effort to combat piracy. I still think piracy in "developed" nations is still despicable, as often then not we have the money to pay for the games, but we don't want to pay for them. I don't believe that that anti-piracy measures that have been implemented by most of the industry are good though, as the hurt the consumer, making them less loyal to the product. So far Stardock's method (as seen with Sins of a Solar Empire) seems the most fair, allow anyone to play the game offline, but require that the enter a code for online play, that way no consumer is really hurt (as long as they don't try to run mutliple copies online). I really hope that companies go this direction, but we as consumers have to push it. Consumer outrage over Mass Effect and Spore's copy protection did force EA into relaxing the protection, it was a small victory considering that the protection is still pretty absurd, but it does show that we can change their minds.

The principle is that you can't pat someone on the head - by enjoying a game - and kick them in the balls - by giving them nothing for what enjoyment you've taken at their expense - at the same time, then wonder why they dislike you. Such abysmal behaviour shouldn't be defended, find another answer or do without your ->Unnecessary Luxury Item<-.

mooncalf, it may not be the most productive thing to state an earlier expressed opinion without adding anything onto it. Do you take issue with anything, specifically, that's been said in response to the already expressed sentiment that "piracy is wrong and people who can't afford games should just learn to do without," or did you just want to make some noise?

Ryan Sumo; a pragmatist after my own heart.

It's only through this sort of article that any practical solution reducing the impact of piracy is going to be achieved. For far too long the figurative well has been poisoned by the warblings of pseudo-revolutionary bootleggers(and to a lesser extent, the tearful artistic indignation of developers). Its refreshing to see a measured analysis. Although it doesn't address exactly who is doing the pirating (All honest vendors looking out for their families? What about the shills turning a quick buck? organised criminal elements? Teenagers at their computers?), and the issue of internet file-sharing (pay for knock-off DVD's? Idiot, I can download that for free!).

The solution you proffer is innovative, but without additional laws to protect the legal trade (and the will to enforce them) it doesn't seem workable. If piracy like this is to be under-cut with cheap games, those copies will need to be ready for sale fairly close to the initial release date. That means the company will still it's overheads; R&D; production; distribution; etc. to worry about. In contrast, you've got small adaptable piracy outfits running off a home PC and a stack of CD/DVD-R's. Their expenses are therefore bugger all, so they can easily match, or beat, the price of any legal copy on the market.

Well here's another way to look at it: cracking down on piracy DOES NOT WORK. Ask the RIAA. Lemme tell you, me and all my college buddies are shaking in my booties with all the lawsuits they're bringing against random students -__-; Software (and piracy/theft of the normal sort) has been around since time immemorial. You cannot eliminate it, so stop butting your head against the wall and get with the program.

Good article.
It reminds me of the goldfarmers in WoW. Even if they vow to stomp them out Blizzard earns millions on them. How many players quit their subscription because of goldfarmers? One or two. How much money do they goldfarmers pay into the system with subscription fees and the buying of the game? Add into the equation that Blizzard bans alot of them so they need to buy new copies of the game over and over and you got something very profitable.

I make sure to tell my friends there that whenever they ban somebody a chinese person's livelyhood is harmed.

Ryan Sumo:

This is my argument in the most simple and pure form:

Piracy exists because people can't afford legit games. An underground economy has sprung up to sell people illegit games for prices they can afford. That economy supports the livelihoods of people in that region. Clamping down on this economy and rounding up the pirates will amount to naught, because people still can't afford legit games, and like an earlier commenter said, they'll probably just go out and play football/soccer (which may not be a bad thing, to be honest with you).

Lastly, I'll throw out another number at you guys, to put things into perspective. Taking the ratio of $60 (current gen game) to $3400 (annual Filipino income) and applying it to the annual American income of $46,000, you get the number 782. Imagine paying $782 dollars for a game, plus shipping costs and taxes that the vendor passes on to you.

Your estimates are flawed because you fail to take into account the relative value of monetary amounts. A meal from a jolly jeep costs 53 pesos or around $1.20. So let's divide $1.20 by $3,400 then multiply it by $46,000. Using your ratio, $16.23 for lunch in the United States would be cheap. The $5 price point you propose means nothing to the middle and upper-classes who purchase pirated games and DVDs in the Philippines. It's a throw-away amount, the equivalent of around two Big Macs or two cups of coffee at Starbucks whereas $60 in the United States is in no way small change.

The people who buy pirated goods in the Philippines do so out of ignorance of the amount of work that goes into producing a game, lack of availability, or because they want to be able to stretch their peso. Game prices could be further reduced in the Philippines, but not to the point where it's a throw-away amount where you can buy a whole bunch of games you don't plan on playing anyway.

There are a lot of people who buy legit games over there. Data Blitz has been in business since 1995 and you should check out TipidPC's listings for console games. If you want to just try out a game, borrow it from a friend or rent it from GameHopper.com.ph. Saying you don't buy legit games because they're expensive is a lousy excuse.

Btw, it's naive to think that those pirate stalls in Green Hills pay much in the way of taxes. The guys they send out to look for customers probably don't even have taxpayer identification numbers or SSS numbers.

friedkamote:
[quote=Ryan Sumo]Using your ratio, $16.23 for lunch in the United States would be cheap.

I'm going to assume you usually pay $1.20 for lunch in the states.

The idea behind those ratios aren't about setting a $5 price point, but the fact that $60 is an exhorbitant amount in a country that pays $1.20 for lunch.

A kid that'll go without lunch for a week for a game in the states, would have to go without lunch for a couple of months to buy a game in the Philippines... Sounds to me that some sort of adjustment is needed to the pricing of food....

friedkamote:
Your estimates are flawed because you fail to take into account the relative value of monetary amounts. A meal from a jolly jeep costs 53 pesos or around $1.20. So let's divide $1.20 by $3,400 then multiply it by $46,000. Using your ratio, $16.23 for lunch in the United States would be cheap. The $5 price point you propose means nothing to the middle and upper-classes who purchase pirated games and DVDs in the Philippines. It's a throw-away amount, the equivalent of around two Big Macs or two cups of coffee at Starbucks whereas $60 in the United States is in no way small change.

Of course my estimates are flawed, I'm a fricking game artist for chrissakes, not an economist. My numbers weren't meant to be taken as gospel, but to provide a sense of perspective. It still remains true that to the Filipino that earns $3400 a year, buying a 60 dollar game would feel the same as an American (who earned $46000) who would pay $782 to buy a game.

friedkamote:

The people who buy pirated goods in the Philippines do so out of ignorance of the amount of work that goes into producing a game...

I have to say that you're naive for thinking that if people knew about all the work that goes into games, they'd buy originals. In general, people don't give squat about the development that goes into games. As long as it works when they play it, they're happy. If it looks like shit when they play it, they'll shit all over the game and never take into account the blood, sweat and tears that went into it. I repeat. Most people don't give a fuck. They don't care who makes their games and who makes their movies, they just want to be entertained.

This game I'm making, if a publisher ever decides to pick it up and release it? I know it'll be pirated. What am I gonna do, accost everyone who I see buys a pirated copy and tell them I worked like a dog on that game and they ought to be ashamed of themselves? The masses don't give two shits how hard anyone works for their craft. All they see is the final product. Get over it.

friedkamote:
...lack of availability, or because they want to be able to stretch their peso...Saying you don't buy legit games because they're expensive is a lousy excuse.

Wait, so buying pirated is ok if it's not available or if people want to stretch their peso...but not just because the games are expensive? Foot in mouth aside, the point is moot because this isn't a space for "anti" or "pro" piracy. It's a space about discussing possible solutions to a problem that has existed for decades.

And one last thing. I actually do get some of my games from TipidPC. But if you read enough game industry literature, you'll know that developers and publishers hate the second hand market just as much as the pirates because it also eats into their bottom line. But used and rented games are another issue entirely.

CMH:

I'm going to assume you usually pay $1.20 for lunch in the states.

The idea behind those ratios aren't about setting a $5 price point, but the fact that $60 is an exhorbitant amount in a country that pays $1.20 for lunch.

A kid that'll go without lunch for a week for a game in the states, would have to go without lunch for a couple of months to buy a game in the Philippines... Sounds to me that some sort of adjustment is needed to the pricing of food....

No, you don't pay $1.20 for a cheap lunch in the U.S. A cheap lunch costs anywhere from $3.50 to $6 in NYC, so a "kid" would have to go without lunch for 17 days to purchase a game, and a kid in the Philippines would have to do that for 27 days (2,200 pesos / 80 pesos for lunch at most private schools). Most game buyers today aren't kids, they're often people in their 20s and up who already have jobs.

Ryan Sumo:

Of course my estimates are flawed, I'm a fricking game artist for chrissakes, not an economist. My numbers weren't meant to be taken as gospel, but to provide a sense of perspective. It still remains true that to the Filipino that earns $3400 a year, buying a 60 dollar game would feel the same as an American (who earned $46000) who would pay $782 to buy a game.

How many of the people who buy pirated games in the Philippines and earn 12,600 pesos a month live on their own? If you're earning 12,600 pesos a month, and you're living with your folks you're probably only spending on lunch and transportation, everything else goes to your little luxuries, or (rarely) to savings. So out of that 12,600 pesos, you have around 8,000 pesos to spend on all sorts of stuff. A lot of original titles cost 2,200 pesos, and if you're a PC gamer the range is 900 to 2,000 pesos. That's three or more games a month if you're willing to forgo a few cups of overpriced coffee or going out partying.

A 20-something gamer in the U.S. who earns $46,000 a year ($3,800 a month) has to worry about living expenses and their student loans. How many of these 20-something game buyers in the Philippines have to pay back loans for their college education? No, 2,200 pesos (around $49) for a game in the Philippines isn't the same thing as $782 in the US.

Ryan Sumo:

I have to say that you're naive for thinking that if people knew about all the work that goes into games, they'd buy originals. In general, people don't give squat about the development that goes into games. As long as it works when they play it, they're happy. If it looks like shit when they play it, they'll shit all over the game and never take into account the blood, sweat and tears that went into it. I repeat. Most people don't give a fuck. They don't care who makes their games and who makes their movies, they just want to be entertained.

This game I'm making, if a publisher ever decides to pick it up and release it? I know it'll be pirated. What am I gonna do, accost everyone who I see buys a pirated copy and tell them I worked like a dog on that game and they ought to be ashamed of themselves? The masses don't give two shits how hard anyone works for their craft. All they see is the final product. Get over it.

I didn't say that the people would automatically buy the games just because they knew how much work went into it. What I was trying to say was that people tend to assume that the only costs involved are actual publication of the CD and are thus able to justify to themselves that they should pay a lower price.

Ryan Sumo:

Wait, so buying pirated is ok if it's not available or if people want to stretch their peso...but not just because the games are expensive? Foot in mouth aside, the point is moot because this isn't a space for "anti" or "pro" piracy.

Do I have to spell out that "stretch their peso" has to do with something being "expensive"?

Ryan Sumo:
It's a space about discussing possible solutions to a problem that has existed for decades.

Your article was surely an eye-opener for many westerners and it explained that people in Asia DO pay for pirated games, but you shouldn't have made it sound like the people purchasing these games actually have to shoulder all their own expenses on the meager salary you listed. Others have already said it, piracy in Asia isn't hurting publishers as much as the piracy in developed countries among people who would rather just download. Your proposal would be great for people in the Philippines who buy on impulse, but would be suicide for the developers and publishers because grey imports would erode their sales in developed markets. Region coding is useless because if games cost 1/10th the price in one region, then you're better off purchasing your console from that region. There can be no win-win if you end up making much less money from a larger customer base of legitimate users.

The only anti-piracy measures I've seen that have worked in the Philippines are free-to-play games and making duplication expensive (PS3). MMOs have been profitable, but the pay-to-play ones aren't immune to "piracy" in the form of private servers.

Ryan Sumo:

And one last thing. I actually do get some of my games from TipidPC. But if you read enough game industry literature, you'll know that developers and publishers hate the second hand market just as much as the pirates because it also eats into their bottom line. But used and rented games are another issue entirely.

A lot of the games being sold on TipidPC are listed as "Sealed" and "New" so I wasn't talking about getting games second-hand/used.

friedkamote:
How many of the people who buy pirated games in the Philippines and earn 12,600 pesos a month live on their own? If you're earning 12,600 pesos a month, and you're living with your folks you're probably only spending on lunch and transportation, everything else goes to your little luxuries, or (rarely) to savings. So out of that 12,600 pesos, you have around 8,000 pesos to spend on all sorts of stuff. A lot of original titles cost 2,200 pesos, and if you're a PC gamer the range is 900 to 2,000 pesos.

Your article was surely an eye-opener for many westerners and it explained that people in Asia DO pay for pirated games, but you shouldn't have made it sound like the people purchasing these games actually have to shoulder all their own expenses on the meager salary you listed.

Friedkamote, I think your problem here is that you're using yourself as the basis for the average gamer (yes, I am making the assumption that you are a gamer who lives with your parents and doesn't pay the rent or utilities and basically only has to provide for his own luxuries, ie games), or person who buys games. This just isn't the case. While there may be quite a few people who fit that persona, don't forget that a lot of games are still being bought by parents whose kids want to play the latest games. Many of these parents already think that the console itself is a huge purchase, so they breath a sigh of relief when they find out that the games are really cheap, never knowing that they're actually pirated.

That's just one segment of the market. There are plenty of other stories. I have gamer friends who help support their families because their parents are getting old or no longer earning as much as they used to. And there are people who really do live on their own and provide for themselves, contrary to what you believe to be the standard.

friedkamote:
That's three or more games a month if you're willing to forgo a few cups of overpriced coffee or going out partying.

This one statement bothered me especially. Let's assume you're right and most gamers in the Philippines fit your description. Do gamers in the US have to sacrifice "overpriced coffee and partying" just to buy their games? If so, then your argument is justified. If not, then I don't see why Filipino gamers should be forced to make that choice. Oh wait, I know why!

Odius:
Perhaps gamers in developing nations should spend some time getting an education and bettering themselves instead of playing video games. All the time wasted playing video games you could have probably learned something useful in the meantime and picked themselves up out of poverty.

It's because gamers in developing nations don't deserve such luxuries! :D

friedkamote:
...but would be suicide for the developers and publishers because grey imports would erode their sales in developed markets. Region coding is useless because if games cost 1/10th the price in one region, then you're better off purchasing your console from that region. There can be no win-win if you end up making much less money from a larger customer base of legitimate users.

Effective region coding would be harder, but it wouldn't be useless. Companies like Sony have already started flexing their muscle when it comes to grey market importers like lik-sang and play-asia, so they could make it very hard for people to import if they really wanted to. A win-win situation is possible. Extremely difficult, but possible. I still maintain that they'd have more to gain from doing that than from eradicating piracy. You're of a different opinion, and that's fine.

If you're comfortable paying that much for a game, then great, developers and publishers love you. But obviously most people don't think it's a fair price, so they choose pirated games. If other goods can be price adjusted to fit the capabilities of a market, then why can't games?

Ryan Sumo:

Friedkamote, I think your problem here is that you're using yourself as the basis for the average gamer (yes, I am making the assumption that you are a gamer who lives with your parents and doesn't pay the rent or utilities and basically only has to provide for his own luxuries, ie games), or person who buys games. This just isn't the case.

I'm a 31-year old family man who's been living overseas for the past 8 years. We visit the Philippines every year, so I'm not out of touch with the realities over there. I still insist that fresh graduates who buy games and earn only 12,600 pesos a month are unlikely to be living on their own. Since we're making assumptions anyway, I'm guessing that you come from a middle- to upper-class family and went to private schools all or at least most of your life. You are university-educated, maybe received an allowance while you were there, currently in your 20s and probably making anywhere from 20k to 30k if you've been working for a while. You're probably a more common example of the Filipino gamer who buys a bunch of pirated games and buys a few legit.

Ryan Sumo:

While there may be quite a few people who fit that persona, don't forget that a lot of games are still being bought by parents whose kids want to play the latest games. Many of these parents already think that the console itself is a huge purchase, so they breath a sigh of relief when they find out that the games are really cheap, never knowing that they're actually pirated.

The parents who can afford to provide their kids with modern PCs and/or consoles (PS3, Wii, Xbox 360) are unlikely to be making less than 80,000 pesos a month together or $26,000 per year. If they're earning less than that then the console may have been a gift from a relative who works overseas, or they may have access to a PS2 instead.

Ryan Sumo:

That's just one segment of the market. There are plenty of other stories. I have gamer friends who help support their families because their parents are getting old or no longer earning as much as they used to. And there are people who really do live on their own and provide for themselves, contrary to what you believe to be the standard.

I'm not denying that those people exist. I have a friend who earns only 18,000 pesos a month and he helps out at home, and he still only purchases original games for his Wii. He doesn't purchase that many games, but he does play the ones that he gets. People like him and those you mention are the exception rather than the rule.

Ryan Sumo:

friedkamote:
That's three or more games a month if you're willing to forgo a few cups of overpriced coffee or going out partying.

This one statement bothered me especially. Let's assume you're right and most gamers in the Philippines fit your description. Do gamers in the US have to sacrifice "overpriced coffee and partying" just to buy their games? If so, then your argument is justified. If not, then I don't see why Filipino gamers should be forced to make that choice.

Yeah, they would have to give up a few items to purchase a $60 game. I don't know if you've ever lived in a developed country for any extended period, but $60 isn't small change.

Ryan Sumo:

Oh wait, I know why!

Odius:
Perhaps gamers in developing nations should spend some time getting an education and bettering themselves instead of playing video games. All the time wasted playing video games you could have probably learned something useful in the meantime and picked themselves up out of poverty.

It's because gamers in developing nations don't deserve such luxuries! :D

I wouldn't mind seeing lower prices for games in Asia, but not to the point where it's a throw-away amount that endangers the publisher's revenue stream from developed countries.If we look at the relative prices of lunch in the U.S. compared to in the Philippines, games at $20 (around 800 pesos) don't seem too bad. Games for the PS3 and Xbox 360 are already priced at around $49 in the Philippines. I don't know what kind of effect on the grey market reducing the price to $20 will have, but it won't be as bad as a $5 price for sure.

Ryan Sumo:

Effective region coding would be harder, but it wouldn't be useless. Companies like Sony have already started flexing their muscle when it comes to grey market importers like lik-sang and play-asia, so they could make it very hard for people to import if they really wanted to. A win-win situation is possible. Extremely difficult, but possible. I still maintain that they'd have more to gain from doing that than from eradicating piracy. You're of a different opinion, and that's fine.

I really can't see them being able to apply any effective form of region control, but they're certainly welcome to try.

Are you aware that the majority of gamers in the Philippines play from internet cafes and often do not have access to a gaming PC or one of the three modern consoles at home and are thus unlikely to buy games for those platforms? The PS2 and PS1 are probably more common, but I have not seen original PS1 games being sold during my last two visits.

Ryan Sumo:

If you're comfortable paying that much for a game, then great, developers and publishers love you. But obviously most people don't think it's a fair price, so they choose pirated games. If other goods can be price adjusted to fit the capabilities of a market, then why can't games?

I think you may be overestimating which items are price-adjusted. Mobile phones, computer hardware, consoles, automobiles are all priced close to their prices in developed countries. The items that are priced lower are often locally produced items or necessities such as food and clothing.

Do you also advocate not cracking down on organized crime(Mafia, Yakuza, Triad, etc)? It's the same rationale you're using with piracy. Thousands of hoods involved in organized crime use the money from their "job" to raise their families. So, by cracking down on this crime we're just depriving hard-working individuals of a means to support their families.

You also stated "If you had $300 a month to spend on rent, food and all of your other expenses, how high would a $60 game be on your list?" in your article. To be honest, that doesn't work as a justification. That's no different than saying it's alright to steal a Porsche simply because you can't afford it, yet you want that luxury in your life. If you can't afford something then you can't have it, it's that simple really.

Don't get me wrong, I have nothing against piracy, data should be freely available to all. What I have a problem with is people trying to rationalize their criminal activity. If you're going to pirate things then do it, but don't make some weak argument to attempt to justify it or make it look like you're only trying to "survive". Games aren't essential to survival, so you'll "survive" without pirating them.

I'll openly admit that I pirate things from time to time. I don't do it to "survive", I don't do it because games are too expensive(I can easily afford them), and I don't do it to "protect myself from a possible bad game", I do it simply because I don't feel like paying for it and it's easy to do. Man up and admit that you pirate software simply because you don't want to pay to support your habit, then I might actually respect you.

I was raised in the same environment as Ryan, so I was a little indifferent about piracy (not that I pirate games myself, because I don't). However, I do understand that Piracy, even with the intention of raising a family is still piracy, and is therefore a crime.

About the link Erin provided, if what Insomniac did back then was very effective (stalling pirates from releasing cracks for about two months), I wonder why other developers did not follow suit, especially now. A lot has happened in during the seven odd years since that article was published. Surely by now, there are a lot of workarounds on the problems suggested on the last part of that article.

It might be worthwhile to note that Steam often offers older games at $5 to $10. I often pick them up. Not only do they run well on modern hardware, but they also often have been patched and less buggy than new releases. A recent example was Bioshok was on for $4.95 on Steam around Christmas.

Even here in North America, $60 is a lot for a game.

Great article, indeed. Showing the other point of view on this matter is just as important as is showing the game publishers' point of view.

I live in Brazil, and here, too, sales on the 'pirate' market far surpass the original game's sales. So people in other countries may have a small notion of what happens here, know this: minimum wage here is around 450 brazilian reais (which is roughly 200 US dollars). However, games here have the overwhelming price of, at the time of release, 299 reais (roughly 135 US dollars). Now, even medium-upper class people in Brazil believe this to be incredibly expensive, considering that the medium-upper class have an average income of 5000 - 10000 brazilian reais (rough estimation).

So, I believe that console games are absolutely over-priced in my country. Publishers claim that they won't cut deals with the government because of the high piracy activity and the loss in profit it causes. But there's no way that the government alone can end the piracy - it's too big of an 'organization' and, one way or the other, it generates jobs, which gives people the means to sustain themselves and our country's economy. So, we remain in a stalemate between game publishers and the government - with a few breakthroughs like Microsoft's initiative to officialy sell the X360 here (yeah, all other consoles are IMPORTED, which means that their prices suffer from the government heavy taxing over 'non-essential' products) and the coming of Ubisoft to Sao Paulo, being the first game developer/publisher to officially come and set an office in brazillian territory.

I really wish that people would buy original games: it would estimulate developers to make incredible games (and I believe that we're in a time that desperately calls for original ideas that are well developed and executed). But my wishing isn't enough to make people change their minds (alas, I'm not that powerful xD). Only through games having competitive prices and attracting people's interest (such as online multiplayer or extra content) that Brazil will have a decent chance of reducing (because I don't believe it will end) the piracy to acceptable levels.

P.S.: All of the above also applies to music, movies, softwares and technology (hardware) as well.

Laters, Coalhada.

This topic makes me happy. As a piracy middleman (I don't really support the idea of ripping off the latest PC game and sending it to 2 million people, but think ROMs of old GBA games are fine, since they're no longer being manufactured new) I'm often the subject of ridicule and derision on The Escapist by members of the Smug Satisfaction Anti-Piracy Elitists Brotherhood (they must be some sort of cult, because they all use the exact same arguments, like "piracy=stealing 100% of the time.") It's nice to see a well-crafted response that considers the economies of countries less fortunate (not sure how long I can keep saying THAT, the way the economy is going) than ours.

I've long known that countries in South America and the Middle East have a thriving electronic black market, and it would be interesting to know exactly how much of an impact piracy has on the success of those countries, commercially.

I also agree with the people saying video game companies need to try to cut out the middlemen. By lowering the average price of games (or simply not shafting certain countries, like Australia) developers and distributors could probably see a bigger profit. I mean, once the difference between legal and illegal is 5 or 10 dollars (American), it is my opinion that most people would pay that little bit extra for respectability. "Supporting the developer" sounds like a good idea on paper, but it's hard to do if you live in a Third World Country and the price of every legit game is $60.

And yeah, maybe game companies should be working on deals with pirates. Actually, I just had a thought!

If piracy groups could ally with big companies, maybe the game publishers could put the DRM/Download Limit garbage on the PIRATED copies. The legit publisher could maybe pay a fee for the pirates to allow this, with strong fines and criminal incarceration as the penalty for removing DRM from a pirated copy. Sure, small pirates would always duck this law, but the big guys in piracy would be getting paid twice for their games (once by the customer, once by the publisher to put the DRM in), so they'd probably be fine with it. This, combined with a new, lower MSRP for retail games would work to make legit copies more attractive (but without digging too much into the profits of pirates, keeping everyone happy.) If, say, the pirates sold their game for $1, they could pocket an extra $1 or $.50 per copy to put the DRM in. Then the customer would have a choice: pay $1 for a pirated copy with a download limit and DRM, or buy the legit copy (with none of that) for $5 or $10.

People will always pirate, the trick seems to be making piracy less attractive to the people who love games but can't afford the sometimes ridiculous prices (especially if they live in Australia.) In retrospect, this plan probably wouldn't work because of the selfishness of people on both sides of this industry, but I thought it was worth a mention.

So basically what this guy is saying is that its OK to steal from other people as long as your poor.

Tell me if I'm wrong.

Good article, and rang very true for me. Game companies act like they would see a huge increase of profit if piracy was completely wiped out, but they really wouldn't. Most people who pirate a game aren't doing it simply because they want the easy solution. There are multiple reasons such as wanting to try a game that didn't have a demo; or for PC gamers wanting to make sure a game will work on their system before they make the purchase.

Example: Not long ago I was thinking of getting GTAIV on Windows. However, that game is not for those with lower specs. My computer is a bit of a mixture, it has a great processor and lots of memory, but the video card is pretty low end. (Only 128MB) Most current games are playable enough despite this, but you can never really be sure. So my options were to either take a gamble and spend $50 for something that may not work, or to pirate it first in order to test it out. If it worked, I would get right onto Steam and buy it. Obviously, I took the second choice.

And it's a good thing I did, it was completely unplayable. I was driving around non-existent areas that popped in at a snails pace, if they popped in at all. The roads, the buildings...all invisible. If I had just bought this, I would have wasted $50. So now I know to just buy it on the PS3 once I get one. I got to keep my $50, and Rockstar will still be getting my money anyways. Win-win.

Daethus:
So basically what this guy is saying is that its OK to steal from other people as long as your poor.

Tell me if I'm wrong.

What the article is saying is that a.) This is hardly stealing to begin with; b.) In poorer areas this is so commonplace that a lot of people don't even know it's piracy or that it's even illegal; c.) Those that DO know in those areas are going to do it anyways, as it's the only way for them to play games at all and d.) This issue would best be solved if the opposition worked with each other rather than against.

duudes...

do you realise that the price is supposed to cover up development costs?

cutting the costs might have us ending up with low quality, bugged games flooding the market

besides.. there are plenty of people buying games at the 60 price point..

if the industry actually did what you proposed.. then both it and the pirates would lose

cause games would suck, and no one would pay anything for them anymore

UNLESS, lowering costs would change the quantity sold so much that you would get a profit

this all comes down to the question of what's the price elasticity and income elasticity and all that economics jazz

piracy is the black market of video games... and in some countries the black market is more important than the official market

Honestly your making more compelling arguements against piracy. To be honest I think the "human face" of something like this is irrelevent.

It's like this, games are a luxury item, as such I have no sympathy for someone who wants to steal them "because they can't afford it". If you can't afford $30 or $60 for a video game then obviously you have concerns beyond gaming. Gaming is at best a hobby, NOT an entitlement.

When it comes to the piracy your discussing your not even defending it as a victimless crime because as you pointed out the pirates in question are SELLING the games. These guys didn't invest anything in their development, but are making money off of it. That changes things a bit on the moral spectrum as wrong as it is in any form, over someone who is pirating a game and distributing it for free.

I'll also be blunt in saying that I have increasingly little sympathy for the so called "developing world" in general, which does fit into this somewhat. This is largely because there are only so many resources on the planet, believe it or not. there are so
many humans out there that just supporting our population at the current level is literally seeing us deforesting the planet, and strip mining it to death (to name only a couple of things), we're using those resources faster than the planet can replentish them. There is simply not enough resources on the planet to support the current population at anything close to the level of the average American or UK citizen, which is what people generally want and feel is an entitlement. As the developing world... well develops, it puts more pressure on resources tha get diverted from other places. With something as simple as wood, you can only cut down trees so fast, and if everyone is building nice houses that means there is more competition for the wood that is being produced. Even with recycling the increasing demand means that to meet that demand we have to cut down even more trees which leads to pulling further and further ahead of the planet's abillity to replentish itself, and sometimes even amounts to raping it so hard that we leave areas where nothing will grow back for thousands of years.

Every person wants to live better, but frankly not everyone can, despite what US morality might want to leave us to believe. We simply overpopulated the planet to that level, especially in a lot of these underdeveloped nations. The increasing demand for resources and raising prices is one of the big reasons why the economy is in such a mess, and the price of things like wood/paper (look at book prices), oil, and similar things are going through the roof even in the first world.

To put it brutally, it's very much an "us or them" situation, and as nasty as it might seem to start smacking down people in developing nations that have very little, I think that keeping the little guys down has actually become a matter of nessecity for the first world. I also tend to think one of the only reasons to solve this kind of problem is to get rid of a lot of people very quickly... which is one of the reasons why I am so relatively callous in talking about breaking cultures and killing hundreds of millions of people in various discussions. See, I believe if we kill tons and tons of people that means less pressure on global resources and a higher standard of living for the survivors. Even if the "victims" hate it the descendants of them down the road will be much happier if they are able to keep the population stable, leading to less global stress and violence from then out out.... some people don't get how brutal militarism, mass murder, and even what some might argue as genocide can be humanitarian practices when viewed as part of a big picture.

Now... the point of this rant that probably has a lot of people going "wow Therumancer, your one twisted Bastard, and what does that have to do with piracy", is simple. When you look at this whole F@cked up situation, people stealing video games is just flat out pathetic. Especially seeing as it shows a mentality of entitlement that is at the root of how a lot of these problems got his bad, where people think that because something exists somewhere they have a right to it. The "if we can't afford it, we'll steal it" mentality.

I'll also say that video games are the tip of the icerberg here, really, the so called "developing world" steals pretty much everything it can get it's hands on.
Producing knock offs, and counterfeits of consumer goods which they use to pump up their economies and then use the resulting money to compete with first world nations for resources. A problem when your in one of those first world nations and your own bloody economy is suffering because of it.

In short, this article does not represent a new point of view. Someone did an Escapist article called "Nation Of Pirates" dealing with the situation in Brazil. My basic attitude
is that the whole "pirate economy" can die, and if it ruins millions of people employed by it, I really don't give a crap. From my perspective it's like saying that Organized Crime employs lots of people and if you shut it down all those pimps, drug dealers, bookies, extortionists, and thugs will be bankrupt due to losing their livelyhood. When did it become our responsibility to prop up foreign economies anyway? Sure we've agreed to this diplomatically in certain cases, but when it comes to stealing? Sorry... no, just no. Besides the US and other first world nations are increasingly in a position where we just can't afford it.

Oh and one final note for those who read this far and might be thinking "yeah well, if the video game industry decided to lower prices they could sell to these economies and make money, the developing world gets games, and they make money, everyone wins" it's not quite that simple either. See, if someone decides to lower the prices dramatically for a foreign market, especially when it comes to an IP, nothing prevents that market from taking the cheap goods and re-selling them in the first world undercutting the prices.

It's a simplistic example, but let's say someone decides to say sell a big Soccor game that sells for $60 in the US and more in Europe for $5 overseas because that's all the developing world can afford. What's going to happen is those guys overseas are going to buy up those games, and then send them back accross the ocean to sell for many times what they cost to purchuse, undercutting the prices charged by the company to begin with.

Things like region locking are attempts to combat this (so say an Asian version of a product that costs less can't be sold to an American consumer) but it doesn't work because all it does is lead to a trade in mod chips, and foreign hardware.

This is also one of the criticisms with online auctions and sales sites. See, it's relatively easy to go after one obvious distributor who is doing this with hundreds of thousands or millions of products at once in bulk. With The Internet though and bulk mailing/business software what they can do is broker it as tons of individual, smaller
sales.

If you get onto sites like Ebay you'll notice that there are games like Pokemon and such selling for like 25% of the market value in the US. A lot of those copies ARE bootlegs, *BUT* a lot of them are simply games from cheaper markets that are being repackaged and resold due to efforts to make exactly this kind of trading work... and as you can see it's an epic fail.

Understand also that a lot of this comes down to money, and profiting off of someone else's work. See a moral arguement can be made about grabbing a product that someone has no intention of ever selling in your part of the world, if it's being distributed for free. Things like fansubbed anime and the like. The differance here is that a lot of these games ARE availible in those countries and people simply choose not to buy them. What's more the guys pirating the games are actually selling them for personal profit. It's not the same thing at all. You'll notice that a lot of those who exist in the gray area of fansubs make a BIG deal about not charging, and also not distributing a version of anything up for sale or liscenced as an upcoming release. The same can be said of a few fan-translations of video games.

It never fails to amaze me how provincial Americans are. We really need to make it a point to get people out of the country once in a while.

And I love this topic. I love the way the sock puppets always come out with post counts of 2 or 3 lambasting the evils of piracy and trying to prop up the idiotic industry mantra that "a pirated game is a lost sale".

And of course the wealth of prideful, self-entitled bigots that spring up (on both sides) is funny too. HEY... GUYS... IN CASE NOBODY EVER BOTHERED TO MENTION THIS TO YOU BEFORE... Righteous indignation is cheap.

While I disagree with it's conclusions I found this article well thought out and providing a perspective that most Americans, and more importantly gaming execs, really need to come to terms with.

I disagree that devaluing the game is a realistic solution to the problem. I think that would invite a whole new type of abuse that actually WOULD cut into the industry's bottom line. But as a culture game publishers really need to get it through their thick skulls that a pirated game is more often than not a lost "no sale".

I honestly think that, for now, the best "solution" is to put the "problem" in perspective. As long as these pirates are not cutting into corporate profits... WHO CARES? In 20 or 30 years this may change and these economies may be able to support AAA gaming, but for now they just can't, so piracy is a non-issue. Time and energy spent trying to fix this "problem" are wasted since even if you succeed (which you won't) all you've done is spent millions of dollars to reclaim a market that won't make you any money anyway. To make matters worse this futile crusade is actually alienating the customers that can and do pay for their games. That's a net LOSS no matter how you slice it. So why bother? Just leave the market alone until it can support your product.

In fact... you might want to put a little time and effort into a long look in the mirror before you price yourself out of the North American and European economies, and out of business, forever.

The companies that provide DRM for games (and no doubt offer up some of the more amusing sock puppets that spring up on these threads) are heavily invested in the "1 pirated game=1 sale" myth. It's a myth that has hurt the industry and honest paying customers alike by saddling us with clunky, often just plain defective DRM with the ridiculous expectation that if they can just stop the evil pirates from stealing their work billions in unclaimed revenues will suddenly flow into their coffers. This assumption is just plain STUPID.

The best thing that could happen for the gaming industry is they could actually succeed in creating a hack-proof DRM. Technically it's impossible, of course, but if they ever did it I'd love to be a fly on the board-room wall. First a bunch of publishing execs would scratch their heads and wonder why the windfall of revenues they were expecting never materialized, then their expressions would turn to horror when they realized they now needed to put together a power point presentation explaining to the Board of Directors how a 40 year multi-million dollar war on piracy campaign has finally been won for a net gain of "diddly-squat".

While I would nitpick the authors math and conclusion this article not only makes one of several irrefutable arguments against this assumption, it does so articulately and succinctly.

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