Digital download markets (PC/Mac/Linux)

Background

Over the past few years, there has been a steady rise of digital sales of applications and games at the expense of retail stores. Steam (the PC game download service) and iTunes (the digital music provider) both launched in 2003 and since that time there has been an explosion in both the number of stores and number of media items purchased on these stores.

I should state up front that although I am in favour of digital distribution under the right conditions, currently none of the PC (or console) digital download services operate under conditions that favour the consumer.

For the remainder of the article, I will use the word media. For this I mean specifically audio (such as a music track), video (such as a TV episode or movie at a given quality) or game (such as a collection of files that constitute a game on a given platform). I will also concentrate on the non-console market for now but may write a seperate article on the state of the console markets.

The Trust We Give

There are three areas of trust that are implicit when buying media from an online digital download market:

1 - Trust that the provider can provide a good functional service as promised (can provide the goods on demand).

2 - Trust that we now actually own the media (trust the the provider understands that it holds your media in proxy and that you are the true owner of the media).

3 - Trust (or faith) that the provider can forever until your death continue to provide the service (stay in business).

If you buy a piece of content from a digital market, by all rights, you should own a physical copy. A physical copy is the ultimate proof of ownership. You have it in your hand, and beyond a short physical defect guarantee period, your relationship with the retailer ends. A digital purchase is like buying a book then immediately loaning out the book to the shop you bought it from. You already paid for the book, the book is yours, but it is a conceptual ownership when you do not have the item at hand and in fact, never actually see the book. Trust is everything.

Publishers automatically get money from a market when you buy, at point of purchase, their transaction is complete however the transaction with the consumer is ongoing. We need assurances that our content will not be downgraded and that if the company disappears that we will still have access to those goods which we purchased. Currently no service offers any such assurances (as they cannot).

Too big to fail

Realistically, it *probably* won't happen with the bigger players such as Steam and iTunes as the market seems to be behind them right now, but how can we can never completely know that? They are too big to fail right?

As the number of purchases you make on a service increases so does your risk. Buying 5 games a year for 10 years, that's $3000 of investment you made in one service. Admittedly, the headline price of games quickly erodes and the cost of replacement may be 10 times less than your original purchase price but the price of other media such as music and video can sometimes hold its full value, especially if you are the type of consumer that waits for deals.

If someone broke in your home and took $3000 whilst simultaneously taking $3000 from millions of other consumers that would be the crime of the century, but we are creating a situation where this could happen.

The fear of buying from a smaller marketplace hurts smaller marketplaces disproportionally that may actually have better deals or services. If I could buy a game from Steam for $12 versus Direct2Drive for $10, I would probably go for Steam as it seems more stable and larger. This is not a decision based on good consumer behaviour. Both items would be identical. I just do not trust the second market and with no consumer protections, free market consumers end up rewarding the largest market, not the most competitive.

Direct2Drive has some good deals now now but are we guaranteed they will be there in the future? Ubisoft, EA and dozens of other companies offer digital downloads (often laces with DRM that assumes the existence of their servers which in turn depend of the existence of their company). If these companies cease to exist, then the content disappears. PC owners therefore flock to Steam. In doing so, all the eggs are in one basket and Steam becomes too big to fail.

Another area of worry in these digital markets is a complete lack of cross compatibility between the markets themselves. The markets do not simply become a means of distribution. They tie-in installation and synchronization functions into their own clients.

That is, if I want a game from Steam, I need Steam installed. If I want music or video from Apple, I need iTunes installed. I can't compare oranges with oranges across these markets as there is not a common interface to access all the markets concurrently allowing for small monopolies to emerge around the 'safe' players. What is needed is a open-market standard and open clients that can implement the standard across platforms. Of course, I don't mean to say that I would expect to be able to play an iPhone game or Android game on my PC, but I should be able to have a client on my PC where I can browse all content across all platforms and even make a purchase without resorting to proprietary clients.

Digital Media Rights Repository

When you buy a piece of digital media from a store, you are buying a license to use that media either on an indefinite basis or as a rental for a fixed amount of time. If you bought an indefinite license then that license should last until death of the licensee. Copyright remains with the copyright holder but the licensee should have rights.


This situation cannot continue indefinitely, somethings gotta give, and legislation often starts with a headline failure.

So, how can we ensure that the life of your download media extends beyond the life of the provider that you bought it from?

Well each piece of content needs a unique content id, each user needs a unique id and each license type needs a unique id and the licenses to the content that the users hold should be held in a central digital copyright repository. Each digital distribution service registers purchases with the central repository upon purchase and pays a nominal 'insurance' fee to the repository upon purchase (1 or 2 cents aggregated and paid weekly).

From the moment that you buy the content from your provider, it is insured against provider failure. That is, if Steam goes bankrupt, you can file a claim, and activate another provider for the same content free-of-charge. The replacement-market does not need to pay the publisher for the new user that is downloading their already purchased media and the administrative costs are covered by the nominal per-purchase fee so no-one is out of pocket and customers are free to seek the best deals with protection.