Delusibeta said:
Once again, we've gone back to the essence of the problem: it's free.
Say, for example, Square Enix started "selling" Kane & Lynch 2 for £0.00. I know enough about the game that I wouldn't bother pulling out my credit card for it, but if I could get it for free, I might as well get a licence and give it a try.
(Before you point out that didn't happen: it did, except with EA's Burnout Paradise instead. Since I already have a copy on the 360, I've got no intention of paying for the PC version, but since a pricing error rendered it available in the UK EA store for £0.00, I helped myself. Perfectly legal, of course: it's their store, after all. My theory was that the script they used to lower the prices on the Christmas sales sneezed at Paradise's £5 price tag)
But see, here's the problem. Things like that come available, yet I don't have all of them? Why? Well, for instance, I'm not the least bit interested in Kayne or Lynch, and Burnout: Paradise holds nothing for me. In fact, the world is chock full of things I can get for free, but I do not have them. Why? Because I'm not interested in them.
Making something free doesn't not
make someone interested in it. It only capitalizes on an
existing interest in the product. If someone is getting it, it's because they were interested, even if they're getting it for free.
I think a significant proportion of pirates are like that (except without the whole following the law thing). They wouldn't pay £0.01 for it up front, but they might as well give it a try. Either that, or they just wanted to pirate.
Cut out the whole middle section, skip to the end, and you're exactly right. Pirates want to pirate.
Of course there's evidence that even if people are able to pay $0.01, they will pirate. More specifically, the first Humble Indie Bundle [http://blog.wolfire.com/2010/05/Saving-a-penny----pirating-the-Humble-Indie-Bundle], where an estimated 25% of direct downloads were from people who hadn't paid a cent. This is a fine example of exactly what I'm talking about.
See, here you've upheld my point better than your own. I've said, quite clearly, several times, that people would have paid a smaller amount
in the absence of a free option. If there were no pirated option, are you claiming that no one among that 25% would have paid a penny? That none of them had an interest in the product, at all, until the word "free" appeared next to it?
Rewrite that whole scenario, and let's say that you could get the Humble Indie Bundle for a penny... but there was absolutely no pirated version. Your only way of getting it was to spend at least a penny.
That wouldn't change a thing for me--I'm not interested in it. That's why I don't have it, free or otherwise. Tons of other people, same story. Yet this 25%
was interested. They had a clear, obvious interest in the product... but we'll never know what they would have paid because the pirated copy skews the results.
For all the talk about how games are too expensive or game companies are greedy, the fact is that piracy (whether or not it means a LOT of lost sales, though it does) interferes with the market's ability to adjust prices. The only two data points a company has to work with are $60 and $0.
Any number they pit against $0 is going to fail.
If you remove piracy, supply and demand will see a new equilibrium established. People stop paying $60, companies make no sales, they have no one to blame but themselves, and they lower the prices a few bucks. A few people start buying again, but not enough... so they lower the price a bit more. Now, suddenly, the average price is back down to $40 (with DLC making up some of the lost revenue, but the increased sales also helping to even things out).
So, because of piracy, companies can't make these adjustments. Because ANY AMOUNT OF MONEY is greater than "free," they can't be assured of seeing increased sales from lowering prices. It's better and smarter for them to just take what they can get as-is and try to fight piracy. PIRATES KEEP PRICES HIGH.