So I guess selling Used Software really is just like Piracy!

Via Tobold, I just read this article in Wired about the overturning of the Autodesk case by the 9th US Court of Appeals:

Guess What, You Don’t Own That Software You Bought (Wired)
The 3-0 decision by the 9th U.S. Circuit Court of Appeal, if it stands, means copyright owners may prohibit the resale of their wares by inserting clauses in their sales agreements.

“The terms of the software license in the case are not very different from the terms of most software licensing. So I think it’s safe to say that most people don’t own their software,” said Greg Beck, the defense attorney in the case who represented an eBay seller sued by Autodesk. “The other ramification, there is no reason a similar license could not be put into the cover of a book. It wouldn’t be difficult for everybody to implement this.”

This may not be good news for eBay seller's and buyers on a budget but I absolutely agree with this ruling. When you buy software, you aren't buying the software but a LICENSE-TO-USE that software. As such, I feel a company is well within their rights to limit any transfer of that license to a 3rd party.

The more immediate ramification for consumers is that the discounts provided by a secondary market go away. But the longer term ramification is that the companies and individuals producing this software will be more justly compensated. That means they are more profitable and better able to continue to provide more of those types of products.

If I have a concern here it's the ramification to other Intellectual Property like books. A lot of books go out of print or have limited print runs.

Facebook: Sid the Seer?

Via Tobold, I just saw this article with Popcap executive Jason Kapalka who just confirmed my prediction from March that competition would squeeze the profit out of the Facebook gaming:

Serial Ganker (March 2010) - Facebook: A lesson in Competition
The Laws of Competition are going to require a successful social gaming company to compete by either:

• creating lots of crappy games (most options)
• and/or, build better games to distinguish themselves (best option)

This is what happens with market forces in a free market. Big markets with big profits attract lots of competition. Which, in turn, drives profits down because more people are chasing the same pool of dollars.

The point here is that while social gaming is attractive to investors right now, it’s not always going to be this attractive as competition drives down profits.

Those are my words from March above, but enough self-congratulating for being so smart and let's steal some juicy quotes from the article with Jeff at Popcap.

"You're definitely in the stage right now in social games where there's a lot of bandwagon jumping, where everyone sees moneymoneymoney and suddenly all these new companies appear. It happened before in mobile, it happened before in casual – in the past it's tended to signal the beginning of the end."

Kapalka isn't suggesting that social games as a whole are going to die. Instead, he says it's the end of a "golden era," where the possibilities of the genre seemed limitless.

So thus far, the first half of my prediction is coming true. Increased competition is bleeding away the profit in social gaming. Zynga, the largest FB dev, has taken the approach of making LOTS of crappy games with the hopes that will increase their overall exposure to more users.

The next stage, I believe, is that we'll see "better" games on Facebook. That's already becoming true to some degree. Certainly games like Desktop Defender, Kingdoms of Camelot and even (gasp) Frontierville are much better designed games than Mafia Wars and Farmville.

Should Used Games be Supported?

While I’m not of the opinion that buying used games is the equivalent of piracy, I certainly do agree that it’s bad for the business of making games. As a general rule, I think it’s safe to assume that the original manufacturer profits little to not at all when you buy or sell a game used.

I’m also not going to argue the legality of it. You can buy and sell used games. That’s not in question.

It’s true that a software license is simply a license to use and while that license gives you no ownership of the actual intellectual property, it does give you license to use the product. You agree to those terms when you install the product.

There is quite a bit of case law that exists for Copyright and Software. And some of it even says that one of the things Software companies can’t do is enforce a term that limits your ability to transfer the license to another party. It’s viewed in the same way that Books or Music copyright is administered.

BUT – unlike Books or Music, Software often needs to be supported long after the initial purchase or sale. This support comes in the form of patches and game updates. And, in many cases, some online service component that the game provides for multiplayer access.

Now the question I would raise is whether or not the right to continued support is something that should be transferable with that license to use?

I don’t think so.

In my mind, the right to use and the right to support are two separate items. Copyright law supports your right to use. It doesn’t support your right for support.

As I see it, a gaming company should be entirely within their right to provide a key for this support with the original purchase and then deny that key to anyone purchasing the product on the secondary market. There are plenty of examples of non-transferable warranties for non-software products.

To me, that’s entirely fair. If you buy a used game, then you buy an unsupported game.