I ran across an interesting story on Vice today about a resale marketplace for digital goods. While it wasn’t directly related to ebooks, it does get me thinking about just how an ebook or music resale market could work—and why the odds are good that we’ll never have one.
The article is about Valve’s new collectible card game, Artifact. This game seems to be an attempt to create a digital equivalent to the venerable Magic: The Gathering, including being designed by Magic‘s original designer Dr. Richard Garfield. As such, it includes digital card sales from player to player, just as Magic did with the physical item.
It seems to be an attempt to replicate a physical game digitally as closely as is possible. There’s no in-game currency, which many free-to-play games offer to allow players to earn in-game items via play. Cards must either be bought new in booster packs from the store (in which some cards are “common” or easily obtained, while rarer cards show up at lower frequencies), or obtained from the aftermarket—mediated through the same Steam online marketplace that enables the sales of custom skins and items for other games. Cards can also be won through in-game tournaments, but those tournaments cost real money to enter. In short, there’s no way to earn new cards that doesn’t require cash outlay.
Aftermarket prices for some of the individual cards can go higher than the game’s $19.95 starting cost, and collecting one of each available card could run a player $300 or more. But there’s one key difference from , where repeated use of a card could wear it out: digital cards are perpetually new.
And the trades can be quite lucrative, too—particularly to the marketplace, which takes a tiny cut of each sale. The article notes:
Skimming two cents off of one million common card transactions ($20,000), is, ultimately, just as valuable as selling 1,000 copies of the base game. (As of December 1st, there have been 6,056,282 cards traded, the fees for which have likely netted Valve around $250,000). And because each card can be traded an infinite number of times (digital cards don’t fade) the long tail of Artifact is very long indeed. Such transactions are very nearly pure profit for Valve, and the company has every reason to keep consumer pricing down to continue extracting rents. Valve isn’t lying when it announces, in defiance of Artifact’s rocky reception and crumbling player base, that they’re “in it for the long haul.”
On the face of it, it seems to be just the kind of thing all those outfits like ReDigi that have been trying to get ebook or music resale off the ground want to do: use DRM to guarantee that each digital item is unique and does go away from the account of the person who sold it. And they foresee taking a cut of the resale value, and perhaps passing most of that cut on to the original publisher of the book. The thing is, it’s just not going to work that way.
The value of Artifact‘s cards comes from their rarity, and their ability to be used in the game. Since you have to have the actual card to use that card (unlike in paper games where you can use a “proxy”—a piece of paper that you and the other player agree to treat as if it were the real card), that means these cards are in demand—and the rarer and more useful the card, the higher demand, the higher the price. Hence, some cards can sell for more than the cost of the game itself.
However, ebooks and digital music are a commodity. They don’t have “rarity”—any book, album, or song is just as easy to buy as any other. You don’t have to buy booster packs and hope to get the one you want. So there’s nothing to drive the prices up.
Also, as I’ve noted before, there’s nothing keeping users from cracking the DRM on ebooks or music and keeping a copy outside of the resale system, the way they could on DRM-expiring checked-out public library ebooks. That’s not going to be the case for a digital CCG, where your cards are verified through a central authority. You can’t just copy a card and stick it back in.
Now, if ebooks or music were to be sold through a system like Hoopla Digital uses, where you consume the ebook or music (or audiobook, digital comic, movie, etc.) entirely through Hoopla’s own web- or app-based interface and can’t export it for use in other devices, that kind of copying and forgery could be controlled. (Online digital movie sales or rentals usually work the same way—you can only stream it, you can’t download it.) But while something like Hoopla might work for library borrowing, where you don’t necessarily expect to have as much freedom as with something you own, it is doubtful people would want to buy books and music through such a system. Unlike movies, consumers are long-accustomed to being able to pay for books and music and then use them in whatever setting they want.
And finally, there’s the little matter of royalties. With CCG cards, the only way to buy them new is in randomized bundles where you don’t know what you’re getting. That’s the kind of sale card resales are competing with—an entirely different sale case. People who buy single specific cards through the market aren’t likely to see that as a direct substitute for buying new.
But with ebooks and music, any cheaper “used” resale would necessarily drive out a full-price “new” sale. (Even if some people would buy cheaper used who wouldn’t buy full-priced new, that argument hasn’t swayed publishers when it comes to pirates who wouldn’t buy new either—they still see every pirated copy as a lost new sale, and would probably feel the same way about used resales.) And even if the sale platforms virtuously split their take with the original publisher and author, they would be getting a much smaller amount from a used sale than they would from a new one. So they’d rather have the new one.
This is why I think digital resale is going to remain the province of tiny specialty markets like Artifact—markets whose centralized nature drives out DRM fraud, and whose publishers see a benefit in allowing resale. It would probably take an act of Congress to change resale laws enough to make general digital resale feasible over the publishers’ objections—and given how much control big media conglomerates seem to have over our legislators, I wouldn’t look for that to happen any time soon.
I would also add that, as lucrative as Artifact‘s market seems to be for Valve and the game’s publisher, those same features make me as a gamer less likely to want to get involved. I’ve lately gotten into another digital CCG, Star Trek: Adversaries, which is effectively Artifact‘s antithesis.
I enjoy Adversaries a great deal because you don’t have to pay to win. You can earn plenty of booster packs and in-game currency just through ordinary play, and these packs can include “blank” cards of all rarities (which can also be bought individually from the game itself) that can be traded for any card you want. And unlike a lot of “free-to-play” games, it’s not riddled with advertising or rigged to become impossible to play without paying as you progress. Although throwing $20 or so in can speed things up, almost everything you can get for real money can be earned just by playing sooner or later.
(I think I’ve gotten pretty good at the game, too. If anyone out there should want to challenge me to a game, my player name there is “Robomaster.”)
So, even when it is feasible, digital resale isn’t everything. Even when the publishers do like it, the market conditions necessary to make it effective can be a turn-off to ordinary users.