Over the last two decades the issue of digital piracy has become increasingly important and received much attention from governments and regulating bodies on a global scale. It has been argued that the illegal copying of intellectual property, such as games and music, has cost companies billions of dollars in lost profits and has subsequently reduced the desire for innovation and product development (Jain, 2008). Therefore, this report will focus on copyright and piracy, with an emphasis on exploring the way in which the Australian Government has attempted to combat piracy in online environments and within the gaming industry. Piracy on a global scale within the video game industry will also be discussed with examples of different companies approaches to combating the illegal downloading of digital media.
Intellectual property, copyright, and current legislation
Intellectual property (IP) was first introduced as a universal concept at the Paris convention in 1883, after preparatory work in the 1870s, and has since been revised and modified during subsequent conventions over the ensuing decades (Bodenhausen, 1968). As the original convention states, IP is a formalised structure in which a user/s, owner/owners, or entities, register for certain properties that are not a physical asset. These properties can be considered as follows:
- Patents: the party involved allows the holder to claim the right to an invention, in which the patent must not infringe on a previous invention or be a new solution to a problem. One of the most prolific examples of a patent in Australia is the development of WLAN, better known as Wi-fi, in 1996 by the CSIRO. As of 2012 this patent ceased as Australia has a 20-year patent ruling (IP Australia, 2016).
- Trademarks: the party registers words, catch phrases or designs that are vital to the company. Unlike patents, trademarks can be renewed indefinitely, such as the vegemite logo, which originally was trademarked in 1923 (IP Australia, n.d).
- Trade secrets: the party can keep certain techniques a secret to keep an advantage over other business. These properties can see the use of such things like the recipe of a certain item or the way in which certain algorithms may perform behind the scenes.
- Copyright: The party registers work or published materials to themselves. Examples of materials include:
a. Literary books, poems, lyrics
b. Computer software or algorithms
c. Music and sounds
d. Film, television, or radio broadcasts
IP has become the focal point of businesses and industries around the world. A review of IP economic impacts determined that with companies and countries investing into all forms of IP, revenue generated from these ventures can cause a six-times increase in profits, as opposed to having just a single entity of IP (Falvey & Foster, 2006).
The term copyright refers to the legal rights of copyright owners to dictate and control certain activities with their works, such as re-use and copying. In Australia, the Copyright Act was first introduced in 1912 and continues to be amended and updated. Most recent are the 2019 amendments made to the Copyright Act 1968 which were implemented on 1st January 2019 (Federal Register of Legislation, 2019). This Act is important as it rewards parties for creating content and serves as an incentive for the distribution of both creative and intellectual works (National Library of Australia, n.d). Unlike trademarks, names and slogans cannot be copyrighted and there have been a number of changes to the Copyright Act within Australia that do not apply to other sub-categories of IP. Largely, this includes the fact that any work that is published by a resident of Australia is automatically trademarked to that party. Secondly, works from a user or parties have a much larger protection term of copyright before becoming ‘out of copyright’ or ‘in the public domain’, as shown in figure 1.
As with many rulesets, some exceptions do apply to the Copyright Act. Infringements exceptions include:
• The use of material for study, research, review, or critiquing
• News reporting, parody of materials or satire
• Professional advice given by a lawyer (Federal Register of Legislation, 2019).
Piracy and its impact on industries
Piracy can be defined as the procurement or use of a copyrighted work without paying for it (Holm, 2014). Over the last decade, piracy in Australia has become a source of global interest. In mid-2014 torrentfreak, a news website, released information on the final episode of Game of Thrones fourth season. Within a day of the worldwide premiere, a sample of 18,333 IPaddresses collected showed that the top sharer was Australia with 11.6% of the total, followed by the United States with 9.3%, and the United Kingdom with 5.8% (Van der Sar, 2014).
During this time, the Australian Government (led by Tony Abbott, with Malcolm Turnbull as the communications minister) attempted to introduce a three strikes policy on Australian citizens for piracy. The recommendation from the Australian Law Reform Commission (ALRC) had deemed that this policy would prove problematic as it would push users to continue to practice piracy (ALRC, 2013). Further, the then Prime Minister failed to take on the advice of industry standards and/or issues that may have caused the high amount of piracy in Australia. Before the takeover from TPG, iiNet was a leading internet service provider (ISP) and advocated for addressing issues such as piracy. An open letter from then CEO Michael Malone detailed what the ISP was doing both the customers and the agenda the government should consider (iiNet, 2014). Since then, Australian guidelines have changed from using a strike policy to using a block of sites approach known as the Online Infringement Bill. Due to this, the level of piracy in Australia has settled to 15% of the population still pirating content on a weekly basis (Federal Register of Legislation, 2018).
Piracy and its impact on the games industry
The games industry within Australia finished the end of the 2018 year at an industry revenue of just a little over $4 billion, with a little more than two thirds of the population having purchased a video game console or game, and actively playing video games. The Interactive Games and Entertainment Association (IGEA) presented a report in November 2019 detailing the health of the video game industry in Australia, with a total of 1275 fulltime employees around Australia (Brand, Jervis, Huggins, & Wilson, 2019; Thorpe, 2019). The Australian outlook on piracy is not quite as grim as other platforms and industries as video game piracy is significantly lower than other mediums, such as film or tv shows. However, the key findings from the IGEA reports demonstrate the hindrances imposed by the Australian Governments lack of funding for support, poor infrastructure support, and low IP turn over and registration.
On a global scale, the video game industry will see a figure of over $100 billion estimated for the 2020 year in videogame sales, with a close to a further $3.5 billion lost to piracy (Dautovic, 2020). The approach that companies have to video game piracy differs greatly across countries/companies and is combated in different ways. Greenheart Games release of Game Dev Tycoon in 2012 provides an example of a developer taking a very specific approach to potential piracy. They released the game on steam, along with a modified torrent version, with the key difference being that those who pirated a copy of the game would eventually encounter an onscreen ‘sales report’ message stating that players have been illegally downloading their ‘game’ and that the company is going ‘bankrupt’. Data published by the company revealed that the day after release a staggering 93.6% of user had illegally downloaded the game (Klug, 2013). A further example of a company dealing with piracy in their own way is provided by Good Old Games. They choose not to have Digital Rights Management(DRM) services on products, stating that forcing a consumer to play a game with malware that will be cracked within a few days, or forcing the game to be played online only, will drive more people towards piracy (Holm, 2014).
It seems unlikely that the attempt to lower piracy within the video game industry with the introduction of DRM will ever be entirely successful. This is due to the fact that many game companies cannot strongly commit to the fight against piracy without enormous backlash from the public. For example, when Electronic Arts released Spore in 2008, the overwhelming majority of reviews on Amazon.com for the game rated it as one star, often citing the DRM as the reason. Spore subsequently became the most pirated game in 2008 (Behm, Leander, & Weber, 2015). A further example of the backlash caused by companies adopting DRM is seen with the 2012 release of Diablo III by Blizzard Entertainment. The adoption of an always-online DRM meant that players were unable to play the game without an internet connection. From the publishers point of view the positive flow-on from this was that the game’s security was improved, however, extreme delays in connecting to the game’s servers during launch weeks caused an outcry from the gaming community (Behm, Leander, & Weber, 2015). These examples stress the point of why the video game industry is struggling to combat digital piracy.
This report has provided an overview of what constitutes intellectual property and the way that it is handled in Australian legislation. It highlights the fact that piracy is seen as one of the key threats to innovation and profitability, not just in the video game realm, but also within other international industries (Jain, 2018). The impact that piracy can have on the video game industry both in Australia and globally has been discussed in detail and demonstrates that the strategies that developers have adopted to combat the illegal downloading of their games are not always met with enthusiasm from the consumer, as seen with the release of Game Dev Simulator and Spore. Overall, it can be concluded that IP, copyright and piracy are all serious, complex issues and continue to affect the day to day functioning of many industries both in Australia and internationally.
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