The Trader's Dilemma

Wrong. The reality is that for all their gesticulating and spluttering, there isn't a single person in the videogames industry who knows exactly what consumers would do if second-hand software wasn't an option, but we can make some educated guesses. The number of second-hand sales which would convert overnight into new software sales could be immense - but it's far more likely to be extremely low.

Equally, you've just taken USD 800 million of credit tagged for videogames purchases out of the cash of another group of consumers. Rough paper napkin calculations suggest that far from generating USD 1 billion or so of new software sales, you'd probably lose the better part of USD 2 billion in turnover for GameStop, including hundreds of millions of dollars of new software sales. Best of all, you'd probably drive former consumers of second-hand games either to eBay - where they won't even see new software to catch their eye - or to BitTorrent. Talk about cutting your nose off to spite your face.

So what about the threat of digital distribution? It's coming, we're told, and it's coming faster than we'd expected (except those of us who expected it to be here three or four years ago, but saw the adoption held up by the industry's initial slavish devotion to the whims of High Street retail - oh, how the worm has turned!). In the digitally distributed future, forget the second hand market - there'll be no physical product to pass on, and no second-hand sales as a consequence.

There are two possible consequences of this, assuming that the industry is dead set on maintaining its present pricing structures. One is that second-hand sales continue to breathe life into High Street retail long after its day should have passed, forcing companies to maintain physical production, inventory and distribution for much longer than they'd hoped.

The other is that publishers get brave and move to online-only distribution rapidly - cue an enormous upswing in piracy and the single largest contraction of software sales that the market has seen, as countless consumers suddenly find that their hobby has become vastly more expensive overnight.

The market will vote with its feet and its wallet. Second-hand sales make gaming affordable for a huge swathe of consumers, they pump revenue back into the industry, and they form a crucial part of the present retail mix. Take that out of the mix, and those consumers will just walk away. Whether they walk away to the embracing arms of BitTorrent or simply to find a hobby that isn't so intent on turning the thumbscrews on them is another matter entirely.

So what's the alternative, if we're already committed to this shining future of digital distribution? Quite simply, the videogames industry needs to bite down hard on a stick to contain its pain, and start recognising that Right of First Sale is an intrinsic part of the copyright systems which allow it to make a living out of media in the first place.

If you sell something to a consumer, it belongs to them, and they are entitled to sell it on. This is a right which has been eroded in some jurisdictions in recent years, but it's still there - and consumers are becoming more and more vocal about re-establishing it at the heart of their dealings with media businesses.

What the industry needs, as much as it argues that it needs nothing of the sort, is a system whereby digitally purchased content can have its ownership transferred. If it wants to keep its consumer base and avoid falling foul of the law in many territories which are starting to listen to consumers' voices rather than the industry's demands, it needs to make second-hand work online.

Yet, as painful as that may look, it's also a golden opportunity. Online, the publisher owns the distribution method. Having looked with envious eyes for years at the revenues GameStop, GAME and company are making from second-hand sales, publishers suddenly have the possibility of taking over those revenues online by directly providing the trade-in and re-sale systems consumers are used to offline.

Instead, they're seemingly determined to slaughter the goose that lays the golden eggs. While this attitude persists, GameStop and its cohorts will continue laughing all the way to the bank.