Tuesday, April 26, 2016

The Cost of Piracy to the Local Game Shop


The idea for this article was born from a series of conversations I had with the owners of the Raven's Loft in Lebanon Mo. It was during these discussions that I began to change my views on piracy and began to see a real cost to real people. Not faceless corporations but to real friends and people trying to make a living. It was at this point that I purged all of my pirated gaming material and vowed to only buy legal copies from here on out.

What follows is what I have personally seen as the cost of piracy to one store in particular. Though, this is more than likely true for any game or hobby shop that still has a brick and mortar presence. I have come to believe that if we want to save the physical stores that we use to buy our material, play in and even hang out the piracy must end for their sake.

The Cost of Owning a Store

Anyone who has taken even a high school business class knows that there is a such thing as overhead. That is the cost of running the business on a day to day basis. Rent, electricity, water, insurance, taxes and wages are part of that overhead and comes out of any money made for that business. On a retail level there is also the cost of buying products to sell which adds more into the equation.

What many people do not realize is that many retail businesses have high enough overhead to only allow for slim margins of profit and rely on a certain number of sales each month to just break even. Since the point of any business is profit, breaking even is not a good thing. The reason is that a percentage of profits should be sunk back into the business to expand and improve. If there is no room for this or, even worse, a business has to cut back due to lost profits the store can stagnate or even die.

Since I do not have access to any actual numbers we are going to assume I have a store and show what the costs can be*:

Rent                          $400

Electricity                    300

Water                         150

Gas                             250

Insurance:                    200

Wages                         800 (Assuming 2 employees at $10/ Hour)

Product Orders          1000

Total Operating Cost:  2850 per month

*These are possibly very conservative numbers.

The store would need to take in $2850/month to break even but would need at least $4275/month To have enough cash to expand and grow as needed. With this particular industry expansion would be partially through new product lines such as Magic: The Gathering blocks, new games like Doomtown, and even the newest offerings from Paizo and WOTC. The other would be for new tables, chairs and other things needed for players to play the games. All of which can be very expensive.

As well, retail tends to fluctuate in sales numbers, prices and what seasons make more than others. So, nothing is hard set or fixed in the market. Which leads to why piracy hurts. . .

The Cost of Piracy

What started me thinking about the cost of piracy to the store was actually seeing the number of pirated D&D 5e books moving in and out of Raven's Loft on a weekly basis. Knowing that WOTC did not, and has not, sold digital versions of the books made it obvious that there was quite a bit of illegal material around. And a sudden influx of tablets and laptops with the 5e core books made it fairly obvious what was going on.

Even my own group had this issue and I did turn a blind eye to it as I figured that this could lead to book sales. Needless to say I was wrong and this led to me enacting a rule that pirated material being used in my game would be grounds for immediate ejection.

Looking at the numbers (again making an educated guess) and the time this happened I could draw a couple of conclusions: First this was during a slow sales time of the year so the store was possibly just barely over even and second that if these were actual sold books the store would be making more money.

So let's go back to my hypothetical store and play this out:

It is early fall which is a slow sales time. I need $2850 to break even and am close but I will have nothing in my profits but if something happens I will be under what I need and will have to use my limited savings and expansion money to cover costs. 5e is taking off and I have potential sales there that I am hoping for.

Eight new players come in for 5e and I figure about half will buy a PHB. So that is a potential sale of $200. However since they are using pirate pdfs, they never buy. In fact all eight are using them meaning that I am looking at eight lost sales totaling $400*. Not to mention a DM using illegal copies which costs me another $150 in potential sales meaning that I have potentially lost $550 in needed income through piracy.

(*Each illegal copy coming into a store should be counted as lost income)

So taking $550 from a lean month in sales hurts terribly and could actually bring the store under for the month. Each time a new player comes into the store with a pirate PHB you can count a $50 loss and a new DM would be a $150 loss. It adds up quickly and this is only on one particular game. If games like Pathfinder or even Star Wars was counted (I have seen both) the income lost is outstanding.

In fact, it can take a profitable store to unprofitable in as little as a month and possibly less than a year to have to close the doors of that store due to lost sales from illegal activity. While it may seem outlandish it is a very real possibility.

A Quick Aside

I should bring up two things that can be argued here: sales from other stores and sales from digital stores.

First off, sales from a competitor is a part of any economy and is within the realm of fair business. It is how a market should work and while it will have impact it is a purely valid move to buy from a business that has what you want. It is a business owner's job to try to get you to buy from him instead of someone else.

As for PDF sales I am not a fan of them as they do undercut physical stores. 99% of pdf sales go straight to to the publishing company and there is no way for a local game shop to sell or distribute the product. Though they are legal sales, I feel they are sales that hurt the overall industry and takes away from gaming on the local level.

My total feelings on these are that they are legal and acceptable purchases that fall into the realm of fair competition. Though I may not like digital sales they are something local stores do have to consider in competing.

Excuses, Excuses

I think I have either used or heard all excuses for piracy from one time or another. Some have a small amount of validity while others are purely absurd. I'm going to list a few here and show why they don't work.

1. I'm going to buy it eventually.  I have used this and nine times out of ten eventually turns to never. The fact is that we will always go the cheapest and easiest route and can justify not buying the item each time we have the chance. Though it

2. I'm only hurting a faceless company. I think I have shown that this is not the case.

3. The books are really expensive.  Ahh yes, the one I loved to use. The truth is that gaming is a hobby and hobbies can be expensive. Unfortunately we as a society have mixed up needs and necessity with wants and recreation. The fact of the matter is that if cost is a factor then look for a cheaper game or hobby. There are many free games now, there is a 5e SRD as well and there is no reason not to go that route.

The cold hard truth is work with what you can afford, save money and shop for a good deal. Using this as an excuse is like saying that a new corvette is too expensive so you just take one off the lot. Sorry, but price is no excuse for piracy

4. I never intended to buy anyway. Yeah this is a doozy and one that sets my teeth on edge even when I was actively pirating. Usually this is followed by wanting to play in or run a game regardless. Basically, you are saying you want the books but have no intentions of paying for them. You might as well be walking into the store and taking them off the shelves because you have stepped from piracy to thievery in one statement.

To me this is the lowest type and reeks of entitlement and lack of respect for anyone running a business that welcomes you to play in. My only advice here is quit the hobby until you can properly adult.

Combating Piracy

Let's get one thing straight, you will never eliminate piracy and there will always be a cost to the stores. However you can slow it down. As I said above using pirate material will get you banned from my game. Raven's Loft has banned laptops unless you are a DM and use of their wi-fi is restricted to staff due to issues of piracy and other problems. Other stores have required that any digital material be checked by staff and if pirated you are banned from the store either for a limited time or for good.

Using this as an example gives us a starting point. Lay the rules out clearly, posting on the door that such things are not allowed and will be cause for removal is a good start. Lay away plans for those that do not have the cash to buy immediately will help curb this. Other stores have offered book rental and keep loaner copies of certain books so that a player can look them over before buying. (Raven's Loft does the latter) Even things as minor as customer loyalty programs can help on the store side.

On the patron side remembering that the store needs money to operate and buying something always helps. It does not mean you have to buy something big every week but something as small as a bag of chips and a soda helps the store along. More on the point, helping new players/customers know why you ban pirated material helps them get the idea and can move them to ordering or buying from the store.

Final Words

The hard core truth of the matter is this: Piracy is Theft. While that does sound like a bad PSA, it is true especially when local stores are involved. If you are going into a local store that can sell or order a book, game or whatever to you and you choose to pirate instead you are basically shoplifting or stealing from the store. Having a job in the past where I did deal with shoplifting I can tell you the cost is much higher that you would think.

Local shops already have to contend with large online sellers like Amazon and Wal-Mart who can afford to undercut prices. As well they have to compete with a digital market that eats into their sales with no way enter the market as it is locked up by the designing companies. (I think an article on this would be a good idea. . .)Adding piracy in as a loss makes an already bad situation worse. However it is one that can be controlled to give the shops some ground to hang on to.

In the end, piracy will not only hurt the stores but those of us who use them. I would ask that if you frequent a store and use pirate material stop. Delete it and buy from the shop to help them. Especially if you value where you play and the community around it. If it is lost it may never come back and it just well may be your fault it died.

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