Next-Gen editor Collin Campbell wrote a lecture on the evils of selling and buying used video games. He claimed resellers of video games like GameStop are costing the industry $1 billion (source?) because when GameStop sells used games, the publishers receive no additional revenue. Instead of backing up his position with facts, Campbell follows the common practice of claiming that publishers have some entitlement to more money, rather than letting the market decide and recognizing that there is more money to made thanks to the second hand market.

Video game companies have been critical of used game sales for years, with Sony even attempting to build-in copy protection on PS3 games to prevent them from being resold (Sony did not include this feature). Even book publishers criticized Amazon.com, claiming selling used books would hurt the sale of new books. But no study has shown used game sales hurt the video game industry, though one study has shown sales of used books can actually help the industry. Campbell’s unsupported $1 billion cost to the industry is only attributed to how much GameStop makes selling used games, meaning Campbell is assuming every used game sale would transfer to a new game purchase. Of course, Campbell’s claim that GameStop forces used games on its customers is contradicted by reports that 17.6 percent of GameStop’s holiday sales came from used games - 43.2 percent came from new games.

Campbell’s article comes at a nervous time. The First Sale Doctrine is an exception in the copyright law allowing a purchaser to resale or give away any product without permission from the original seller or maker. Software companies are primarily looking to limit the First Sale Doctrine claiming users purchase a license for the software, not ownership of said software. Campbell claims that its illegal to resell software, which is untrue and currently the subject of a court battle. The music industry is also eager to squeeze money out of the supply chain. Musicians in the UK are demanding a cut of concert tickets sold second-hand, a demand that has support some some politicians.

Software companies, video game companies, to book publishers are sticking with shortsighted fear mongering rather than taking advantage of a passionate market available to them.

Campbell forgets two parts of buying something in his article. First, knowing something has a resale value actually makes the product more valuable to you as a purchaser. You’ll spend more on a car because you know in several years, you can sell it for a percentage of what you paid. You won’t make a profit, but you’re basically getting something for nothing. This is best revealed in the trade of college textbooks where students will spend more on a textbook knowing in a few months they can get some of that money back. Video games share the same benefit since GameStop will buy any game you bring into the story. You won’t get much, but you’re guaranteed something. And something is better than nothing. Knowing that you can get $10 or $20 for your $60 game makes you more likely to buy the game since it really only costs $40 or $50. And publishers should be excited about having a second owner. For no more overhead, they now have a second person to sell all-new downloadable content to all over again.

The second part is that used games might help gamers find new game genres, franchises, or publishers they like. I purchased a used Kingdom Hearts and enjoyed it so much, I bought Kingdom Hearts II new. Used games, which cost less for stores to stock and for gamers to buy, allow stores to provide greater selection which gives gamers more choice. That’s not great because of competition, but it has more potential to help gamers find something they wouldn’t have been willing to spend $60 on in the first place.

Campbell is further misguided about the economics in simply selling video games (he gets book selling wrong too). Campbell claims “You’ll note, big-chain booksellers and big-chain music-sellers don’t fill their show-floors with used stock. Neither books nor CDs carry large margins, but the likes of Barnes & Noble seem to manage just fine.”

First, Amazon.com and Barnes & Noble both sell used books. It’s online only, but I’ll address the store front issue in a second. Second, Campbell is comparing books and video games as if they are exactly the same. Book stores can bulk buy books for around 40 percent of the list price. This is why best sellers can be sold for significant discounts. Book stores use the best sellers to get you into the store and expect you to buy some older books without the markdowns. Video games, on the other hand, are sold to stores at rarely more than a 15 percent discount. If you wondered why video games are rarely on sale, this is why.

The profit margins are small compared to most other products. The reason GameStop makes so much money is because of 40-50 percent markups in used games. New games cannot generate the same profits books or used games can.

Because books can be more profitable, Borders and Barnes and Noble can afford to devote all their shelf space to new books. The result is a cleaner, more organized store. Used book stores and video games stores are messier and less organized. Borders and Barnes and Noble have sought to make shopping for books a pleasant experience, with couches and lattes. The used book smell might turn the hip hang out into a place known for giving out used books, CDs, and even video games for free. It’s called a library.

To summarize, in a capitalist society, no one has any right to making money. Capitalism is meant to foster competition. You make your product better than the other guy’s and you’ll make more money (or just have better advertising). Used games are simply more competition. If game companies really wanted to combat used games, they should make games people don’t want to sell. Provide excellent multiplayer options, downloadable content, user generated content like mods, etc.

But in truth, fighting used games is fighting against yourself. Used games provide an entry level market for gamers. Amazing games can be found for less than $10 allowing children or casual gamers to experiment with little investment. So game publishers, stop feeling entitled to more money. Make better games with more features, provide extra content, and then just keep making games. When you’re making record profits and revenue, it’s hard to claim you need more.