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The intro for yesterday's video interview with Don Marti started out by saying, "Don Marti," says Wikipedia, "is a writer and advocate for free and open source software, writing for LinuxWorld and Linux Today." As we noted, Don has moved on since that description was written. In today's interview he starts by talking about some things venture capitalist Mary Meeker of Kleiner Perkins has said, notably that people only spend 6% of their media-intake time with print, but advertisers spend 23% of their budgets on print ads. To find out why this is, you might want to read a piece Don wrote titled Targeted Advertising Considered Harmful. Or you can just watch today's video -- and if you didn't catch Part One of our video conversation yesterday, you might want to check it out before watching Part 2.

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tommy refenes sm.jpgBy Tommy Refenes

I think I can safely say that Super Meat Boy has been pirated at least 200,000 times. We are closing in on 2 million sales and assuming a 10% piracy to sales ratio does not seem unreasonable. As a forward thinking developer who exists in the present, I realize and accept that a pirated copy of a digital game does not equate to money being taken out of my pocket. Team Meat shows no loss in our year end totals due to piracy and neither should any other developer.

For the sake of argument, some of those people that did pirate Super Meat Boy could have bought the game if piracy didn't exist but there is no actual way to calculate that lost revenue. It is impossible to know with certainty the intentions of people. With the SimCity fiasco and several companies trying to find new ways to combat piracy and stating piracy has negatively affected their bottom line I wonder if they've taken the time to accurately try to determine what their losses are due to piracy.

My first job outside my parents cabinet shop was at KMart. KMart, like countless other retailers, calculates loss by counting purchased inventory and matching it to sales. Loss is always built into the budget because it is inevitable. Loss could come from items breaking, being stolen, or being defective. If someone broke a light bulb, that was a calculable loss. If someone returned a blender for being defective, it wasn't a loss to KMart, but a calculable loss to the manufacturer. If someone steals a copy of BattleToads, it's a loss to KMart.

All loss in a retail setting is calculable because items to be sold are physical objects that come from manufacturers that have to be placed on shelves by employees. You have a chain of inventory numbers, money spent and labor spent that goes from the consumer all the way to the manufacturer. A stolen, broken, or lost item is an item that you cannot sell. In the retail world your stock is worth money.

In the digital world, you don't have a set inventory. Your game is infinitely replicable at a negligible or zero cost (the cost bandwidth off your own site or nothing if you're on a portal like Steam, eShop, etc). Digital inventory has no value. Your company isn't worth an infinite amount because you have infinite copies of your game. As such, calculating worth and loss based on infinite inventory is impossible. If you have infinite stock, and someone steals one unit from that stock, you still have infinite stock. If you have infinite stock and someone steals 1 trillion units from that stock , you still have infinite stock. There is no loss of stock when you have an infinite amount.

Because of this, in the digital world, there is no loss when someone steals a game because it isn't one less copy you can sell, it is potentially one less sale but that is irrelevant. Everyone in the world with an internet connection and a form of online payment is a potential buyer for your game but that doesn't mean everyone in the world will buy your game.

Loss due to piracy is an implied loss because it is not a calculable loss. You cannot, with any accuracy, state that because your game was pirated 300 times you lost 300 sales. You cannot prove even one lost sale because there is no evidence to state that any one person who pirated your game would have bought your game if piracy did not exist. From an accounting perspective it's speculative and a company cannot accurately determine loss or gain based on speculative accounting. You can't rely on revenue due to speculation, you can't build a company off of what will "probably" happen. Watch "The Smartest Guys in the Room" and see how that worked out for Enron.

Companies try to combat piracy of their software with DRM but if loss due to pirated software is not calculable to an accurate amount does the implementation of DRM provide a return on investment? It is impossible to say yes to this statement. Look at it as numbers spent in a set budget. You spend $X on research for your new DRM method that will prevent people from stealing your game. That $X is a line item in accounting that can be quantified. Can you then say "This $X we put into research for our DRM gained us back $Y in sales"? There is no way to calculate this because it is not possible to quantify the intentions of a person. Also, there's no way of accurately determining which customers would have stolen the game had there not been DRM.

To add to that, the reality of our current software age is the internet is more efficient at breaking things than companies are at creating them. A company will spend massive amounts of money on DRM and the internet will break it in a matter of days in most cases. When the DRM is broken is it worth the money spent to implement it? Did the week of unbroken DRM for your game gain you any sales from potential pirates due to the inability to pirate at launch? Again, there is no way of telling and as such cannot be used as an accurate justification for spending money.

So what should developers do to make sure people don't steal games? Unfortunately there is nothing anyone can do to actively stop their game from being pirated. I do believe people are less likely to pirate your software if the software is easy to buy, easy to run, and does what is advertised. You can't force a person to buy your software no more than you can prevent a person from stealing it. People have to WANT to buy your software, people have to WANT to support you. People need to care about your employees and your company's well being. There is no better way to achieve that than making sure what you put out there is the best you can do and you treat your customers with respect.

Lets loop back to what's going on with SimCity. I bought SimCity day one, I played it and experienced the same frustrations that countless others are experiencing. For total fairness, I know the always on DRM isn't the main issue, but I can't help but think that the server side calculations are a "wolf in sheep's clothing" version of DRM. I won't claim to know the inner workings of SimCity and this isn't a Captain Hindsight article because that is irrelevant. EA and Maxis are currently facing a bigger problem than piracy: A growing number of their customers no longer trust them and this has and will cost them money.

After the frustrations with SimCity I asked Origin for a refund and received one. This was money they had and then lost a few days later. Applying our earlier conversation about calculable loss, there is a loss that is quantifiable, that will show up in accounting spreadsheets and does take away from profit. That loss is the return, and it is much more dangerous than someone stealing your game.

In the retail world, you could potentially put a return back on the shelf, you could find another customer that wants it, sell it to them and there would be virtually no loss. In the digital world, because there is no set amount of goods, you gain nothing back (one plus infinity is still infinity). It's only a negative experience. A negative frustrating experience for a customer should be considered more damaging than a torrent of your game.

Speaking from my experience with SMB, I know for a fact we have lost a lot of trust from Mac users due to the Mac port of SMB being poor quality. I could go into the circumstances of why it is the way it is but that is irrelevant...it's a broken product that is out in the public. We disappointed a good portion of our Mac customers with SMB and as a result several former customers have requested and received refunds. I'd take any amount of pirates over one return due to disappointment any day.

Disappointment leads to apathy which is the swan song for any developer. If people don't care about your game, why would people ever buy it? When MewGenics comes out, I doubt many Mac users are going to be excited about our launch. When EA/Maxis create their next new game how many people are going to be excited about it and talking positively about it? I imagine that the poison of their current SimCity launch is going to seep into potential customers thoughts and be a point of speculation as to "Is it going to be another SimCity launch?".

This is not a quantifiable loss of course, but people are more likely to buy from distributors they trust rather than ones they've felt slighted by before. Consumer confidence plays a very important role in how customers spend money. I think its safe to say that EA and Maxis do not have a lot of consumer confidence at this point. I think its also safe to say that the next EA/Maxis game is going to be a tough sell to people who experienced or were turned away by talk of frustration regarding SimCity.

As a result of piracy developers feel their hand is forced to implement measures to stop piracy. Often, these efforts to combat piracy only result in frustration for paying customers. I challenge a developer to show evidence that accurately shows implementation of DRM is a return on investment and that losses due to piracy can be calculated. I do not believe this is possible.

The reality is the fight against piracy equates to spending time and money combating a loss that cannot be quantified. Everyone needs to accept that piracy cannot be stopped and loss prevention is not a concept that can be applied to the digital world. Developers should focus on their paying customers and stop wasting time and money on non-paying customers. Respect your customers and they may in turn respect your efforts enough to purchase your game instead of pirating it.

[Tommy Refenes wrote this on sister site Gamasutra's free community blogs.]

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[There is often some confusion among developers with regard to the terminology used by user researchers. Just what is focus testing, what's user testing, and how do the goals and methods of the two differ? The IGDA Special Interest Group for Games User Research (GUR-SIG) would like to clarify the matter once and for all.] In this day and age, it is nearly impossible to think about developing a game without some form of systematic ...

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stock market

Editor’s note: Barry Silbert is founder and CEO of SecondMarket. Follow him on Twitter @BarrySilbert.

The SEC recently concluded its investigation of the emerging market for pre-IPO shares of private companies, resulting in charges being brought against three market participants. I am proud to say that SecondMarket was not among those investigated or charged with wrongdoing.

While the press focused on the SEC “cracking down” on the private company market, the investigation actually focused on wrongdoing that has existed in the securities markets for decades: broker-dealers using improper sales practices and charging inappropriate fees, and unregistered middlemen improperly acting as broker-dealers.

Nonetheless, the investigation should result in a better private company marketplace.  Because of market structure changes and regulatory hurdles, companies are remaining private longer than ever before. The public markets work well for the largest companies, but many observers believe a company has to have a market capitalization of more than $1 billion before it receives the sales and research coverage to successfully navigate the public markets.

That is an extraordinarily high barrier to entry and supports the notion that a robust private company market is critical to the startup ecosystem. An efficient private market can help a company provide its shareholders with interim liquidity, so that a company is not prematurely forced to go public or pursue an M&A transaction. At SecondMarket, we continue to develop practices and procedures that we believe all participants should adopt as we move forward.

Regulatory oversight: Quite simply, anyone facilitating trades of private company stock should be registered as a broker-dealer. Trust is an essential element of an efficient market. The ability to conduct trades in a regulated environment confers accountability on the part of the broker-dealer and provides assurance to participants that there is regulatory oversight of a transaction. SecondMarket was fully regulated as a broker-dealer before we ever conducted a private company stock transaction.

Robust Accreditation: Private company stock is not for everyone. Investing in a private company is inherently risky, and investors must have the financial means and risk tolerance to participate in the market. While we require companies that exclusively sell secondary shares with us to provide financial disclosures, the information is less detailed than public company disclosures.

Only “accredited” investors are eligible to buy private company stock on SecondMarket, and we have established a process to ensure that only accredited investors buy stock. We conduct online accredited investor questionnaires, background checks and reviews prior to a transaction, and contact each potential buyer to understand his or her investment intent.

Company Engagement: Every private company is different. Each company has unique goals, circumstances and objectives. SecondMarket works with each company to design a customized liquidity program to meet that company’s needs. The companies control who can buy and sell, how much each shareholder can sell, frequency of transactions, and share price.  Most importantly, as noted above, we require companies that allow secondary transactions on SecondMarket to provide financial disclosures to the company-approved buyers and sellers.  Providing financial information to participants ensures transparency and information symmetry, but it is important to private companies that only the eligible buyers and sellers (and not the entire world) have access to that information.

We will not permit a transaction if the company is not willing to work with us, and we encourage other marketplaces to follow suit. It is critically important that companies support secondary trading of their shares. A managed secondary trading process can provide a company with numerous benefits, including retaining existing employees and attracting new talent.

Mitigate Conflicts of Interest:  It is important that buyers and sellers understand that a marketplace is an impartial intermediary that is not on either side of a transaction.  We actively seek to minimize conflicts of interest in a variety of ways. We do not produce or pay for research. We do not buy private company stock for our own account or make investment decisions on behalf of our platform participants. And we do not offload our regulatory responsibility to third-party broker-dealers.

As we look ahead, I firmly believe that the continued success of this overall market is predicated on honesty, integrity and reliability. By following these guidelines, we can ensure that bad actors are forced out of the market and a healthy, prosperous secondary market for private company stock can continue to flourish.

[image via Flickr/Katrina. Tuliao]

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Many e-commerce sites these days tend to be loaded down with too much information on their landing pages. The reasoning for cluttered e-commerce sites is simple: the more information you can cram on the page, the more the user will buy. Unfortunately, web buyers are a finicky bunch.

Jacob Nielsen reports that web users are becoming much more impatient while shopping and browsing online. Instead of spending their time going to a site’s homepage and finding the content by categories or other product recommendations, most shopping is done by quick Google searches. If the user can’t find what she’s looking for right away, she’s gone.

It’s crucial to have simple web designs to allow the user to quickly find the information they need, especially if you are selling a product. If the page is cluttered with useless text, widgets or unrelated products, the site becomes meaningless.

However, it’s become a common practice to do just the opposite. e-commerce sites have taken this “scatter shot” approach of trying to slap the potential buyer with as many options as possible. Instead of making the landing page solely about one product, sites usually clutter the page with unnecessary information, ads and related products.

Less Products Mean More Focus

Many web companies forget the cardinal rule of e-commerce: Web shoppers want as little hassle as possible. Instead of hopping in the car and driving to the store to buy a DVD, it’s much easier to go online and snag it from Amazon in a few clicks. The customer is even willing to wait longer and spend more money if the shopping experience is simple and fast.

Apple

Apple has mastered the art of minimal homepage design. If you go to their homepage, they’ll only show you three things:

  • A simple header navigation
  • One product in the body of the page
  • A few informational links about the featured product with images below the fold

Aside from the standard footer navigation, the homepage consists only of three parts. Here’s what you see if you click on a product link (like the iPhone).

iPhone homepage

Even on the product page, you immediately see what the page is about: the iPhone. The product itself dominates the bulk of the page, and the surrounding information are apps and features of the new iPhone. But more importantly, notice what’s not on the iPhone page:

  • Unrelated products
  • Unrelated sidebar ads
  • Lots of copy
  • Clutter

Apple has effectively shown just enough information in a very pleasing manner. There’s nothing wrong with showing lots of information, as long as it doesn’t feel like a lot of information. You’ll also notice that all of the information, links and pictures are all centered around the iPhone and what it offers. There are no distracting ads or unneeded information about other products.

There are a couple of tried-and-true methods that any designer or web developer can take to ensure that the site layout doesn’t drive customers away with clutter.

  1. Only what you need.
    The biggest aspect of simple web design is only showing what’s needed to make the sale, and nothing more. This doesn’t mean that you can’t give the user lots of information. Just make sure they want to see more information. Apple uses “Learn more” links throughout the page to accomplish this.
  2. Reduce clicks. The less clicks it takes for a customer to buy a product, the higher returns. Don’t make them jump through hoops to buy your product.
  3. The “Grandma” rule. If your grandma (or any elderly person) can figure out how to buy a product for your site, odds are it’s put together pretty well. Unneeded information will turn Grandma away quickly.
  4. Reduce the number of columns. Each time you add a column to a page, the content is pushed into a smaller and smaller space. This puts less emphasis on the main product, and more on extra stuff the buyer isn’t really looking for.
  5. Give less options. There is an added stress put on web shoppers to make decisions. Ultimately, the buyer wants to think as little as possible when making the purchase. Displaying products in a way that eliminates extra thinking and decisions will streamline the buying process and give the customer more peace of mind.
  6. Keep it clean. A clean design keeps visitors happy. By taking the time to ensure that the layout of the site is aesthetically pleasing keeps the customer returning to the site.

Intuitive web design means thinking like a potential customer. Would you shop at your site?

Other Great Examples of Simple e-commerce Design

Bell.ca

Bell.ca uses only a few colors to indicate the branding and offers visitors only the main navigation options. Notice how well the design manages to present a number of different options — shop navigation, support as well as personal and business areas. The design isn’t cluttered but clean and simple and provides the visitors with a broad overview of available options without forcing users to actually go through all of them. Also notice how clever the product navigation is designed at the top of the site. There is just nothing users can do incorrectly.

Shoeguru.ca

Shoeguru.ca present a very user-centric and product-centric design. The product seems to be on the stage just in front of the visitors. The design presents only the product, and nothing else; even only few navigation options are available.

Etsy

Etsy is a great example of how to place a lot of information on a page without it being cluttered. Etsy has a wide catalog of products to sell from, yet Etsy’s design has an earthy, relaxing quality. Creating a useful homepage that doesn’t distract is no small feat.

crupress

Crupress is an elegant book site without many distractions. The homepage manages to present a lot of text without agitating the user. The header navigation is prominent, but doesn’t demand attention. All the design elements flow together smoothly.

tokyocube

Tokyocube is a fun, trendy little site that sells Japanese products. Instead taking precious space explaining what the site sells, the products are put right in front of you. Also, the heavy use of white space allows the products to almost jump right off the page at you. You can’t help but click on one of the toys to learn more about them.

furious tees

While Furious Tees is a tad busier in graphics than the previous sites, it helps do two things:

  1. Show the playfulness of the site
  2. Make it very clear that all shirts are only $19.99

You aren’t lost trying to figure out what Furious Tees is selling, the products are all in front of you. Having all the products on the homepage is especially beneficial for novelty sites that have merchandise people normally wouldn’t be looking for.

But sites with lots of products on the homepage run the risk of becoming cluttered very quickly. Furious Tees doesn’t have this problem. They don’t use any extra sidebars or ads taking attention away from the T-Shirts. The focus is solely on the shirts and the hilarious design.

37 Signals

Basecamp (37 Signals)

Look no further than 37 Signal’s project management tool Basecamp for an incredible example of mixing different types of information to sell a product. Yet there’s just enough information to make an effective sales copy. Every word, every image has to be weighed in a design. If there’s not enough information, the user won’t spend time trying to figure out what the product does. Too much information and the user becomes overwhelmed.

The tasteful use of heading backgrounds and company logos makes every bit of information stand out on it’s own. And they somehow made all of the different types of media blend together, with plenty of space so that the user isn’t bombarded by lots of text or images at one time.

You Only Have a Few Seconds

Every website is going to require a different type of layout, design and copy to sell products. But designers can strive to do more with less by:

  • weighing every word
  • removing unneeded elements
  • using tasteful colors and whitespace
  • and limiting the amount of overall information the shopper sees at one time

Remember, online shoppers are a fickle bunch. They don’t “window shop”. They use search engines to limit their searches to a very narrow field. If they don’t like what they see, they leave. Site owners only have a very small window of time to capture the attention of the prospective shopper. A tasteful, clutter-free design that places the focus on the product (and nowhere else) will allow the shopper to find what she wants faster.

Glen Stansberry is a web developer and blogger. You can read more of his articles on smart web development at Web Jackalope.

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