Gabe Newell - Piracy Isn't About Price

Valve CEO Gabe Newell explains to IGN why piracy is a result of bad service rather than high price, and how Valve expanded Steam into Russia without rampant piracy resulting and grew it into their biggest region in Europe:

"We think there is a fundamental misconception about piracy," Newell said. "Piracy is almost always a service problem and not a pricing problem. For example, if a pirate offers a product anywhere in the world, 24/7, purchasable from the convenience of your personal computer, and the legal provider says the product is region-locked, will come to your country three months after the U.S. release and can only be purchased at a brick and mortar store, then the pirate's service is more valuable.

"Most DRM solutions diminish the value of the product by either directly restricting a customer's use or by creating uncertainty."

He adds, "Our goal is to create greater service value than pirates, and this has been successful enough for us that piracy is basically a non-issue for our company. For example, prior to entering the Russian market, we were told that Russia was a waste of time because everyone would pirate our products. Russia is now about to become our largest market in Europe.

"Our success comes from making sure that both customers and partners feel like they get a lot of value from those services. They can trust us not to take advantage of the relationship that we have with them."