5 ms·

Unfortunately, this would probably force them to treat purchase revenue as a liability on the accounting books.

by jbay808 6y ago

elcomet 6y ago
What's the problem with this ? I'm not familiar with accounting.
- martin-adams 6y ago
  It means that all revenue could at some point trigger a refund, for example if they want to exit the media distribution business and shutdown the services. That would be an expensive thing to do. I suspect any law would state it has an availability period before refunds are not eligible.
  - MereInterest 6y ago
    That's only if they design the distribution system such that it relies on the existence of the servers. If I start up Age of Empires 2 (assume in a computer or older VM such that compatibility isn't an issue), I can start a multiplayer game through LAN without any issue. If I start up a game of Overwatch, I cannot play against somebody in the same room without connecting through Blizzard's servers. It is perfectly reasonable for a company to be liable for refunds if they want to deliberately take products or features away from users. In order for a company to avoid this liability, they must provide a way for those features to still be available to users, even if the company no longer supports the product. This is pretty easy and straightforward to legislate. A media company that provides distribution of individual works (like Steam or Apple, as opposed to subscription services like Netflix), must provide a method for users to easily and automatically back up all purchased content. A company that runs servers necessary to the use of a program (e.g. matchmaking servers for video games) must provide the server executable, in a form that can run on currently-available commodity hardware, and must allow the client to select a privately-owned software. Companies that don't meet these requirements would still hold full liability for refunds if they remove product features later on.
jononor 6y ago
Is that standard practice on physical products which have warranties? If not, then I do not see why it would be necessary here.
- ghufran_syed 6y ago
  I believe you have to put aside some portion of the cost of the item as a liability. So say you sold a $100 item that cost $70 and the average cost of providing warranty service per item is calculated to be $10. Then you would have to set aside $10 of the $100 as a liability.
- josephcsible 6y ago
  Warranties are for things that break on their own. If the manufacturer of a physical product broke into your house and smashed it with a sledgehammer, they'd absolutely be on the hook for what they did, warranty or no warranty.
topynate 6y ago
Only if they decided to retain the technological means to revoke access to the items purchased.
bigyikes 6y ago
I know literally nothing about accounting, but does it really work that way? I figured you would just be able to count the portion of purchases you expect to be refunded as a liability, rather than all purchases.
- redtexture 6y ago
  The 100% return creates a liability to return the revenue to the buyer.
Qwertious 6y ago
Well, question: suppose Steam ran out of money tomorrow. Do you think it would be acceptable for Valve to just delete all user accounts and games, if it saved them $100? Or do you think they have an obligation to customers to at least provide a single transfer of each game download to archive.org or someone, and give customers a magnet link for each game they own?
- nexuist 6y ago
  Which employee is going to be responsible for doing all that, considering they just ran out of money and most definitely will not be getting a paycheck for executing this plan?
  - RandomBK 6y ago
    That's why this needs to be a law - to create an incentive where one would otherwise not exist.
    - neltnerb 6y ago
      I think the slightly longer version is that going bankrupt is not usually a discrete step in time and that planning and negotiating between creditors, debtors, and the government is going on. So if there is a law there is a government interest in customers being treated right before, for instance, big owners get a payout from a sale of assets. If there are literally no assets there's very little that can be done though, you could threaten the owners with jail but what can they even do if there is no money? If there were a law it would almost necessitate something more like unemployment insurance where companies are forced to hold insurance to deal with this in a predictable way if they shut down or close a customers account. Actually, unemployment insurance might be a pretty good analogy. If a company goes out of business and you get laid off as an employee you get unemployment mostly paid for out of money the company paid to an insurance policy. In this case instead of being triggered by unemployment it's triggered by loss of access. In the same way, if a company is closing a lot of accounts their insurance rates go up.
- ajnin 6y ago
fencepost 6y ago
Perhaps, but it's more likely that they'd figure out how to retain a read-only account - one with basic settings for email/password that could be changed, but everything else was static. No purchases, no email, no uploads, etc. This does not seem like an enormous leap to make.
Wowfunhappy 6y ago
Only if they use DRM. It’s not possible for me to lose access to the music I’ve purchased on iTunes, the games I’ve purchased on GoG, or the audiobooks I’ve purchased on libro.fm. (Except through my own fault, which shouldn’t apply.)
- narwally 6y ago
  iTunes doesn't use DRM anymore? I haven't used it since I had a 1st gen ipod mini back in high school, but I remember only certain music was available without DRM and you used to have to pay extra for it.
  - Wowfunhappy 6y ago
    When they dropped DRM, they raised the price a bit. I don’t remember them ever offering a choice, but I could be wrong—regardless, the slightly-more-expensive, DRM-Free songs are all that’s available today. If you purchased music before the switch, that does still have DRM. (As an aside, you can get rid of it by setting up a VM with an old version of iTunes and Requiem.)
beefield 6y ago
I would imagine this not being the case if they can show that the customer downloaded a DRM free copy of the content at any point. After that it is the customer's problem to keep access to the downloaded copy.
- narwally 6y ago
  That's why I uploaded all of my DRM free purchases to iCloud, that way I'll have access to it forever. /s
heavyset_go 6y ago
Oh well, they should have thought about that before diving into a market thinking that they shouldn't bear any responsibility for their actions towards consumers.

Unfortunately, this would probably force them to treat purchase revenue as a liability on the accounting books.

elcomet 6y ago

What's the problem with this ? I'm not familiar with accounting.

martin-adams 6y ago
It means that all revenue could at some point trigger a refund, for example if they want to exit the media distribution business and shutdown the services. That would be an expensive thing to do. I suspect any law would state it has an availability period before refunds are not eligible.
- MereInterest 6y ago
  That's only if they design the distribution system such that it relies on the existence of the servers. If I start up Age of Empires 2 (assume in a computer or older VM such that compatibility isn't an issue), I can start a multiplayer game through LAN without any issue. If I start up a game of Overwatch, I cannot play against somebody in the same room without connecting through Blizzard's servers. It is perfectly reasonable for a company to be liable for refunds if they want to deliberately take products or features away from users. In order for a company to avoid this liability, they must provide a way for those features to still be available to users, even if the company no longer supports the product. This is pretty easy and straightforward to legislate. A media company that provides distribution of individual works (like Steam or Apple, as opposed to subscription services like Netflix), must provide a method for users to easily and automatically back up all purchased content. A company that runs servers necessary to the use of a program (e.g. matchmaking servers for video games) must provide the server executable, in a form that can run on currently-available commodity hardware, and must allow the client to select a privately-owned software. Companies that don't meet these requirements would still hold full liability for refunds if they remove product features later on.

jononor 6y ago

Is that standard practice on physical products which have warranties? If not, then I do not see why it would be necessary here.

ghufran_syed 6y ago
I believe you have to put aside some portion of the cost of the item as a liability. So say you sold a $100 item that cost $70 and the average cost of providing warranty service per item is calculated to be $10. Then you would have to set aside $10 of the $100 as a liability.
josephcsible 6y ago
Warranties are for things that break on their own. If the manufacturer of a physical product broke into your house and smashed it with a sledgehammer, they'd absolutely be on the hook for what they did, warranty or no warranty.

topynate 6y ago

Only if they decided to retain the technological means to revoke access to the items purchased.

bigyikes 6y ago

I know literally nothing about accounting, but does it really work that way? I figured you would just be able to count the portion of purchases you expect to be refunded as a liability, rather than all purchases.

redtexture 6y ago
The 100% return creates a liability to return the revenue to the buyer.

Qwertious 6y ago

Well, question: suppose Steam ran out of money tomorrow. Do you think it would be acceptable for Valve to just delete all user accounts and games, if it saved them $100? Or do you think they have an obligation to customers to at least provide a single transfer of each game download to archive.org or someone, and give customers a magnet link for each game they own?

nexuist 6y ago
Which employee is going to be responsible for doing all that, considering they just ran out of money and most definitely will not be getting a paycheck for executing this plan?
- RandomBK 6y ago
  That's why this needs to be a law - to create an incentive where one would otherwise not exist.
  - neltnerb 6y ago
    I think the slightly longer version is that going bankrupt is not usually a discrete step in time and that planning and negotiating between creditors, debtors, and the government is going on. So if there is a law there is a government interest in customers being treated right before, for instance, big owners get a payout from a sale of assets. If there are literally no assets there's very little that can be done though, you could threaten the owners with jail but what can they even do if there is no money? If there were a law it would almost necessitate something more like unemployment insurance where companies are forced to hold insurance to deal with this in a predictable way if they shut down or close a customers account. Actually, unemployment insurance might be a pretty good analogy. If a company goes out of business and you get laid off as an employee you get unemployment mostly paid for out of money the company paid to an insurance policy. In this case instead of being triggered by unemployment it's triggered by loss of access. In the same way, if a company is closing a lot of accounts their insurance rates go up.
ajnin 6y ago

fencepost 6y ago

Perhaps, but it's more likely that they'd figure out how to retain a read-only account - one with basic settings for email/password that could be changed, but everything else was static. No purchases, no email, no uploads, etc. This does not seem like an enormous leap to make.

Wowfunhappy 6y ago

Only if they use DRM. It’s not possible for me to lose access to the music I’ve purchased on iTunes, the games I’ve purchased on GoG, or the audiobooks I’ve purchased on libro.fm. (Except through my own fault, which shouldn’t apply.)

narwally 6y ago
iTunes doesn't use DRM anymore? I haven't used it since I had a 1st gen ipod mini back in high school, but I remember only certain music was available without DRM and you used to have to pay extra for it.
- Wowfunhappy 6y ago
  When they dropped DRM, they raised the price a bit. I don’t remember them ever offering a choice, but I could be wrong—regardless, the slightly-more-expensive, DRM-Free songs are all that’s available today. If you purchased music before the switch, that does still have DRM. (As an aside, you can get rid of it by setting up a VM with an old version of iTunes and Requiem.)

beefield 6y ago

I would imagine this not being the case if they can show that the customer downloaded a DRM free copy of the content at any point. After that it is the customer's problem to keep access to the downloaded copy.

narwally 6y ago
That's why I uploaded all of my DRM free purchases to iCloud, that way I'll have access to it forever. /s

heavyset_go 6y ago

Oh well, they should have thought about that before diving into a market thinking that they shouldn't bear any responsibility for their actions towards consumers.