Doubt as a free good; or, ‘Product defence’ as an externality

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The previous post considered advice, courtesy of Joe Biden, that videogame firms should try to ‘improve their public image’, presently mottled by various ‘kinds of evidence linking video games to aggression.’

Impressions, it seems, are everything: videogames firms don’t ‘necessarily need to change anything they’re doing,’ but must instead focus on ‘how they’re perceived by the public’.

This need for decorative gestures comes ‘irrespective of the “truth” of the violence/media debates’, says a vociferous pro-games participant in the latter. Not action but legitimation is called for.

Such PR needs do arise from time to time.

The owners and managers of a business enterprise naturally want to preserve their full dominion over its assets, and the prerogatives (and cash flow) that follow from it.

Thus firms regularly are obliged to undertake defence of a product or activity that, while profitable, also poses a risk or hazard to consumers, employees, the environment, the assets of other firms, etc.

Restrictions on the prerogatives of ownership include many types of government regulation: quality standards, labelling laws, health and sanitation laws, zoning ordinances or land-use restrictions that limit where commercial and industrial structures may be built, commercial licences that control who and where people may operate businesses, minimum-wage laws, anti-discrimination laws, pollution control and monitoring by environmental protection agencies, occupational safety and health regulations, taxation or eminent domain, and establishment of civil remedies.

In ordinary circumstances, it must be said, any hazardous byproducts (negative externalities or ‘market failures’) arising from economic activity, while of course regrettable, are hardly prohibitive.

Both tort law and government regulation aspire to an ‘efficiency standard’, balancing the costs arising from some commercial activity or product against its benefits.

Broadly speaking, if the increment in profits outweighs the decrement in human lives or environmental amenity, according to some arithmetic, the tradeoff is deemed ‘worth it’.

But, in rare circumstances, official opinion may decide that the troublesome product or activity imposes excessive or intolerable burdens upon the state (e.g. medical costs, political instability), upon other special interests (e.g. insurance providers) or upon a powerful and broad social constituency (e.g. the propertied classes as a whole, through higher wage bills or loss of legitimacy for existing social institutions).

In such cases, particular business interests may be sacrificed for the ‘greater good.’ The state may impose regulations limiting the full exercise of property rights, restricting what the offending owners may do with their assets or how their enterprises operate.

Thus the need for corporate ‘product defence’ campaigns.

These are deployed, permanently in some industries, to dispel alarm and forestall the threat of damaged business interests from lower sales revenue, product liability claims, government regulation or outright prohibition.

Cigarette manufacturers, oil corporations, etc. have notoriously employed, or engaged as independent contractors, teams of professional Panglossians.

These ‘merchants of doubt’, co-opted or career, were set up in well-apportioned Potemkin institutions for phony research. Their task was ‘establishing a controversy at the public level’, where no such equivocation existed at the level of peer-reviewed science.

Meanwhile economists like Kip Viscusi provided ad hoc intellectual warrants and boosterism.

Viscusi argued that the addictiveness of cigarettes, as measured by smokers’ responses to rising prices, was comparable to ‘consumer products that people generally do not consider addictive, such as theater and opera, legal services, and barber shops and beauty parlors.’

And anyway, he added, premature deaths caused by smoking save the government the cost of pensions and nursing homes.

Videogame firms face a similar need to defend their product against the risk of regulation, damaging criticism, penalty or suppression.

Duke University economist James T. Hamilton has asserted that, ‘at its core’, media violence ‘is a problem of pollution.’

This is because ‘programmers and advertisers may not take into account the full costs to society of the show they schedule or support.’ Such costs include the desensitization, increased aggression and fear experienced by audiences, particularly children.

So defined, and according to the conventional prescription of ‘public policy’ experts, this means that the remedies for media violence must be similar to the solutions for environmental pollution: zoning (e.g. for broadcast TV, ‘shifting violent programs to times when children are less likely to be in the audience’) or taxation.

Thus several jurisdictions, including the state of California, have attempted to prohibit the sale of violent video games to minors.

Entertainment Software Association - lobbying spending Q3 2012

But the response by videogames firms has been different from that followed by cigarette manufacturers and oil corporations.

Certain features of the product itself and the market for video games, as described below, make it less necessary for firms to directly fund ‘product defence’ by bought-and-paid-for researchers and centrally directed think tanks (which these firms nonetheless do finance).

For several reasons, which are outlined below, the advocacy service is already provided at close to zero expense  by ideologists, consumers, other segments of the mass-communications media and academics.

The latter constitute, I will argue, a decentralized ‘epistemic community’ of like-minded people and linked institutions. Shared incentives (and self-conscious group identity) motivate them to adopt similar beliefs about the harmlessness of violent video games, ignoring (for both psychological and commercial reasons) available information that disconfirms such beliefs.

But the first reason can be dealt with briefly, since it is least relevant to my point in this post.

Any statement regarding the harmfulness of video games products can simply be trumped (in the US) by brandishing the First Amendment, thereby activating the professional guild values of journalists and academics.

A seemingly dispositive argument can be made that commercial videogames are constitutionally-protected speech, including when addressed to minors and involving extreme violence. Thus their sale is immune from restriction or impediment, ‘even where protection of children is the object’ (Antonin Scalia).

This line has been advanced by the Cato Institute, the corporate mega-lobby ALEC, the industry-funded think tank The Media Institute, the Electronic Frontier Foundation and the Progress and Freedom Organization.

In 2011 it was supported 7-2 by the Supreme Court in Brown v Entertainment Merchants Association, striking down the Californian statute.

Since ‘there is no exception for violence’, voluntary ‘self-regulation’ by the industry and ‘parental empowerment’ are the only responses available to ‘what some people think is offensive’ (legal counsel for Michael Gallagher, president of the Entertainment Software Association).

If so desired, the syllogism may be extended to a broader claim: any critical scrutiny of a ‘creative’ product violates the First Amendment rights of its maker.

A recent example appears in the breathtakingly disingenuous statement issued by a Sony Entertainment spokeswoman, in response to criticism from within Hollywood of Kathryn Bigelow’s Zero Dark Thirty: ‘The film should be judged free of partisanship. To punish an artist’s right of expression is abhorrent. This community, more than any other, should know how reprehensible that is.’

A second feature of video games is much more important in explaining why the industry’s PR defence occurs, in large part, without the involvement of centrally organized or directly paid agents.

Like with many media, information and entertainment products, the market for video games exhibits what economists call ‘network externalities’.

When this feature is present, the value or benefit of a product is increasing in its popularity or number of users. Additional users make the product more valuable or appealing (i.e. increase the willingness of buyers to purchase it at the going price).

Sellers duly profit from this cascade or bandwagon effect.

adopters to a network

With videogame consoles and other platforms, an increase in the number of one type of user (customers or game players) increases the number of another type of user (content providers or game developers).

A pair of mainstream economists explain how this works:

Buyers of videogame consoles want games to play on; game developers pick platforms that are or will be popular among gamers…

Videogame platforms, such as Nintendo, Sega, Sony Play Station, and Microsoft X-Box, need to attract gamers in order to convince game developers to design or port games to their platform, and need games in order to induce gamers to buy and use their videogame console. Software producers court both users and application developers, client and server sides, or readers and writers. Portals, TV networks and newspapers compete for advertisers as well as “eyeballs”. And payment card systems need to attract both merchants and cardholders.

The console firms design and manufacture hardware, then contract out to independent game developers to provide games for the platform (as well as producing their own in-house titles). They may finance the developer’s large fixed costs.

The independent developer pays a fixed fee to the console maker for use of proprietary software development tools (the ‘devkit’), then also pays a per-unit licensing royalty on sales. These IP royalties, a form of rent, are the principle source of profit for the console producers and ‘publishers’.

Two-sided markets with network externalities

More crucially, like many segments of the media industry, video games exhibit indirect and ‘cross-market’ network externalities.

This means that the value of other products is increasing in the popularity of video games. These complementary products find their usefulness to buyers is enhanced as video games themselves have more buyers.

For example, growth in the number of users of particular software increases the attactiveness of a complementary component, console or other hardware  such as an HD TV, a speedy Internet connection or PC, a new handheld device and so on.

There are spillovers across markets: the more buyers a game has, the more attractive becomes brand or merchandise tie-ins, the more advertising and games journalism can occur, the more likely becomes permission to use proprietary material (music and film) in return for per-unit royalty fees, and so on.

Sony famously tried to increase demand for its Blu-ray discs, and its revenues as a movie studio, by bundling a Blu-ray player into its Playstation 3 console.

Entertainment Software Association president Mike Gallagher described this feature of video games in a speech to the Institute for Policy Innovation, a right-wing think tank:

[As] gamers know – and economists have confirmed — the demand for great video and computer game experiences also drives sales of complementary products and services, such as for broadband and high-definition TVs. Our industry stimulates complementary product purchases of roughly $6.1 billion a year in the U.S. alone. These purchases are also spread around to businesses large and small.

Network externalities mean that the greater the number of consumers purchasing and using video games, the larger is demand in several other distinct markets.

This includes others not mentioned by Gallagher, among them the mass communications media, advertising, journalism and other opinion-making fields. All may experience mutually increasing demand for their product as the number of people adopting and playing video games grows.

This translates into material rewards and personal advantage: higher profits (or rents) for owners and higher earnings (or other labour-market success) for employees in these complementary markets.

Along with games consumers themselves, these providers of complementary products (whose returns increase with the usage of video games) therefore have incentives to provide the games industry with ‘product defence’, flattery and boosterism. Thus they can be found disseminating cheerful claims that violent video games are neither a public-health threat nor morally objectionable.

Success really does provide its own justification. Self-conscious individual corruption is not necessary. Motivated belief formation (‘wishful thinking’, dissonance reduction or effort justification) is sufficient to persuade most people that whatever brings them rewards and a livelihood can’t be altogether bad.

The familiar dynamics of belief transmission in tightly clustered social networks then apply, with epistemic contagion ensuring that all members share credence in the safety of violent video games.

As explained by two rapt economic theorists  among the chief academic ideologues of our postmodern infoculture  the dynamics of network effects (which also support so-called consumer ‘subcultures’) are also those of conformity and herd behaviour.

Increasing returns in the market for video games (and thence for related products) provide a scaffold for the propagation of beliefs about the soundness of the product.

In other words, there is no need for video-games firms to follow the example of tobacco firms. The latter had to seek out Reader’s Digest and persuade Edward R. Murrow to cease the damaging coverage of their product. In the presence of strategic complementarity, however, good press and favourable PR take care of themselves.

Ultimately the video games industry is tied to other sections of the media, information and entertainment industry  by direct threads of ownership, credit, cross-subsidy, and labour-market adjacency  in ways that did not apply for Philip Morris or Exxon.

Thanks to this relationship, there is a standing army of journalists, bloggers and opinion-makers who will reliably leap to the defence of games without needing to be bamboozled or force-fed talking points.

(See the scornful online article in Condé Nast publication Vanity Fair about Biden’s meeting: ‘Didn’t Tipper Gore resolve the “violent video games” issue shortly after she heard Prince for the first time, in 1985, and insisted on warning labels on CDs and game packaging? Apparently not.’)

Of course, it is true that tabloid TV programs, newspapers and talk-radio presenters do periodically suggest  usually following some mass shooting  that violent video games may have deleterious effects on their users or on society.

But so do they regularly rail against the greed of banks and the venality and corruption of politicians.

This never seriously threatens the continued existence or positions of the latter, any more than the commercial survival of a profitable branch of the entertainment industry is endangered by the feeble, short-lived denunciations of ‘old media’ commentators.  (Such critical beliefs about e.g. banks, which find no outlet in the electoral system or within reach of any available levers of popular influence, are allowed only inchoate and limited expression. They may thereby be channelled into such useful directions as racism, scapegoating, etc., or  leveraged for authoritarian or reactionary purposes, or deliberately stoked by one powerful group to win bargaining power over another.)

Most ‘anti-games’ media commentators, of course, are employed or paid  by a firm that itself is a subsidiary of some conglomerate or holding company (Vivendi, Viacom, Disney, Time Warner, etc.) that also owns firms publishing, developing, marketing or distributing video games.

Traders in the language of ‘old media’ and ‘new media’ take their generational framework quite literally, as though novel industries within the consumer-entertainment sector must inevitably compete with and displace traditional and existing ones, much as each human generation must physically supplant that which it succeeds.

Thus the argument from ‘moral panic’, or ‘technopanic’ as Cato’s Adam Thierer would have it. (Thierer is former president of the Progress and Freedom Foundation, a ‘market-oriented think tank that studies the impact of the digital revolution’, funded by the Entertainment Software Association and the world’s largest media corporations. He now is at George Mason’s Mercatus Center.)

As I’ve shown, remonstrating against ‘moral panic’ has been deployed to great effect by Christopher Ferguson and others to deter all criticism of violent video games.

The claim presented here (packaged in the language of 1970s ‘left-wing’ sociology) is that ‘old media’ entities are fogeyish cultural ‘authorities’ seeking to preserve their privileges. They are resistant to novelty, such as is found in ‘new media’ products like video games.

This argument is calculated to push all sorts of buttons and win a broad, ramified constituency.

The ‘knowledge economy’ rhetoric is chosen to win the allegiance of a self-identified ‘creative class’, which looks favourably upon new forms of entertainment, information and communications technology. Borrowing from the sociology of deviance, meanwhile, aims to attract ‘progressives’ who sympathize with the marginalized.

Onto this is grafted the the intellectually fashionable idea of ‘belief contagion’, fear cascades and popular risk hysteria, developed by Cass Sunstein.

The result is a neat contrarian package, unassailable by anyone who considers themselves to be ‘sophisticated.’

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But there is no reason games can’t merely supplement existing media, and became part of the asset portfolio of existing media giants (Activision, for example, is now a subsidiary of Vivendi, having been started during the 1970s as an independent company by disgruntled Atari games developers).

Indeed, due to the high fixed costs and low marginal costs involved in digital production and distribution, it seems inevitable that the sector should exhibit economies of scale and thus create barriers to entry. Its surviving firms are destined to become subsidiaries of (or to go on licensing intellectual property from) some conglomerate or holding company.

development costs

Few avowedly ‘progressive’ people have sympathy for such corporate media behemoths as Sony, Microsoft, etc. They may however be induced, by what Thomas Frank called ‘market populism’, to express enthusiasm for the venture-capital driven world of games.

In this sector, small and scrappy developers and start-up companies (and later small- and medium-sized enterprises) have few assets and thus are credit constrained.

These firms therefore rely on private equity finance from Silicon Valley. As shown above, they also feed money into the pockets of those large companies (oligonomies, to use Steve Hannaford’s term) that own the platform for independent content producers and the distribution system for customers (Apple’s iTunes, Amazon, Netflix, Rhapsody, etc., and the three big games-console makers, Sony, Nintendo and Microsoft), as well as to those that aggregate and allow mining of massive data sets to build fortunes from advertising brokerage (Google, Facebook).

This leads on to the third reason why the video games industry has not needed to rely upon centrally organized ‘merchants of doubt’, nor ‘astroturf’ through paid agents, to defend their products.

The network externalities of the videogames industry reach all the way to academia, thanks especially to the contemporary commercialization of the university.

Consider the remark made by Georgia Tech professor Ian Bogost in The Atlantic about the visit by games industry CEOs to the White House for Biden’s meeting:

[Public] opinion has been infected with the idea that video games have some predominant and necessary relationship to gun violence, rather than being a diverse and robust mass medium that is used for many different purposes, from leisure to exercise to business to education… Truly, we cannot win.

‘We’, says the faculty member of a state university about ‘my colleagues in the games industry’.

There now are many humanities and social science scholars, faced with shrinking faculty budgets, stingy hiring policies and poor tenure prospects, who in desperation have hitched their wagon to a rapidly growing segment of the entertainment industry.

These academics have perceived a confluence of fortunes: as the games industry goes, so do they. As Bogost says, they naturally seek to acquire ‘cultural legitimacy’ for their medium.

An acknowledgement of video games’ good standing  as a respectable non-hazardous part of the culture, a ‘diverse and robust mass medium’, worthy of journal articles and monographs  is needed if these ambitious academics are to succeed in capturing a permanent seat at the table (perhaps fusing with cinema studies or even sitting alongside it as rough equals).

Therefore many of these scholars are obliged to defend violent games and to furnish the desired ‘no proof of harm’ arguments, come what may.

(Consider Texas A&M psychologist Chrisopher’s Ferguson’s comical attempt to argue against the well-supported hypothesis that violent games desensitize users to violence. The recently published study involved his student participants watching an episode of the programs Law and Order: SVU, Bones or Once Upon a Time, then failing to self-report reduced empathy when subsequently shown violent footage. Here we can add a corollary to the argument about the unique situation faced by defenders of video games in the academy. On average, peer review forms less of a barrier to publishing worthless or spurious results in social science or humanities journals than in the natural sciences.)

Many videogames scholars are precariously ensconced in academia: lowly adjuncts who receive no White House invitations. They are obliged to supplement their teaching income through paid work linked to the games industry (e.g. promotion, development, journalism).

Others, with stabler positions and savings to play with, can risk starting up their own firms (Bogost is one, though it seems unlikely to me that his above use of the collective first-person pronoun referred to this).

Such varieties of dependence and forms of extramural interaction create a commonality of both personnel and interests, tying the commercial success of a product to the scholarly work based on it. This increases feelings of affiliation. This sense of shared fate is not mistaken, and leads to unabashed scholarly apologetics for video games.

Amid the laudation, scope exists for some academics to engage in ‘criticism’ of certain aspects of the videogames industry and its products. But such reproaches are only of the nourishing, tough-love type that ultimately has the industry’s welfare at heart. Bogost’s encomium captures the general tone.

For all these reasons, there seems little requirement for videogames firms to orchestrate a subterranean ‘product defence’ by funding dedicated merchants of doubt. There are plenty of respectable and motivated people who perform the cheerleading task already as a sideline to their day job.

Now comes the final and perhaps most crucial reason why videogames firms have not had to spend more on paid agents and front groups to undertake a political defence of violent games (though expenditure on ‘government relations’ professionals is indeed enormous: the ESA typically spends more than $1 million per quarter on K Street lobbyists).

The US state leadership is committed to the promotion of militarism and violence.

Therefore the fact that members of the country’s population are presented with large doses of realistically depicted violence as ‘entertainment’  thereby being brutalized from early childhood  must prompt little concern, and provoke some pleasure, in ruling circles.

In a submission to a US Senate committee investigating violent media products, Thierer wrote:

Many people — including many children — clearly have a desire to see depictions of violence… Could it be the case, then, that violent entertainment — including violent video games — actually might have some beneficial effects? From the Bible to Beowulf to Batman, depictions of violence have been used not only to teach lessons, but also to allow people — including children — to engage in sort of escapism that can have a therapeutic effect on the human psyche. It was probably Aristotle who first suggested that violently themed entertainment might have such a cathartic effect on humans…

One might just as easily apply this thinking to many of the most popular video games children play today, including those with violent overtones…

This echoes Judge Posner’s opinion in the Kendrick case that: ‘To shield children right up to the age of 18 from exposure to violent descriptions and images would not only be quixotic, but deforming; it would leave them unequipped to cope with the world as we know it.’

In what Thierer called a ‘blistering tour-de-force’, Posner ‘[explained] how exposure to violently-themed media helps to gradually assimilate us into the realities of the world around us.’

But what did the eminent Posner mean by the ‘world as we know it’?

His 2001 judgement (on an Indianapolis ordinance banning ‘gratuitously violent’ games in arcades) had gone on curiously:

Now that eighteen-year-olds have the right to vote, it is obvious that they must be allowed the freedom to form their political views on the basis of uncensored speech before they turn eighteen, so that their minds are not a blank when they first exercise the franchise… People are unlikely to become well-functioning, independent-minded adults and responsible citizens if they are raised in an intellectual bubble.

So Posner’s defence of hyper-violent video games was that they mould the political views of children, making of them responsibile citizens ready to exercise political judgement. Lacking such inputs they would, apparently, make unreliable voters.

What callowness did games erase: what reality were children being prepared for?

Some idea may come from another submission to the same Senate commitee hearing on violent games, this one  by David Horowitz, director of the industry lobby group the Media Coalition.

Horowitz put it thus:

The impossibility of distinguishing “acceptable” from “unacceptable” violence is a fundamental problem with government regulation in this area. The evening news is filled with images of real violence in Iraq and Afghanistan routinely perpetrated by the “bad” guys. Often this horrific violence goes unpunished. It would be virtually impossible for the government to create a definition that would allow “acceptable” violence but would restrict “unacceptable” violence.

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