The Question Of Grey Market Resellers

It’s hard for a small team like ours to deliver interesting deals everyday for such a vibrant and demanding user-base. That we manage to continuously hit the target is largely due to the tips and feedback we get from the gaming community at large.

For this reason, we’d like to open an important dialogue. The topic is: how legitimate Steam key distributors such as IndieGala should approach the controversial phenomenon of unauthorized key retailers – the Steam grey market.

Grey market resellers’ main tactic is to acquire activation keys from a variety of sources at the lowest possible cost. So they get their keys off bundles (from platforms like ours) or individual products (on platforms like ours and other stores, because this phenomenon doesn’t affect only bundled games) taking advantage of particularly low discount prices. They then strategically resell them at a huge profit, upsetting developers and publishers with whom they have no contract.

At IndieGala we’ve decided to develop a public API that basically scans a key to determine if it was previously sold on IndieGala or not. We have no way of obligating anybody to use this API. It’s just a first step. Developing an API will be a burden and an expense for us. So, we’d like to know the community’s opinion before getting started.

One thing should be clear. The first party affected by grey market resellers are the legit distribution platforms like IndieGala. Skipping the nitty-gritty details, this is how it plays out.

A publisher (with whom we have a distribution contract) will contact us, upset that keys provided for distribution through IndieGala are now available on a grey market platform at an irregular price point. At this point, our day pauses.

We spend some time investigating and, usually shortly thereafter, realize that for the most part the keys were acquired through a bundle. We sigh.

We then contact the publisher and explain the situation:

  1. The keys were acquired through a bundle. Legitly.
  2. We don’t condone the situation, as our terms stipulate that keys acquired from our platform are for personal use only.
  3. It will be difficult – quite near impossible – to track and void the rogue keys without also inconveniencing legit buyers.

We then advocate cutting losses and moving on. “This is an industry-wide issue and for now no clear-cut solution exists,” we say. But for some publishers this isn’t enough. They insist on voiding a batch of keys. Eager to protect legit customers and also the reputation of the frustrated publisher, we caution against this measure. Whether our business relationship ruptures or not at this juncture is 50/50.

Our conundrums don’t necessarily end there. Imagine the publisher goes ahead and voids a batch of keys. Our activities stop again. We now have to contend with a wave of emails from angry customers about keys that don’t work. In a nutshell, everybody hurts but we’re caught between what should be crossfire. Only it’s not, because everybody is aiming at us!

The irony of it all: the grey market resellers don’t even break a sweat.

However, this brings us to the question of the day. How should a legitimate distribution platform like IndieGala strive to co-exist with grey market players? We’re actively seeking answers from the community at large on this issue.

We can no longer pretend that these grey market players don’t exist. Moreover, they have a salient point in the matter. They say, “I bought your key legitly. Now it’s mine. What do you care if I sell it?” And here sits the cog in someone’s machine that needs to be sorted out. But whose machine? Bear in mind that that this practice is legal in some countries. According to the EU Court of Justice, once a software company sells a copy of its program, it loses its exclusive rights to distribution. This legitimizes the market for some resellers.

At IndieGala, we’re looking towards developing a public API that can detect if a key was or wasn’t sold on our platform. This is our in-house initiative to build a bridge for cross-platform transparency. We can’t enforce the use of this API. Still, we hope that it will be used by any parties that claim to be bona fide peer-to-peer marketplaces. Our policies prohibit reselling. So we want to put out a simple tool to help P2P distributors stay in line with that.

But of course this isn’t the equalizer. We don’t have it. We don’t know it. So we thought, if we – the community – can figure out how to create, distribute, and beat all these video games, then together we can surely figure out how to fix the machine. What are your ideas? What can/should/must legitimate distributors like IndieGala do in an era of grey market resellers?