Most readers of this journal attended the 1994 Computer Game Developers’ Conference, and so should already be familiar with the basic facts of the controversy involving Disney. For those of who didn’t attend, here’s a quick rundown: Dan Chang proposed a lecture on the making of Sega Aladdin. He recruited several Virgin employees to assist him, because Virgin had created the program under license from Disney. At this point, the single disagreement over facts arises: Disney and Virgin claim that Dan failed to clear it with them; Dan claims that he did in fact notify Virgin of his intentions. However, this dispute over facts is not relevant to the real issues of the case.
The board of directors of the conference accepted Dan’s proposal and listed it in the conference announcement. Somebody at Disney saw the listing and called Virgin to inquire. At this point, the exact sequence of who told what to whom becomes murky, but the basic result is agreed upon: Virgin management forbade its two employees to participate in the lecture. Dan reluctantly cancelled the lecture.
So far, all we had was an unfortunate screwup. But the really sensational results came a week later when, in an effort to straighten out the mess, I called Marc Terren, General Manager of Disney Software. Marc was more than polite; he was downright pleasant to talk with. He was also unambiguous in his pronouncements. I proposed that he send somebody from Disney over to have a little talk with the Virgin programmers, explaining to them what information was proprietary, leaving them free to talk about anything else. This is the standard approach used in dealing with sensitive matters involving proprietary information. Marc wouldn’t have any of this. Twice he brushed aside my suggestion without explanation. Each time I gently brought the conversation back to the suggestion, and offered it again. The third time he presented his explanation. "We consider all aspects of the way we do business to be proprietary."
I was stunned. I have never in my life encountered such an all-encompassing definition of proprietary information. At first, I didn’t believe him. I asked some followup questions, expecting him to qualify his bombshell in some fashion. But he didn’t compromise, qualify, or pare down his position. Every single aspect of the way that Disney does its business is considered to be proprietary information. I thanked Marc for his candor and bid him a pleasant goodbye.
The board debated all this and decided to place an open letter in the conference program explaining the situation.
I would like to present my thoughts on the matter. These are my opinions and do not represent the opinions of the board of directors in any fashion.
The issue here has nothing to do with Disney. Disney’s behavior, by itself, is unimportant. After all, Disney is an insignificant player in this industry. The important issue is much broader:
Just how much information should we be sharing with each other?
Hackers Versus Suits
There are two opposing cultural approaches to this question: the hacker culture and the corporate culture. Hacker culture believes in information anarchy. There’s no such thing as proprietary information in the hacker ethic. All information is (or should be) free to all. We all have an obligation to share our information with others. The more extreme hackers believe that, if you won’t share your information, then they are justified in taking it from you.
The corporate culture, personified in the "suits" (By the way, I do not use the term "suits" with slanderous or insulting intent; it’s the only word I can think of that adequately describes a particular group of people.) takes the opposite stance. Information is property. Why should a company spend money creating information and then simply give it away to its competitors? The most extreme version of this stance, taken by Disney, holds that the only way to be safe is to hold everything as proprietary. No wonder that Disney is commonly referred to with such terms as "Mousewitz" and "Duckau".
The issue is particularly sensitive for the interactive entertainment industry because we are in transition. Our roots are in the hacker culture. The people who got this industry off the ground were pioneers, and pioneers have a strong sense of duty to help the next guy. But over the years, interactive entertainment has become a bigger business, and the corporate mentality has made steady inroads. This is not a bad trend; after all, the hackers who founded the industry just don’t have the skills needed to make it bigtime. But along the way, the emphasis on information-sharing has been eroded.
A Personal Evolution
I have seen the change at a very personal level in my own behavior. Back in September of 1981, I released my game Eastern Front (1941). One month later, I released the source code to that product. Yes, we actually sold the complete source code, in machine-readable form, with extensive annotations and this was early in the sales life of the product! Moreover, this was not source code for some minor academic exercise Eastern Front (1941) was one of the big hit products of 1981!
As the years have gone by, my liberality has waned. Yes, I still give away a lot of information; this journal is the best proof of that. But I am more careful now. I don’t publish source code anymore.
What’s Best for the Industry?
Now, we can look at this problem from the point of view of the industry as a whole, in which case it would appear, at first glance, that the best thing would be for companies to freely share information. After all, if companies share their information freely, then everybody builds on everybody else’s work, and the industry progresses that much faster.
But this thinking overlooks the capital cost of developing new information. So long as the creation of information is something done by a hobbyist hackers, we needn’t worry about capital costs. But nowadays, software development is an expensive process involving entire teams of people. If you’re going to invest a couple of million dollars developing a new concept, you need some assurances that you’ll be able to recoup that investment without worrying about competitors stealing your ideas. Thus, what’s best for the industry seems to be some sort of balance between free sharing of information (for rapid industry progress) and private retention of information (to attract capital for rapid industry progress).
What’s Best for Individual Companies?
On the other hand, if we look at this from the point of view of individual companies, there’s no question at all: individual companies prosper most in an environment of totally proprietary information. There is absolutely no benefit derived from sharing information.
The Tragedy of the Commons
It would appear that what we have here is the classic situation known in economics as "the tragedy of the commons". In England, there were sections of grazing land set aside as "the commons". Any citizen had the right to graze his cattle on the commons. As a result, each citizen put lots of cattle on the land. With too many cattle, the land was overgrazed and failed to live up to its productive potential. Thus, by allowing each individual to pursue his optimal strategy, the system guaranteed that the community as a whole achieved a suboptimal result.
That’s what we have here. If each company follows its best strategy and holds all information proprietary, then the information sharing that helps the industry grow never takes place. What’s good for individuals is bad for the group.
What’s Best for the Talent?
The good news is, the tragedy of the commons need not apply to our industry. It could apply, if we handle the problem poorly. But with just a little education, it won’t. Here’s the trick:
There’s a third party to consider, a party that holds the real power in this situation. That party is "the talent". These are the people who create all that valuable information that the companies want to keep secret. They hold the biggest card, because every company needs talent, and the companies with the best talent have the biggest competitive advantage. Interactive entertainment is not a commodity; much to the chagrin of the suits, the most important factor in success is not one of the controllable factors such as distribution, marketing, patents, and the like, but the talent that makes the products.
So let us apply our test to "the talent". Let’s look at the matter of information sharing from the talent’s point of view. What kind of strategy with respect to information sharing is best for talent?
The answer is pretty clear: talent needs professional development. Any creative worker in this industry knows that his/her skills become obsolete in a matter of a few years; to retain any value, a creative worker absolutely must work hard at learning new skills. In this industry, professional development is not just desirable, it is imperative.
Giving Versus Taking
But this obvious truth only covers part of the problem. Obviously, individuals want to absorb new information but so do companies. Disney was perfectly happy to send employees to the conference to suck up whatever good ideas other people would be stupid enough to reveal (in Disney’s thinking). What about the other side of the coin: giving away information?
Here is where the best strategy for an individual deviates from the best strategy for a company. You see, creative people place more emphasis on meritocracy than the corporate hierarchy.
Let’s think in terms of motivation for the creative worker. It’s a very different world than that of the typical suit. The suits have their own set of incentives: stock options, performance bonuses, and so forth. But these incentives seldom apply to the creative people, because creative people are not primarily motivated by money (Note that qualifying term "primarily"!) Creative people value their creativity above all, and they crave more than anything else the external confirmation of their creative talents. It’s not good enough to have the boss pat you on the head and compliment your work, because your boss doesn’t understand the creative issues. How can his one-minute compliment mean anything? And how can sales figures validate the creativity of a person whose creative contribution was a tiny fraction of the overall product?
The best, most satisfying confirmation of your creative talents is the respect and esteem of your peers. We see this in all the creative fields: they are meritocracies at their core. Tom Clancy may be a commercially successful author, but in a gathering of writers his commercial success won’t get him an ounce of respect. The quality of his writing will determine whether he’s embraced or snubbed. Engineers are the same way. The engineering supervisor gets respect only to the extent that he’s acknowledged to be the best engineer in the group. The fact that he’s the boss is a minor administrative detail in the eyes of the working engineers.
Thus, every creative worker has a need to stand up in front of his peers and show off his contribution to the body of common knowledge. To deny that moment of glory is to deprive the creative worker of one of the fundamental satisfactions of the career.
Most suits just can’t understand this fundamental truth about creative people. They dismiss it as egotism and shake their heads in dismay at the childishness of it all. Of course, the incentives that the suits use stock options, performance bonuses, etc. could be dismissed as nothing more than greed gratification. Indeed, it should be obvious that the satisfaction of the needs of the creative people costs a corporation far less than the suits cost. In any case, denying or ignoring human incentives be they creative gratification or greed is just plain bad management.
The Answer Is...
So, we’ve come to the conclusion that the creative people have a personal need to display their talents to the world. They need to give away their knowledge. And the corporations need the creative talents. Herein lies the resolution of the tragedy of the commons in our industry.
The best overall strategy for any individual corporation is to create a distinction between "proprietary information" and "professional expertise". Then the corporation encourages its creative talent to freely disseminate their professional expertise, while at the same time forbidding them to reveal proprietary information. This protects the most critical proprietary information while providing for the needs of the creative talent.
What happens if a company refuses to follow this strategy? It would appear to short-sighted Harvard MBA’s that they are protecting their corporate assets, but in reality they are also driving away creative talent. The word gets out through the grapevine: if you’ve got talent, don’t bother with Company X; they treat their creative people like dirt. This is already happening in our industry. The creative community has pretty well figured out which companies are desirable and which companies aren’t worth talking to. It should come as no surprise that the companies with enviable reputations as employers I will name Maxis, LucasArts, and Electronic Arts as examples have an open attitude towards information exchange. Conversely, the companies widely regarded as undesirable employers here I won’t name names, you probably already know who they are also have secretive corporate policies. This isn’t coincidence, folks.
So do your part to help the industry advance. If your company won’t let you share your professional expertise with your peers, come to the conference with your resume in hand. You’ll have no problem getting a better job. And if your boss won’t let you come to the conference, then take vacation time and come with a lot of copies of your resume you need to get out of that rathole fast!
Defining Proprietary Information
I need to cover one last issue: how do we tell the difference between "proprietary information" and "professional expertise"? After all, it could be argued that Disney’s actions are in full compliance with everything I’ve written so long as we accept their broad definition of proprietary information.
At this point, some people assert that the definition of proprietary information is not a matter for any individual to assert for the entire industry. Each company should be allowed to define proprietary information in any manner that it sees fit. Who gave you the power, they might challenge me, to impose your own definition on the industry?
This argument confuses legal issues with pragmatic ones. Yes, every company has a legal right to define proprietary information in any way that it sees fit. But this editorial does not accuse Disney and other companies of breaking the law if that were the case I wouldn’t be writing editorials, I’d be filing a criminal complaint.
The important issue here is not how Disney defines the term. The important issue is how you define the term. You are the creative talent. You can shape the future of this industry by voting with your feet. You can embrace Disney’s definition, and we will get a secretive industry with few opportunities for professional development, because nobody wants to share expertise. Or you can adopt a more balanced definition. I would like to offer a definition that I believe to be workable.
The critical concept of proprietary information is competitive advantage. Companies don’t want to give away proprietary information because they would lose their competitive advantage. So let’s use the concept of competitive advantage as the basis of our definition:
Proprietary information is any information that gives a company a significant competitive advantage. Thus, information that is known to you and just a few of your competitors should be considered proprietary. On the other hand, information that is already known by, say, more than three of your competitors cannot give you a significant competitive advantage and is therefore not proprietary.
For example, suppose you have a technology for realtime 3D graphics display. Let’s say that it’s about as good as the engine in Wolfenstein 3D. That’s pretty good, but let’s face it: there are a dozen other companies out there with engines that are just as good as that. Treating that engine as proprietary is inappropriate. It won’t buy you a significant competitive advantage over anybody else. The best way you can wring some more value out of it is to let your creative people tell the world about it; that way they’ll derive some serious job satisfaction out of what is otherwise a dead horse.
But suppose that your creative people have been working hard and they’ve come up with a 3D engine that’s as good as the engine in Doom. This is another matter entirely. This is state-of-the-art; this is something that only you and Id Software have figured out. Good for you -- keep it proprietary! It gives you a genuine competitive edge and you should milk it for all it’s worth.
Isn’t that a much more pragmatic approach than Disney’s?