How do we know that digital sales aren't being stolen?

[Rad4]

I was wondering how do companies know that their digital sales aren't being stolen by the middle person? For example: iTunes music, Amazon ebooks, Steam games, Google adsense, etc...

[Fulcrum]

How would someone steal a digital sale?

What would Apple, Steam, Amazon, Google, etc. gain from blatantly stealing sales?

[Harold Mansfield]

I was wondering how do companies know that their digital sales aren't being stolen by the middle person? For example: iTunes music, Amazon ebooks, Steam games, Google adsense, etc...

If you mean piracy and P2P sites, you don't until you find it. Those companies have people who seek out illegal downloads of their products and lawyers to institute legal action. As a small company that doesn't have that infrastructure you either hire someone to manage it or do it yourself. Still, even those companies have a hard time policing offshore sites..especially in countries who don't care or police piracy in accordance to the treaties.

They also have more pull than you with international agencies because they are international companies.

So long story short, let's say you sell your own ebook. Yep, it's easy for someone to purchase it and then put it up on a P2P site for free.
So what are you going to do about it? Who you gonna call to complain? How will you enforce it and make a site hosted in say....Denmark take it down?

Short answer, you probably can't.

[Rad4]

How would someone steal a digital sale?

What would Apple, Steam, Amazon, Google, etc. gain from blatantly stealing sales?

You are misunderstanding. If I as a consumer go onto Steam and buy a game. The developer of that game gets a fraction of the money, but Steam is the middle man. What is to say a couple of thousands of customers bought the product but the developer didn't get the money. There is no way of checking that.

So my question was, how do companies check that? With physical stock it is easy, since the middle man actually buys the product in bulk first.

[Rad4]

Great explanation of piracy and P2P sites, but I already knew that. Read my earlier reply to get a gist of where I'm going with this.

[Brian Altenhofel]

Trust.

If you have reason to believe that a middleman has not been properly reporting sales, you can always request a third-party audit (at your expense). If you know that sales are not being properly reported, then you can bring a lawsuit.

[Rad4]

How would the 3rd party be able to perform a audit on something not physical?

[Freelancier]

It's specified in the reseller contract that they record every person they sold a copy to and for how much. Just like it's contractual that you can audit them X times a year to ensure compliance. And the audit team looks at what they are claiming they sold vs their revenue during the same period to determine if the numbers are a match or not.

[Harold Mansfield]

If you don't trust your middle man, skip the middle man and do your own promotion, marketing, and sales.

[Fulcrum]

You are misunderstanding. If I as a consumer go onto Steam and buy a game. The developer of that game gets a fraction of the money, but Steam is the middle man. What is to say a couple of thousands of customers bought the product but the developer didn't get the money. There is no way of checking that.

So my question was, how do companies check that? With physical stock it is easy, since the middle man actually buys the product in bulk first.

I understood what you're asking.

All I did was ask you to clarify your position a little more by asking you what the big resellers would gain. So what would they gain and would it be worthwhile, as opposed to the bad rep and legal fees from stealing money?

Physical stock isn't that easy either. Bad counts, spoilage, dishonest employees, poor tracking methods, pulling items without recording, etc. all play into missing and disappearing physical inventory.

[Rad4]

The same reason why big corporations break the laws like any other individual, despite all the negatives. To gain power and money.

[Harold Mansfield]

The same reason why big corporations break the laws like any other individual, despite all the negatives. To gain power and money.

Again, the answer is to do it yourself. Be in control of your own marketing and sales and don't depend on someone else to do it for you, be fair, or be responsible for all of your sales. If you don't trust the situation, don't get yourself into it. It's really that simple.

[Rad4]

Again, the answer is to do it yourself. Be in control of your own marketing and sales and don't depend on someone else to do it for you, be fair, or be responsible for all of your sales. If you don't trust the situation, don't get yourself into it. It's really that simple.

Harold, I understand all that, but that is not my question. I'm not like everyone else who just moves on and doesn't pursue knowledge on things. I want to know how this stuff goes down, period. All the offshot stuff I can think of by myself. Hence why I asked this specific question instead.

[Harold Mansfield]

I think we've answered it pretty clearly and given you a lot of variables and ways to protect yourself. Is there something that we're missing? Not sure who the "everyone else" is that you're speaking of. No one would ever suggest that you don't do your due diligence and know every thing about every penny when it comes to running your business.

[Harold Mansfield]

The most egregious instances of fraud usually come from other people. Not the parent company. It's usually the affiliates that execute the most scams, fraudulent clicks and sales. And then there's 3rd party websites with click fraud scams from BHO's and infections.

In my experience, Ebay and Amazon are the ones who get scammed. Not the ones who do the scamming. I've been an eBay and Amazon affiliate for years. Even though I don't use it much or drive a lot of sales through them anymore I still get the emails and they are pretty efficient about making sure you get real time and accurate reporting. It's not in their best interest to scam you, nor is it lucrative in any way and pretty much all of the scam affiliates are gone.

[Rad4]

The most egregious instances of fraud usually come from other people. Not the parent company. It's usually the affiliates that execute the most scams, fraudulent clicks and sales. And then there's 3rd party websites with click fraud scams from BHO's and infections.

In my experience, Ebay and Amazon are the ones who get scammed. Not the ones who do the scamming. I've been an eBay and Amazon affiliate for years. Even though I don't use it much or drive a lot of sales through them anymore I still get the emails and they are pretty efficient about making sure you get real time and accurate reporting. It's not in their best interest to scam you, nor is it lucrative in any way.

Freelancier answered everything perfectly for me. Once again thx u everyone.

[damienzero]

That's one of the risks of having a middle man.

[sassydes]

I agree with Harold Mansfield that if you are not comfortable with someone selling your product, get someone else. As a business person you do not have the luxury of trusting.
Creating a website today is relatively easy. The hard part is getting your site promoted properly. The money you save cutting out the middle man you give to someone to promote your site.