The only thing debatable is to what extent piracy is harming the gaming industry and not if it's harming the gaming industry.

But the fact remains that they are still making those decisions based on perceptions that are a direct result of piracy.

I disagree.  I really don't think they could have anticipated what happened.  That kind of "gotcha" piracy protection has been in PC games for years (one of the most interesting was a combat simulator that would slowly degrade the accuracy of controls the longer you played an illegal copy), but for whatever reason, a couple of reviewers picked up on it in Titan Quest, and the rest is history.  I really don't think you can blame Iron Lore.

One thing- when the game improves, get the word out that the patches massively improve the game- that might turn pirates into customers.

The downside to this piracy is people might get a bad impression of the game a few months down the road, unless someone puts out a patched torrent (which is possible but most pirates don't bother with that)

An utter shame this argument doesn't work. You cannot make a DRM system that will stop piracy without wasting tonnes of cash and royally pissing off all your users. You'd do more damage to yourself than you'd get in return by any magical pirates that decide to buy the game that requires an always on man servant watching you insert the disc into the drive.

Offset by how much? What proof do you have that more people would buy if they couldn't pirate than pirates who trial the game would buy it? You can't prove anything. Some of the most successful games have the highest percentages of piracy rates around. Did those games fail due to pirates? heck no. You want to combat piracy? MAKE A GOOD GAME and MARKET IT.

Pirates will be here no matter what anyone does...

In the end, if the game is THAT good, even the Pirates will buy it...

Yes. The last time i had pirated software was when i was 16, on my C64. When i grew older and started to understood that it was nothing more then thievery i deleted my discs and threw them away. Since then it is buy or pass for me.

They have pirated the 1.01 patch 

Again, the problem with Iron Lore was their own fault for using DRM. If they had no DRM and people had just used a version which was not set to fail, then they wouldn't have such a word-of-mouth issue. They failed to recognise how much free advertisement is done by Piracy and they paid the price. It's their fault. Sorry.

The only thing debatable is to what extent piracy is harming the gaming industry and not if it's harming the gaming industry.

Nope. We're not just debating on whether piracy is harmful in the first place, but how much net benefit it provides as well.

But the fact remains that they are still making those decisions based on perceptions that are a direct result of piracy.

Then their business model will fail and others like Steam and Stardock will dominate. The PC gaming **industry** will remain, even if the previous dinosaurs go extinct when they could not adapt to a changing environment.

*Sigh* we seem to be having such a discussion every time a new Stardock game comes out. Aren't you people tired of whining about something you can't change? It's obvious the anti-piracy arguments don't convince those you condemning.

So a box in retail is not a physical good? Production cost of those is nil?

That doesn't make any sense at all dude.  Pirates aren't making a living giving away their own good...they are taking other people's goods and illegally distributing them to the masses.  Half the crackers do it for shits and giggles.  Your views don't even come close to matching up with reality lol.

But I am glad in a way you just admitted that scenario would have an affect on the taco stand trying to sell the tacos

Just my personal opinion here, but there are roughly three types of pirates:

1. Those who want to try before they play, but no demo is available.  Most of these either buy it, or stop playing it.
2. Those who want to buy the game, but can't afford it yet.  Most will buy it at some point, if it lives up to expectations.
3. Those who will never spend money on the game.

Plus I believe that a lot of people who crack DRM don't care about the game, just the challenge of cracking it.

The analogy absolutely works for reasons already explained, and you already admitted the effect it would have

Selling tacos isn't a obsolete business model either, hence the tens of thousands of taco stands around the world.  Neither is the video game industry, which is also doing fine.

The fact is having a group of jerks distributing their hard work for free does negatively affect their overall business, as you already admitted.

Nope, you clearly admitted it would have a negative affect, you simply excused it away as an obsolete model.

See, luckily for the taco vendor anybody who made a business of just giving away tacos would quickly bankrupt themselves for obvious reasons.  However, in the gaming industry that doesn't exist.  Crackers/pirates can distribute other people's hard work for free for nothing.  The end effect is the same though, which is you have the same product available to people for absolutely nothing.  This without a doubt cuts into the sales of the people who are actually trying to sell said product (you know, the ones who worked hard to actually create it and deserve the compensation).

That's just one aspect to piracy too, there are other negative affects like having to support pirates (estimated at nearly 30% of support tickets, and is money right out of their pockets).  Negative word of mouth due to bad cracks, and all sorts of other stuff related to piracy.

Do I think pirates are evil people?  No, certainly not.  But the idea their actions when taken in bulk doesn't have a negative effect on this wonderful industry and all the amazing hard working people who make it possible is just idiotic.

Personally if someone said "yeah I pirate I didn't have the money and just wanted to play it", I would at least know I am speaking to a person with their head on straight.  The new mentality (yours), however, is just moral debauchery and quite simply dishonest.

Pirates are going to pirate your software or not use it 99.9% of the time, according to some research I was reading about on Ars Technica. An extravagant DRM method was applied to some companies software and they broke it down and figured that for every 1000 people they could stop from pirating their product they might generate one sale. Unfortunately I can't find a link to the article readily (there's a lot of stuff on Ars about piracy). There's probably a reason for that, financially. I understand everyone's concerns when you read things like 90% piracy rate of Machinarium, or even higher IIRC for World of Goo. It's a shame, especially when the biggest selling titles are arguably not the games that push the industry forward. Genre blending and risky gameplay mechanics that pay off aren't what people tend to spend their money on. 

This entire taco debacle has gone too far. Clearly you're better off trying to compare the situation to the news, where the newspaper industry is foundering because of the fact that so many people turn to the internet because they get their news for free. But no analogy is going to convince anyone of anything, seriously people why bother to argue on the internet?