One of the biggest mistakes they made was taking an existing game with tons of Workshop mods then allowing people to set up a pay wall. This should have been done with a game from the ground up, not letting people retroactively add pay walls to a game that previously had nothing but free mods. I'm still against the idea in general beyond a donate button, but at least if it was an experiment with a new game it wouldn't have received as much backlash. Sure, people probably would have thought it was dumb, but when you start screwing with a game they already own and love you're going to enrage them.
The other problem is that there wasn't any policing or curating. Mod makers could submit a take down request for stolen work, but there was nothing stopping people from flooding the market with worthless crap with a price tag hoping to make quick change. There would have to be some sort of system where only the best mods could actually charge money, which would require a lot of work on Valve's part.
It was a terrible idea to begin with and I hope it never catches on, but those two points are probably the biggest reasons why this idea fell flat on its face.
Well not only that but i saw another problem down the road if this made it to a multiplayer game: community split.
So say they have maps as paid mods for say counter strike or killing floor. In the worst case people decide to have almost all custom maps as paid for, how is that handled? For one i can see it making people's lives who run servers a lot more difficult. On top of having to pay the monthly server fee you would have to pay say 60c to a dollar for every custom map on the server. On top of normal server fees which arn't free if you want to have say 10 of the most popular custom maps then that cost an extra $10, possible more if you say have a server with 20 or even 50.
The next question, how does it work with the actual players? Do you need to also own the map to play on the server? Do you need to own every map to play on a server? That means that people just logging in to a custom map server have to pay for every map that they don't have. Even more annoying it could be that whenever you have a map come up that you don't have it kicks you off the server and makes you pay for it. This would literally kill custom maps on servers.
I hear you say "but wait, what if they could just download it off the server and only the server host needed to pay so everyone could play for free?". That sounds good but there is a problem, one person could buy a map and distribute it for free, thus robbing modders of potential customers. You could try to secure it but it would take far more trouble than it is worth, t still has to be playable so someone will find a way to crack it, especially with an easy to access SDK. Eventually there would be a no one making custom maps since many would feel entitled to be paid for their work.
Then the finger pointing stats, it's the fault of the greedy modders, it's the fault of the cheap playerbase, people who pay for mods are scum, custom server owners are the reason maps are ruined, etc, etc.
One of the biggest mistakes any multiplayer game can make is dividing the community and that is exactly what something like paid mods can do.
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