Network Externality and Commercial Software Piracy

Contrary to the earlier findings under end-users piracy where the existence of strong network externality was shown to be a reason for allowing limited piracy, we find when the piracy is commercial in nature the optimal policy for the original software developer is to protect its product irrespective of the strength of network externality in the software users market.Copyright violations, Commercial/Retail piracy, Network externality, Quality

Copying, Superstars, and Artistic Creation

We provide a new perspective on the impact of unauthorized copying and copy levies on artistic creation. Our analysis emphasizes three important aspects of artistic markets: the predominance of superstars, the dynamics of talent sorting, and the importance of promotion expenditures. In the short run, piracy reduces superstars’ earnings and market share, and increases the number of niche and young artists. From a dynamic perspective, piracy may help more young artists start their careers, thereby increasing the number of highly talented artists in the long run. The long run impact on artistic creation of levies on copy equipment may crucially depend on whether their yields primarily accrue to superstars or are allocated to help young artists.artistic creation, superstars, private copy, piracy, levies

Passive Piracy: Why Pirates Are Not Necessarily Potential Buyers of Digital Products

Digital piracy is the illegal copying or downloading of copyrighted digital products. Based on individuals’ need for a digital product and the price of the product, we propose a model that distinguishes between active piracy and passive piracy. We believe that passive piracy explains why pirates are not necessarily potential buyers of digital products. The research contributes to the literature by showing that not all piracy behavior is the same. To curb the piracy problem, digital product providers and government agencies should educate the general public not to lend out their copies for piracy purpose

Piracy of Digital Products: A Critical Review of the Economics Literature

Digital products have the property that they can be copied almost costlessly. This makes them candidates for non-commercial copying by final consumers. Because the copy of a copy typically does not deteriorate in quality, copying products can become a wide-spread phenomenon – this can be illustrated by the surge of file-sharing networks. In this paper we provide a critical overview of the literature that addresses the economic consequences of end-user copying. We conclude that some models with network effects are well-suited for the analysis of software copying while other models incorporating the feature that copies provide information about the originals may be useful for the analysis of digital music copying.information good, piracy, copyright, internet, peer-to-peer, software, music

Piracy and Competition

The effects of (private, small-scale) piracy on the pricing behavior of producers of information goods are studied within a unified model of vertical differentiation. Although information goods are assumed to be perfectly horizontally differentiated, demands are interdependent because the copying technology exhibits increasing returns to scale. We characterize the Bertrand-Nash equilibria in a duopoly. Comparing equilibrium prices to the prices set by a multiproduct monopolist, we show that competition drives prices up and reduces total surplus.information goods, piracy, copyright, pricing

Fighting Information Good Piracy with Versioning

Information goods piracy is a pervasive problem as advanced information and communication technologies become so inexpensive and so easy to access. This problem, if not alleviated, can pose a serious loss to society as it can reduce information goods providers’ incentives to develop information goods or threaten the use and growth of the Internet as a distribution media for valued digital information goods. Contrasting with previous literature, which mainly consider instruments, such as law enforcement or technology-based solutions, that work on increasing individual piracy cost, we consider using versioning as a complementary means to these other methods. While the previous literature has shown that versioning may not be the optimal strategy for information goods (having negligible or concave marginal costs), we show that versioning could be a very effective and profitable instrument to fight piracy. Furthermore, we also show that it is possible to do this without sacrificing the consumer’s surplus and, as a result, the entire social welfare could increase. This suggests that by using versioning along with other instruments that work on increasing individual piracy cost, information goods providers can fight piracy more efficiently

A Contribution to the Understanding of Illegal Copying of Software: Empirical and Analytical Evidence Against Conventional Wisdom

This paper analyzes the causes of illegal copying and its effects in the software market across 66 countries. By studying the aggregated and joint effects of different variables, the analysis shows that supply constraints in the software market, shortage of after-sale support, and characteristics legal framework are major drivers of illegal copying when controlling for income per capita. It also concludes there is enough evidence to show there is a threshold of illegal copying over which its aggregated effect on the software market is positive, and this is an efficient mechanism for market creation. Thus, allowing illegal copying in some countries and at certain periods of time may be a profit generating decision in the long-term, especially in countries with low-developed software markets and with presence of Open Source software. For other hand, the results provide evidence to understand why proprietary software companies would prefer enforcing their copyrights and intellectual property rights contingently and as result of a rational decision-making process

Digital piracy : theory

This article reviews recent theoretical contributions on digital piracy. It starts by elaborating on the reasons for intellectual property protection, by reporting a few facts about copyright protection, and by examining reasons to become a digital pirate. Next, it provides an exploration of the consequences of digital piracy, using a base model and several extensions (with consumer sampling, network effects, and indirect appropriation). A closer look at market-structure implications of end-user piracy is then taken. After a brief review of commercial piracy, additional legal and private responses to end-user piracy are considered. Finally, a quick look at emerging new business models is taken.information good, piracy, copyright, IP protection, internet, peer-to-peer, software, music