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

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

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

Software Versioning and Quality Degradation? An Exploratory Study of the Evidence

We present a framework for measuring software quality using pricing and demand data, and empirical estimates that quantify the extent of quality degradation associated with software versioning. Using a 7-month, 108-product panel of software sales from Amazon.com, we document the extent to which quality varies across different software versions, estimating quality degradation that ranges from as little as 8% to as much as 56% below that of the corresponding flagship version. Consistent with prescriptions from the theory of vertical differentiation, we also find that an increase in the total number of versions is associated with an increase in the difference in quality between the highest and lowest quality versions, and a decrease in the quality difference between "neighboring" versions. We compare our estimates with those derived from two sets of subjective measures of quality, based on CNET editorial ratings and Amazon.com user reviews, and discuss competing interpretations of the significant differences that emerge from this comparison. As the first empirical study of software versioning that is based on both subjective and econometrically estimated measures of quality, this paper provides a framework for testing a wide variety of results in IS that are based on related models of vertical differentiation, and its findings have important implications for studies that treat web-based user ratings as cardinal data.Information Systems Working Papers Serie

The cloud paradigm: Are you tuned for the lyrics?

Major players, business angels and opinion-makers are broadcasting beguiled lyrics on the most recent IT hype: your software should ascend to the clouds. There are many clouds and the stake is high. Distractedly, many of us became assiduous users of the cloud, but perhaps due to the legacy systems and legacy knowledge, IT professionals, mainly those many that work in business information systems for the long tail, are not as much plunged into producing cloud-based systems for their clients. This keynote will delve into several aspects of this cloud paradigm, from more generic concerns regarding security and value for money, to more specific worries that reach software engineers in general. Do we need a different software development process? Are development techniques and tools mature enough? What about the role of open-source in the cloud? How do we assess the quality in cloud-based development? Please stay tuned for more!Comment: Position paper to introduce a keynote, proceedings of WAMPS'2011 - VI Annual MPS.BR Workshop, pp. 20-25, Campinas, Brazil, October 201

Differentiation With Shared Features And Cannibalization Of Information Goods

Large sunk cost of development, negligible cost of reproduction and distribution and substantial economies of scale make information goods distinct from industry goods. In this paper, we analyse versioning strategies of horizontally differentiated information goods with shared feature sets, discrete hierarchical groups and continuous individual consumer tastes. Based on our modelling results, when cannibalization is considered among different market segments, it is always sub-optimal to differentiate information goods if market is not fully differentiated or characteristics of the information goods are not specifically designed to relate to certain market segments

Bundling of Digital Goods in the Presence of Piracy

The efficacy of bundling is well-known in the context of digital goods with zero marginal cost. However, digital goods are also prone to piracy, and it is not clear what impact piracy might have on the efficacy of bundling. Prior research on this issue is limited, and it suggests that the appeal of bundling remains intact in the face of piracy. Using a model that recasts the classic bundling problem in the backdrop of piracy, we question this insight and show that piracy can severely diminish the appeal of bundling. In fact, bundling exacerbates the piracy problem and pushes more consumers to substitute the legal products with illegal ones, which more than offsets the usual benefits of bundling to a monopolist seller. Overall, the manufacturers of digital goods need to take piracy into consideration in their bundling decision and, perhaps, refrain from bundling when they anticipate the threat of piracy to be severe

An Economist’s Guide to Digital Music

In this guide, we discuss the impact of digitalization on the music industry. We rely on market and survey data at the international level as well as expert statements from the industry. The guide investigates recent developments in legal and technological protection of digital music and describes new business models as well as consumers' attitude towards music downloads and audio-streaming. We conclude the guide by a discussion of the evolution of the music industry.music, internet, file-sharing, peer-to-peer, piracy, digital rights management, copyright, e-commerce