Digital Rights Management and the Pricing of Digital Products

As it becomes cheaper to copy and share digital content, vendors are turning to technical protections such as encryption. We argue that if protection is nevertheless imperfect, this transition will generally lower the prices of content relative to perfect legal enforcement. However, the effect on prices depends on whether the content providers use independent protection standards or a shared one, and if shared, on the governance of the system. Even if a shared system permits content providers to set their prices independently, the equilibrium prices will depend on how the vendors share the costs. We show that demand-based cost sharing generally leads to higher prices than revenue-based cost sharing. Users, vendors and the antitrust authorities will typically have different views on what capabilities the DRM system should have. We argue that, when a DRM system is implemented as an industry standard, there is a potential for "collusion through technology."

Digital Rights Management and the Pricing of Digital Products

Digital products such as movies, music and computer software are protected both by self-help measures such as encryption and copy controls, and by the legal right to prevent copying. We explore how digital rights management and other technical protections affect the pricing of content, and consequently, why content users, content vendors, and antitrust authorities might have different views on what technical capabilities should be deployed. We discuss the potential for collusion through technology

The Effect of HRM Practices and R&D Investment on Worker Productivity

Using data on a large sample of electronics firms in seven large states from a newly developed employer-employee matched database (Longitudinal Employer Household Dynamics, LEHD), we examine the impact of human resource management (HRM) practices and technology on worker productivity. Motivated by extensive site visit research in the semiconductor industry in which we observe the interaction of HRM practices, technology and product markets, we use linked employer-employee data to test the generalizability of our case study observations. Specifically, we examine the relationship between product markets and HRM practices. Empirically, we identify HRM clusters for firms based on firm-level observations of nine measures of HRM outcomes. Next, we use principal components analysis to examine the relationships between the HRM measures. Then we use these principal components and their interactions with R&D investment as explanatory variables in a worker productivity regression. We find that there are large differences on the impact of human resource practices on labor productivity across levels of technological investment. Our preliminary results indicate that firms with high levels of R&D investment and HRM systems with multiple ports of entry, performance incentives, and lower turnover have higher worker productivity than comparable high-R&D firms without these HRM practices. Similarly, firms with low R&D that implement HRM systems with performance incentives have higher productivity than low R&D firms without performance incentives. These results suggest that high R&D firms are more likely to buy new skills compared to low R&D firms, and yet these high R&D firms suffer if they lose too many experienced workers. These findings are consistent with the implications of our “make versus buy” model of workforce skill adjustment as a response to technological change

Digital Rights Management and the Pricing of Digital Products

Digital products such as movies, music and computer software are protected both by self-help measures such as encryption and copy controls, and by the legal right to prevent copying. We explore how digital rights management and other technical protections a®ect the pricing of content, and consequently, why content users, content vendors, and antitrust authorities might have di®erent views on what technical capabilities should be deployed. We discuss the potential for \collusion through technology."technical protections, DRM, antitrust, trusted systems

Digital Rights Management and the Pricing of Digital Products

Digital products such as movies, music and computer software are protected both by self-help measures such as encryption and copy controls, and by the legal right to prevent copying. We explore how digital rights management and other technical protections aect the pricing of content, and consequently, why content users, content vendors, and antitrust authorities might have dierent views on what technical capabilities should be deployed. We discuss the potential for \collusion through technology." Keywords: technical protections, DRM, antitrust, trusted systems JEL Classications: L13, L14, L15, K21, O33 We thank Joan Feigenbaum and Scott Shenker for helpful discussion. Financial support from the NET Institute (http://www.NETinst.org) is gratefully acknowledged

and the Pricing of Digital Products

, is a non-profit institution devoted to research on network industries, electronic commerce, telecommunications, the Internet, “virtual networks” comprised of computers that share the same technical standard or operating system, and on network issues in general. Digital Rights Managemen

Digital Rights Management and the Pricing of Digital Products. working paper

Abstract: As it becomes cheaper to copy and share digital content, vendors are turning to technical protections such as encryption. We argue that if protection is nevertheless imperfect, this transition will generally lower the prices of content relative to perfect legal enforcement. However, the effect on prices depends on whether the content providers use independent protection standards or a shared one, and if shared, on the governance of the system. Even if a shared system permits content providers to set their prices independently, the equilibrium prices will depend on how the vendors share the costs, and prices may be higher than with perfect legal protection. We show that demand-based cost sharing generally leads to higher prices than revenuebased cost sharing. Users, vendors and the antitrust authorities will typically have different views on what capabilities the DRM system should have. We argue that, when a DRM system is implemented as an industry standard, there is a potential for “collusion through technology.