Managing Digital Piracy: Pricing, Protection and Welfare

Topics:
Music
Tags:
Business Operations,
Pricing Strategy,
Pricing,
Piracy,
New York University,
Marketing Research,
Marketing,
Digital Rights Management (DRM),
Digital Piracy,
Corporate Law,
...
Source:
New York University

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Overview: This paper analyzes the optimal choice of pricing schedules and technological deterrence levels in a market with digital piracy, when legal sellers can sometimes control the extent of piracy by implementing digital rights management (DRM) systems. It is shown that the seller's optimal pricing schedule can be characterized as a simple combination of the zero-piracy pricing schedule, and a piracy-indifferent pricing schedule which makes all customers indifferent between legal consumption and piracy. Many online music services implement DRM by limiting the rendering of their MP3 files to a single device, and by placing related restrictions on the portability of these files.

(Is this item miscategorized? Does it need more tags? Let us know.)

Format: PDF | Size: 659KB | Date: May 2003 | Pages: 40

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