Managing Digital Piracy: Pricing and Protection
- Topics:
- Music,
- Price Optimization
- Tags:
- Business Operations,
- Pricing,
- Piracy,
- Marketing Research,
- Marketing,
- Institute For Operations Research,
- Digital-rights,
- Digital Piracy,
- Corporate Law,
- Pricing Strategy
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Overview: This paper analyzes the optimal choice of pricing schedules and technological deterrence levels in a market with digital piracy where sellers can influence the degree of piracy by implementing Digital Rights Management (DRM) systems. It is shown that a monopolist's optimal pricing schedule can be characterized as a simple combination of the zero-piracy pricing schedule and a piracy-indifferent pricing schedule that makes all customers indifferent between legal usage and piracy. The results are based on the following digital rights conjecture: that granting digital rights increases the incidence of digital piracy, and that managing digital rights therefore involves restricting the rights of usage that contribute to customer value.
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Format: PDF | Size: 269KB | Date: Sep 2004 | Pages: 22
