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Flexibility as an Instrument in Digital Rights Management

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Author Info

  • Dirk Bergemann

    ()
    (Cowles Foundation, Yale University)

  • Thomas Eisenbach

    (Dept. of Economics, University of Munich)

  • Joan Feigenbaum

    ()
    (Dept. of Computer Science, Yale University)

  • Scott Shenker

    (ICSI and Dept. of Electrical Engineering and Computer Science, University of California, Berkeley)

Abstract

We consider the optimal design of flexible use in a digital-rights-management policy. The basic model considers a single distributor of digital goods and a continuum of consumers. Each consumer can acquire the digital good either as a licensed product or an unlicensed copy. The availability of (or access to) unlicensed copies is increasing both in the number of licensed copies and in the flexibility accorded to licensed copies. We thus analyze the optimal design of flexibility in the presence of unlicensed distribution channels (the "greynet"). We augment the basic model by introducing a “secure platform” that is required to use the digital good. We compare the optimal design of flexibility in the presence of a platform to the one without a platform. Finally, we analyze the equilibrium provision when platform and content are complimentary goods but are distributed and priced by different sellers.

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Bibliographic Info

Paper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1505.

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Length: 19 pages
Date of creation: Apr 2005
Date of revision:
Handle: RePEc:cwl:cwldpp:1505

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Related research

Keywords: Digital Rights Management; Platform; Flexibility; Piracy;

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References

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  1. Peter Biddle & Paul England & Marcus Peinado & Bryan Willman, 2003. "The Darknet and the Future of Content Distribution," Levine's Working Paper Archive 618897000000000636, David K. Levine.
  2. Kathleen Reavis Conner & Richard P. Rumelt, 1991. "Software Piracy: An Analysis of Protection Strategies," Management Science, INFORMS, INFORMS, vol. 37(2), pages 125-139, February.
  3. Rob, Rafael & Waldfogel, Joel, 2006. "Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 29-62, April.
  4. Arun Sundararajan, 2003. "Managing Digital Piracy: Pricing, Protection and Welfare," Law and Economics, EconWPA 0307001, EconWPA.
  5. Novos, Ian E & Waldman, Michael, 1984. "The Effects of Increased Copyright Protection: An Analytic Approach," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 92(2), pages 236-46, April.
  6. Bakos, Yannis & Brynjolfsson, Erik & Lichtman, Douglas, 1999. "Shared Information Goods," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 117-55, April.
  7. Takeyama, Lisa N, 1994. "The Welfare Implications of Unauthorized Reproduction of Intellectual Property in the Presence of Demand Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 155-66, June.
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Cited by:
  1. David Waterman & Sung Ji & Laura Rochet, 2007. "Enforcement and Control of Piracy, Copying, and Sharing in the Movie Industry," Review of Industrial Organization, Springer, vol. 30(4), pages 255-289, June.

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