IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/19755.html
   My bibliography  Save this paper

The Nature and Incidence of Software Piracy: Evidence from Windows

Author

Listed:
  • Susan Athey
  • Scott Stern

Abstract

This paper evaluates the nature, relative incidence and drivers of software piracy. In contrast to prior studies, we analyze data that allows us to measure piracy for a specific product - Windows 7 - which was associated with a significant level of private sector investment. Using anonymized telemetry data, we are able to characterize the ways in which piracy occurs, the relative incidence of piracy across different economic and institutional environments, and the impact of enforcement efforts on choices to install pirated versus paid software. We find that: (a) the vast majority of "retail piracy" can be attributed to a small number of widely distributed "hacks" that are available through the Internet, (b) the incidence of piracy varies significantly with the microeconomic and institutional environment, and (c) software piracy primarily focuses on the most "advanced" version of Windows (Windows Ultimate). After controlling for a small number of measures of institutional quality and broadband infrastructure, one important candidate driver of piracy - GDP per capita - has no significant impact on the observed piracy rate, while the innovation orientation of an economy is associated with a lower rate of piracy. Finally, we are able to evaluate how piracy changes in response to country-specific anti-piracy enforcement efforts against specific peer-to-peer websites; overall, we find no systematic evidence that such enforcement efforts have had an impact on the incidence of software piracy.

Suggested Citation

  • Susan Athey & Scott Stern, 2013. "The Nature and Incidence of Software Piracy: Evidence from Windows," NBER Working Papers 19755, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19755
    Note: IO PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w19755.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2007. "Governance Matters VI: Aggregate and Individual Governance Indicators, 1996-2006," Policy Research Working Paper Series 4280, The World Bank.
    2. Hall, Robert E & Jones, Charles I, 1997. "Levels of Economic Activity across Countries," American Economic Review, American Economic Association, vol. 87(2), pages 173-177, May.
    3. Felix Oberholzer-Gee & Koleman Strumpf, 2007. "The Effect of File Sharing on Record Sales: An Empirical Analysis," Journal of Political Economy, University of Chicago Press, vol. 115(1), pages 1-42.
    4. Felix Oberholzer-Gee & Koleman Strumpf, 2010. "File Sharing and Copyright," Innovation Policy and the Economy, University of Chicago Press, vol. 10(1), pages 19-55.
    5. Brett Danaher & Michael D. Smith & Rahul Telang, 2014. "Piracy and Copyright Enforcement Mechanisms," Innovation Policy and the Economy, University of Chicago Press, vol. 14(1), pages 25-61.
    6. Brett Danaher & Michael D. Smith & Rahul Telang & Siwen Chen, 2014. "The Effect of Graduated Response Anti-Piracy Laws on Music Sales: Evidence from an Event Study in France," Journal of Industrial Economics, Wiley Blackwell, vol. 62(3), pages 541-553, September.
    7. Felix Oberholzer-Gee & Koleman Strumpf, 2010. "File Sharing and Copyright," NBER Chapters, in: Innovation Policy and the Economy, Volume 10, pages 19-55, National Bureau of Economic Research, Inc.
    8. Andrew Burke, 1996. "How effective are international copyright conventions in the music industry?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 20(1), pages 51-66, March.
    9. Kathleen Reavis Conner & Richard P. Rumelt, 1991. "Software Piracy: An Analysis of Protection Strategies," Management Science, INFORMS, vol. 37(2), pages 125-139, February.
    10. Joel Waldfogel, 2011. "Bye, Bye, Miss American Pie? The Supply of New Recorded Music Since Napster," NBER Working Papers 16882, National Bureau of Economic Research, Inc.
    11. Peitz, Martin & Waelbroeck, Patrick, 2006. "Piracy of digital products: A critical review of the theoretical literature," Information Economics and Policy, Elsevier, vol. 18(4), pages 449-476, November.
    12. Shane Greenstein & Jeff Prince, 2006. "The Diffusion of the Internet and the Geography of the Digital Divide in the United States," NBER Working Papers 12182, National Bureau of Economic Research, Inc.
    13. Bezmen, Trisha L. & Depken II, Craig A., 2006. "Influences on software piracy: Evidence from the various United States," Economics Letters, Elsevier, vol. 90(3), pages 356-361, March.
    14. Oz Shy & Jacques‐Françlois Thisse, 1999. "A Strategic Approach to Software Protection," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(2), pages 163-190, June.
    15. Silva, Francesco & Ramello, Giovanni B, 2000. "Sound Recording Market: The Ambiguous Case of Copyright and Piracy," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 9(3), pages 415-442, September.
    16. Landes, William M & Posner, Richard A, 1989. "An Economic Analysis of Copyright Law," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 325-363, June.
    17. Lakhani, Karim R. & von Hippel, Eric, 2003. "How open source software works: "free" user-to-user assistance," Research Policy, Elsevier, vol. 32(6), pages 923-943, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bastiaan Overvest & Bas Straathof, 2015. "What drives cybercrime? Empirical evidence from DDoS attacks," CPB Discussion Paper 306.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Bradley, Wendy A. & Kolev, Julian, 2023. "How does digital piracy affect innovation? Evidence from software firms," Research Policy, Elsevier, vol. 52(3).
    3. Xinyu Hua & Kathryn E. Spier, 2021. "Settling Lawsuits with Pirates," HKUST CEP Working Papers Series 202104, HKUST Center for Economic Policy.
    4. Bastiaan Overvest & Bas Straathof, 2015. "What drives cybercrime? Empirical evidence from DDoS attacks," CPB Discussion Paper 306, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Shane Greenstein, 2020. "Digital Infrastructure," NBER Chapters, in: Economic Analysis and Infrastructure Investment, pages 409-447, National Bureau of Economic Research, Inc.
    6. Milan Miric & Lars Bo Jeppesen, 2020. "Does piracy lead to product abandonment or stimulate new product development?: Evidence from mobile platform‐based developer firms," Strategic Management Journal, Wiley Blackwell, vol. 41(12), pages 2155-2184, December.
    7. Martínez-Sánchez, Francisco, 2020. "Preventing commercial piracy when consumers are loss averse," Information Economics and Policy, Elsevier, vol. 53(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Markus Pasche, 2014. "Welfare Effects of Endogenous Copyright Enforcement - the Case of Digital Goods," Jena Economics Research Papers 2014-008, Friedrich-Schiller-University Jena.
    2. Wojciech Hardy & Michal Krawczyk & Joanna Tyrowicz, 2015. "Friends or foes? A meta-analysis of the link between "online piracy" and sales of cultural goods," Working Papers 2015-23, Faculty of Economic Sciences, University of Warsaw.
    3. Tyrowicz, Joanna & Krawczyk, Michal & Hardy, Wojciech, 2020. "Friends or foes? A meta-analysis of the relationship between “online piracy” and the sales of cultural goods," Information Economics and Policy, Elsevier, vol. 53(C).
    4. Bradley, Wendy A. & Kolev, Julian, 2023. "How does digital piracy affect innovation? Evidence from software firms," Research Policy, Elsevier, vol. 52(3).
    5. Lee, Jonathan F., 2018. "Purchase, pirate, publicize: Private-network music sharing and market album sales," Information Economics and Policy, Elsevier, vol. 42(C), pages 35-55.
    6. Piolatto, Amedeo & Schuett, Florian, 2012. "Music piracy: A case of “The Rich Get Richer and the Poor Get Poorer”," Information Economics and Policy, Elsevier, vol. 24(1), pages 30-39.
    7. Tatsuo Tanaka, 2016. "The Effects of Internet Book Piracy: The Case of Japanese Comics," Keio-IES Discussion Paper Series 2016-027, Institute for Economics Studies, Keio University.
    8. Aguiar, Luis & Martens, Bertin, 2016. "Digital music consumption on the Internet: Evidence from clickstream data," Information Economics and Policy, Elsevier, vol. 34(C), pages 27-43.
    9. Brett Danaher & Michael D. Smith & Rahul Telang, 2014. "Piracy and Copyright Enforcement Mechanisms," Innovation Policy and the Economy, University of Chicago Press, vol. 14(1), pages 25-61.
    10. Handke, Christian & Girard, Yann & Mattes, Anselm, 2015. "Fördert das Urheberrecht Innovation? Eine empirische Untersuchung," Studien zum deutschen Innovationssystem 16-2015, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    11. Oz Shy, 2011. "A Short Survey of Network Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(2), pages 119-149, March.
    12. Oberholzer-Gee, Felix & Strumpf, Koleman, 2016. "The effect of file sharing on record sales, revisited," Information Economics and Policy, Elsevier, vol. 37(C), pages 61-66.
    13. Vendrik, M.C.M. & Hirata, J., 2003. "Experienced versus decision utility of income: relative or absolute happiness," Research Memorandum 039, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    14. Luis Aguiar & Jörg Claussen & Christian Peukert, 2018. "Catch Me If You Can: Effectiveness and Consequences of Online Copyright Enforcement," Information Systems Research, INFORMS, vol. 29(3), pages 656-678, September.
    15. C. Bellégo & R. De Nijs, 2015. "The redistributive effect of online piracy on the box office performance of American movies in foreign markets," Documents de Travail de l'Insee - INSEE Working Papers g2015-17, Institut National de la Statistique et des Etudes Economiques.
    16. van Kranenburg, H.L. & Hogenbirk, A.E., 2003. "Determinants of multimedia, entertainment, and business software copyright piracy: a cross-national study," Research Memorandum 020, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    17. Antonio Andrés, 2006. "The relationship between copyright software protection and piracy: Evidence from europe," European Journal of Law and Economics, Springer, vol. 21(1), pages 29-51, January.
    18. Christian Handke, 2013. "Empirical evidence on copyright," Chapters, in: Ruth Towse & Christian Handke (ed.), Handbook on the Digital Creative Economy, chapter 22, pages 249-261, Edward Elgar Publishing.
    19. Fukugawa Nobuya, 2018. "Are Heavy Pirates also Heavy Buyers?: A Case of the Video Game Industry in Japan," Asian Journal of Law and Economics, De Gruyter, vol. 9(1), pages 1-13, April.
    20. Dyuti Banerjee & Ahmed Khalid & Jan-Egbert Sturm, 2005. "Socio-economic development and software piracy. An empirical assessment," Applied Economics, Taylor & Francis Journals, vol. 37(18), pages 2091-2097.

    More about this item

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:19755. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.