IDEAS home Printed from https://ideas.repec.org/a/bba/j00004/v2y2023i1p18-22d75.html
   My bibliography  Save this article

Protection in DRM and pricing strategies for digital products considering quality degradation

Author

Listed:
  • Linlan Zhang

    (School of Business, Hubei University, Wuhan, China)

  • Yu Zhang

    (School of Business, Hubei University, Wuhan, China)

Abstract

In this paper, we develop a model in which a monopolistic firm manufactures and sells a digital product, by incorporating digital rights management (DRM), quality degradation of pirated products, and government copyright enforcement into the consumer’s utility function. We determine the monopolist’s optimal pricing strategies and the appropriate DRM protection level through mathematical deduction. Our results show that when the government copyright enforcement is moderate and the quality of pirated products is relatively high, implementing a DRM system is optimal for the monopolist. However, in most other cases, DRM-free is better for the monopolist. This result may explain why DRM is not very popular in some industries. Our results suggest that choosing the right price, focusing on content innovation, and weakening DRM protection may be a better strategy for firms now. The results also indicate that DRM-free may be more prominent in the digital music industry than in the software and video games industries.

Suggested Citation

  • Linlan Zhang & Yu Zhang, 2023. "Protection in DRM and pricing strategies for digital products considering quality degradation," Economic Analysis Letters, Anser Press, vol. 2(1), pages 18-22, March.
    • Handle: RePEc:bba:j00004:v:2:y:2023:i:1:p:18-22:d:75
    as

    Download full text from publisher

    File URL: https://www.anserpress.org/journal/eal/2/1/13/pdf
    Download Restriction: no
    File URL: https://www.anserpress.org/journal/eal/2/1/13
    Download Restriction: no
    ---><---

    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:bba:j00004:v:2:y:2023:i:1:p:18-22:d:75. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Ramona Wang (email available below). General contact details of provider: https://www.anserpress.org .

    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.