IDEAS home Printed from https://ideas.repec.org/a/eee/iepoli/v57y2021ics0167624521000238.html
   My bibliography  Save this article

Eliminating digital rights management from the E-book market

Author

Listed:
  • Kim, Jin-Hyuk
  • Leung, Tin Cheuk

Abstract

We examine the impact of removing Digital Rights Management (DRM) from electronic book devices. We derive a Bayesian hierarchical logit model based on the consumer’s utility maximization problem and estimate the model using data from a choice-based survey. We then simulate the counterfactual market outcomes when DRM is removed; on average, the consumer surplus increases nontrivially holding everything else constant. However, the gain in consumer surplus is diminished when we re-calibrate e-book device prices. Further, if there is a negative shock to content supply, then the consumer surplus could in fact decrease after DRM removal.

Suggested Citation

  • Kim, Jin-Hyuk & Leung, Tin Cheuk, 2021. "Eliminating digital rights management from the E-book market," Information Economics and Policy, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:iepoli:v:57:y:2021:i:c:s0167624521000238
    DOI: 10.1016/j.infoecopol.2021.100935
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167624521000238
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.infoecopol.2021.100935?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    2. Thierry RAYNA & Ludmila STRIUKOVA, 2008. "White Knight or Trojan Horse? The Consequences of Digital Rights Management for Consumers, Firms and Society," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(69), pages 109-126, 1st quart.
    3. Jean Imbs & Isabelle Mejean, 2015. "Elasticity Optimism," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 43-83, July.
    4. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
    5. Greg M. Allenby & Jeff Brazell & John R. Howell & Peter E. Rossi, 2014. "Valuation of Patented Product Features," Journal of Law and Economics, University of Chicago Press, vol. 57(3), pages 629-663.
    6. Mortimer, Julie Holland & Nosko, Chris & Sorensen, Alan, 2012. "Supply responses to digital distribution: Recorded music and live performances," Information Economics and Policy, Elsevier, vol. 24(1), pages 3-14.
    7. 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, pages 1-42.
    8. Ahn, Illtae & Shin, Ilsoon, 2010. "On the optimal level of protection in DRM," Information Economics and Policy, Elsevier, vol. 22(4), pages 341-353, December.
    9. Dinah A. Vernik & Devavrat Purohit & Preyas S. Desai, 2011. "Music Downloads and the Flip Side of Digital Rights Management," Marketing Science, INFORMS, vol. 30(6), pages 1011-1027, November.
    10. Handke, Christian, 2012. "Digital copying and the supply of sound recordings," Information Economics and Policy, Elsevier, vol. 24(1), pages 15-29.
    11. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-1672, September.
    12. Yooki Park & Suzanne Scotchmer, 2004. "Digital Rights Management and the Pricing of Digital Products," Working Papers 04-09, NET Institute, revised Oct 2004.
    13. Leung, Tin Cheuk, 2015. "Music piracy: Bad for record sales but good for the iPod?," Information Economics and Policy, Elsevier, vol. 31(C), pages 1-12.
    14. Manski, Charles F. & Salomon, Ilan, 1987. "The demand for teleshopping : An application of discrete choice models," Regional Science and Urban Economics, Elsevier, vol. 17(1), pages 109-121, February.
    15. Joel Waldfogel, 2012. "Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music since Napster," Journal of Law and Economics, University of Chicago Press, vol. 55(4), pages 715-740.
    16. Hui Li, 2019. "Intertemporal Price Discrimination with Complementary Products: E-Books and E-Readers," Management Science, INFORMS, vol. 67(6), pages 2665-2694, June.
    17. Farrell Joseph & Shapiro Carl, 2010. "Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-41, March.
    18. Babur De los Santos & Matthijs R. Wildenbeest, 2017. "E-book pricing and vertical restraints," Quantitative Marketing and Economics (QME), Springer, vol. 15(2), pages 85-122, June.
    19. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-362, March.
    20. Laurina Zhang, 2018. "Intellectual Property Strategy and the Long Tail: Evidence from the Recorded Music Industry," Management Science, INFORMS, vol. 64(1), pages 24-42, January.
    21. Harris, Richard & Olewiler, Nancy, 1979. "The Welfare Economics of Ex Post Optimality," Economica, London School of Economics and Political Science, vol. 46(182), pages 137-147, May.
    22. repec:wly:soecon:v:81:2:y:2014:p:387-408 is not listed on IDEAS
    23. Oecd, 2012. "E-books: Developments and Policy Considerations," OECD Digital Economy Papers 208, OECD Publishing.
    24. Dirk Bergemann & Thomas Eisenbach & Joan Feigenbaum & Scott Shenker, 2011. "Pricing under the Threat of Piracy: Flexibility and Platforms for Digital Goods," Cowles Foundation Discussion Papers 1834, Cowles Foundation for Research in Economics, Yale University.
    25. Paul E. Green & Abba M. Krieger & Yoram Wind, 2001. "Thirty Years of Conjoint Analysis: Reflections and Prospects," Interfaces, INFORMS, vol. 31(3_supplem), pages 56-73, June.
    26. Beggs, S. & Cardell, S. & Hausman, J., 1981. "Assessing the potential demand for electric cars," Journal of Econometrics, Elsevier, vol. 17(1), pages 1-19, September.
    27. 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.
    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. Paulina Jusiuk, 2023. "Influence of Pro-Environmental Attitudes on the Choice between Tangible and Virtual Product Forms," Sustainability, MDPI, vol. 15(13), pages 1-24, July.
    2. Christian Peukert & Margaritha Windisch, 2023. "The Economics of Copyright in the Digital Age," CESifo Working Paper Series 10687, CESifo.

    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. Jin-Hyuk Kim & Tin Cheuk Leung, 2013. "Quantifying the Impacts of Digital Rights Management and E-Book Pricing on the E-Book Reader Market," Working Papers 13-03, NET Institute.
    2. Christian Peukert & Margaritha Windisch, 2023. "The Economics of Copyright in the Digital Age," CESifo Working Paper Series 10687, CESifo.
    3. 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.
    4. Bradley, Wendy A. & Kolev, Julian, 2023. "How does digital piracy affect innovation? Evidence from software firms," Research Policy, Elsevier, vol. 52(3).
    5. Savelkoul, Ruben, 2020. "Superstars vs the long tail: How does music piracy affect digital song sales for different segments of the industry?," Information Economics and Policy, Elsevier, vol. 50(C).
    6. Aguiar, Luis & Waldfogel, Joel, 2016. "Even the losers get lucky sometimes: New products and the evolution of music quality since Napster," Information Economics and Policy, Elsevier, vol. 34(C), pages 1-15.
    7. Hardy, Wojciech, 2021. "Displacement from piracy in the American comic book market," Information Economics and Policy, Elsevier, vol. 57(C).
    8. Leung, Tin Cheuk, 2015. "Music piracy: Bad for record sales but good for the iPod?," Information Economics and Policy, Elsevier, vol. 31(C), pages 1-12.
    9. Gans, Joshua S., 2015. "“Selling Out” and the impact of music piracy on artist entry," Information Economics and Policy, Elsevier, vol. 32(C), pages 58-64.
    10. Joel Waldfogel, 2017. "How Digitization Has Created a Golden Age of Music, Movies, Books, and Television," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 195-214, Summer.
    11. 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.
    12. 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.
    13. Sanz, Esteve, 2015. "Copyright indicators and the costs of symbolic production: The cultural dimension of telecommunications policy," Telecommunications Policy, Elsevier, vol. 39(3), pages 208-217.
    14. Markus Pasche, 2014. "Welfare Effects of Endogenous Copyright Enforcement - the Case of Digital Goods," Jena Economics Research Papers 2014-008, Friedrich-Schiller-University Jena.
    15. Robert G. Hammond, 2014. "Profit Leak? Pre‐Release File Sharing and the Music Industry," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 387-408, October.
    16. Mary J. Benner & Joel Waldfogel, 2016. "The Song Remains the Same? Technological Change and Positioning in the Recorded Music Industry," Strategy Science, INFORMS, vol. 1(3), pages 129-147, September.
    17. Ratchford, Brian & Soysal, Gonca & Zentner, Alejandro & Gauri, Dinesh K., 2022. "Online and offline retailing: What we know and directions for future research," Journal of Retailing, Elsevier, vol. 98(1), pages 152-177.
    18. Laurina Zhang, 2018. "Intellectual Property Strategy and the Long Tail: Evidence from the Recorded Music Industry," Management Science, INFORMS, vol. 64(1), pages 24-42, January.
    19. 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).
    20. 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.

    More about this item

    Keywords

    Ebook; Demand system; Platform; DRM;
    All these keywords.

    JEL classification:

    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    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:eee:iepoli:v:57:y:2021:i:c:s0167624521000238. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505549 .

    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.