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Digital Rights Management: White Knight or Trojan Horse?

Author

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  • Thierry Rayna
  • Ludmila Striukova

    ()

Abstract

Due to its ability to solve all main problems associated with digital goods, Digital Right Management is the favourite option used by companies to tackle piracy. The aim of this article is to discuss the consequences of DRM for consumers, firms and society. The rationales of DRM are discussed and the expected benefits for firms are presented. It is shown that the advantages brought by DRM to firms go beyond what would be needed for an efficient provision of digital goods. In contrast, consumers are likely to see few benefits in DRM. This article demonstrates that even a standard DRM system is unlikely to improve social welfare. The article concludes with some public policy and corporate strategy recommendations.

Suggested Citation

  • Thierry Rayna & Ludmila Striukova, 2007. "Digital Rights Management: White Knight or Trojan Horse?," Bristol Economics Discussion Papers 07/596, Department of Economics, University of Bristol, UK.
  • Handle: RePEc:bri:uobdis:07/596
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    File URL: http://www.bristol.ac.uk/efm/media/workingpapers/working_papers/pdffiles/dp07596.pdf
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    More about this item

    Keywords

    Digital Right Management; Digital Goods; Piracy; Excludability; Durability; Sampling;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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