On the optimal level of protection in DRM

Catch Me If You Can: Effectiveness and Consequences of Online Copyright Enforcement

“…This is backed by evidence showing that private enforcement can be effective in settling infringement cases regarding digital images (Luo and Mortimer, 2016), and increase sales of e-books (Reimers, 2016). However, when copy protection reduces consumer utility, private enforcement can have negative implications for firm profits and social welfare (Ahn and Shin, 2010). This idea is mirrored in evidence showing that music sales increase due to the removal of digital rights management technology (Zhang, forthcoming).…”

“…Private enforcement Theory suggests that firms find it optimal to invest in private enforcement to deter piracy when public enforcement is too weak (Banerjee, 2003;Sundararajan, 2004;Kiema, 2008;Ahn and Shin, 2010;Lu and Poddar, 2012). This is backed by evidence showing that private enforcement can be effective in settling infringement cases regarding digital images (Luo and Mortimer, 2016), and increase sales of e-books (Reimers, 2016).…”

Managing piracy: Dual-channel strategy for digital contents

“…Retail price, p T Theorem 1 allows us to compare the equilibrium outcomes in the traditionalchannel structure with and without piracy. Note that when the marginal cost of copyright protection is relatively low, i.e., c 1 8 , the producer can perform complete copyright protection such that both firms set prices as if they are in a market without piracy. Otherwise, the producer's copyright protection is insufficient to exclude the threat of piracy on firm pricing.…”

“…No matter what level the copyright protection is, the strategic introduction of the online-direct channel can always mitigate the piracy level, i.e., ∀e ∈ [0, 1], q D P < q T P . (ii) Dual-channel marketing acts as a complement to insufficient copyright protection, i.e., when c > 1 8 , e D > e T . Part (i) of Proposition 3 indicates that the reduced piracy level induced by the online-direct channel's introduction needs not come in the company of conventional copyright protection.…”

“…Sundararajan [23] studies the optimal pricing and the DRM protection strategies of a monopolistic digital content producer, finding that price discrimination can substitute or complement DRM protection. Ahn and Shin [1] examine a monopolist's optimal DRM protection level in the presence of government copyright enforcement. They find that the two piracy-mitigating approaches are substitutes for each other.…”