Online Piracy and the “Longer Arm” of Enforcement

Abstract

Controlling digital piracy has remained a top priority for manufacturers of information goods, as well as for many governments around the world. Among the many forms taken by digital piracy, we focus on an increasingly common one-namely, online piracy-that is facilitated by torrent sites and cyberlockers who bring together consumers of pirated content and its suppliers. Motivated by recent empirical literature which makes a clear distinction between anti-piracy efforts that restrict supply of pirated goods (supply-side enforcement) and ones that penalize illegal consumption (demand-side enforcement), we develop a simple economic model and discover some fundamental differences between these two types in terms of their impacts on innovation and welfare. All in all, supply-side enforcement turns out to be the "longer arm"-it has a more desirable economic impact in the long run. Our results have clear implications for manufacturers, consumers, and policymakers.

Copyright enforcement in the digital age

“…Supply-side policies. These results suggest that the success of supply-side anti-piracy interventions rests on how inconvenient they make piracy, a view also espoused in a 2015 theory paper by Dey et al 11 Opponents of supply-side k The one exception to this is segment 9, as in the Table 6, the heaviest users of the blocked sites, and is discussed further in Danaher et al 4 l The 19-site block resulted in a large-percentage increase in visits to VPN sites. However, on a unit basis the increase in use of legal sites was much greater than the increase in VPN usage.…”

Does piracy lead to product abandonment or stimulate new product development?: Evidence from mobile platform‐based developer firms

“…However, unlike these earlier papers which focus on property rights from the perspective of policy, the present article considers the implications of digital copyright, and in turn, the violation of those property rights through piracy, a question that affects the strategy of platform firms which try to optimize innovation, "on top of their platforms" (Boudreau & Jeppesen, 2015;Jacobides et al, 2018). The insights from this article have less to do with optimal strategies for pirated firms themselves to regulate piracy (Conner & Rumelt, 1991;Dey, Kim, & Lahiri, 2019), but more for the platform itself that can benefit or be harmed by the presence of piracy. For instance, the results of the present study suggest that piracy may shape innovative effort, but that this may be observed mostly through a decline in incremental innovations such as bug fixes.…”

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

“…Public enforcement There are reasons to expect stronger effects from greater enforcement efforts on the supply-side. In the model of Dey et al (2016), stronger supply-side enforcement leads to higher entry costs for unlicensed websites, which in turn reduces the content available for consumers. The authors show that supply-side enforcement can lead to desirable welfare outcomes (which is similar to the result in Tsai and Chiou, 2012).…”

“…Putting aside country-specific legal issues -which may make a large scale international raid difficult -the associated costs of physically raiding multiple websites hosted on geographically dispersed servers would also have to be taken into account. This could naturally reduce the welfare enhancing effect of supply-side enforcement (Tsai and Chiou, 2012;Dey et al, 2016). A relatively recent regulatory approach is to reduce the advertising revenues that piracy websites receive.…”