Economics
The Effect of Piracy and Digital Rights Management on Vertically Related Content Industries
Document Type
Article
Abstract
The purpose of this paper is to investigate how digitalization affects vertically related content industries with the threat of piracy. We construct a model of vertical relationship where an upstream [a downstream] firm is considered as a content provider [a retailer]. Three business models are proposed depending on who has the right to implement digital rights management (DRM): a vertically-integrated entity, an upstream, and a downstream. First, we analyze how different modes of control on DRM affect the optimal prices and the level of copy protection. The results are dependent upon the different control modes of DRM and the degree of opportunistic behavior responding to increasing piracy costs. Second, we analyze the effect of two types of piracy depending on distribution channels (non-digital versus digital). Strengthening intellectual property rights (IPR) protection results in a price hike for both cases, while we have opposite changes in quantities depending on the types of piracy.
Publication Title
Review of Network Economics
Publication Date
3-26-2017
Volume
16
Issue
1
First Page
1
Last Page
26
ISSN
1446-9022
DOI
10.1515/rne-2017-0035
Keywords
copyright protection, digital rights management, digitalization, piracy, upstream-downstream
Repository Citation
Bae, Sang Hoo; Kim, Myungsup; and Yoo, Kyeongwon, "The Effect of Piracy and Digital Rights Management on Vertically Related Content Industries" (2017). Economics. 59.
https://commons.clarku.edu/faculty_economics/59