Digital Rights Management and the Pricing of Digital Products / Yooki Park, Suzanne Scotchmer.

Format:

Book

Author/Creator:

Park, Yooki.

Contributor:

Scotchmer, Suzanne.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11532.

NBER working paper series no. w11532

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

As it becomes cheaper to copy and share digital content, vendors are turning to technical protections such as encryption. We argue that if protection is nevertheless imperfect, this transition will generally lower the prices of content relative to perfect legal enforcement. However, the effect on prices depends on whether the content providers use independent protection standards or a shared one, and if shared, on the governance of the system. Even if a shared system permits content providers to set their prices independently, the equilibrium prices will depend on how the vendors share the costs. We show that demand-based cost sharing generally leads to higher prices than revenue-based cost sharing. Users, vendors and the antitrust authorities will typically have different views on what capabilities the DRM system should have. We argue that, when a DRM system is implemented as an industry standard, there is a potential for "collusion through technology."

Notes:

August 2005.

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