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3D PRINTING & PIRACYWhat lessons can we learn from the piracy of digital content?
Prof. Thierry RaynaESG Management School
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PROF. THIERRY RAYNA
Professor of Economics
Department of Economics & Finance
Chair of Digital Business
ESG Management School, Paris
Email: [email protected]
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THE STORY SO FAR…
• Massive consumer piracy has appeared in all industries that have become digital
• Firms have had tremendous difficulties adapting their business models
• As object go digital, will the piracy phenomenon spread to the physical world?
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3D PIRACY:WILL IT HAPPEN?
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NO, BUT IF I COULD DOWNLOAD A COPY, I WOULD
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IT IS ALREADY HAPPENING
• “Physible” section on the Pirate Bay opened in January 2012
• Cease & Desist letters sent to online design hosting platforms
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WARHAMMER 40,000
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ON A SMALL SCALE?
• So far, very limited extent
• But, adoption of 3D printers by consumers is still low
• Technology is yet immature
• Early days of MP3, VCDs, etc. were similar
• Brace yourself for a far larger phenomenon!
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3D Sc
anne
r 3D Printer
Piracy as easy as 1-2-3
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‘HISTORICAL’ EVOLUTION OF PIRACY
t1985 1990 1995 2000 2005 2010 2015
CD-R
Internet
Napster
CD-ROM
Broadband
KaZaA
eMule
BitTorrentFloppy disks
DRM
Cyberlocker war
TabletsBlu-ray
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LESSON #1:WHEN SOMETHING GOES DIGITAL,
IP INFRINGEMENT ALWAYS HAPPENS
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3D PIRACYCAN IT BE PREVENTED?
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THERE ARE LAWS TO PREVENT PIRACY
• Multiple means to protect IP
• Vast majority of legal systems are protective of IP
• Trend towards stronger protection of IP
• Does it work?
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How different?
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WHY IPR LAWS DON’T WORK AGAINST PIRACY?
Counterfeiting Consumer PiracyInfringersActivitySphere
IdentificationProfit (infringers)
Net Benefit (holders)Net Social Outcome
(of litigation)
Few (relatively) ManyProduction/sale Consumption
Public Mostly privateEasy (relatively) Difficult
High LowPositive Negative
Positive Negative
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IF LAW DOESN’T WORK, WHY NOT USE TECHNOLOGY?
• Anti-piracy technologies have been used since dawn of digital age
• Digital Rights Management (DRM) have been rather ineffective
• Non-protected versions always available
• Obnoxious for legitimate users, may turn them to piracy or slow down adoption
• Costly to develop and manage
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IF TECHNOLOGY AND LAW DON’T WORK WHY NOT CHANGE THE LAW?
• Graduated response “3-strike laws” adopted in France, New Zealand, U.K.
• Legal monitoring of private communications
• Reversal of burden of proof
• After 3 strikes, internet is cut and/or fine
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WHY WOULD GRADUATED RESPONSE WORK AGAINST PIRACY?
Consumer PiracyMany
ConsumptionMostly private
DifficultLow
Negative
Negative
InfringersActivitySphere
IdentificationProfit (infringers)
Net Benefit (holders)Net Social Outcome
(of litigation)
Graduated responseTechnological use
Presumption of guilt/Less privacy
Moderate punishmentNo litigation cost/Market effect
Lower public expenditure
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DOES THIS WORK?
• Ambiguous effect on consumers:
• improbable very high (and uncertain) cost vs more probable set and relatively low cost
• strategic behaviour with regard to warnings
• In fact, very costly
• Who bears the cost?
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HOW EFFECTIVE?
• HADOPI:
• 2+ million emails in 2 years
• Including 186,000 as “second warning”
• 3 people found guilty: 1 got internet access cut for 15 days and 600€ fine, second 150€ fine, last one no fine
• No serious evidence of effect
• Dropped by new government
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LESSON #2:NEITHER THE LAW NOR
TECHNOLOGY (ALONE) CAN PREVENT PIRACY
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3D PIRACY:CAN IT BE AVOIDED?
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YES, PIRACY CAN BE AVOIDED
• Successful examples of piracy avoidance strategies
• Lower prices (e.g. apps on iOS)
• Open Source
• Revenues linked to complementary products and services
• “O.E.M.” type contracts
• Requires radical changes in business models
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LESSON #3:PIRACY CANNOT BE PREVENTED
BUT CAN BE AVOIDED
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Think Different
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≠
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Digital Technology
Replicability
Non-rivalness
Non-excludability
Public Good
Sharing
Durability
Free-riding/Piracy
Imperfect information
SamplingBehaviour
Durable Good
Legend
Technology
Economic
characteristic
Behaviour
Type of
good
Experience Good
Delaying purchase
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THE DIGITAL ECONOMY:A LAND OF OPPORTUNITIES
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THE DIGITAL ECONOMY:WHAT MOST COMPANIES ARE TRYING TO DO
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THE MUSIC INDUSTRYC. 2012
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THE DIGITAL ECONOMY:WHAT GOOGLE IS DOING
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THE DIGITAL ECONOMY:WHAT WE ARE DOING
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DIGITAL ECONOMICS AIKIDO
• Stop fighting against nature
• Channel the strength of digital economy to your advantage...
• ... without harming your customers
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+
+
+
+
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“IT’S COMPETITION, STUPID!”
• Piracy is a sign of the problem, not the root
• Even if it were possible to totally prevent piracy, the problem would still be there
• 3D printing and digital technology empower people with creation, production and distribution tools
• Far greater supply, far more competition
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ON THE BRIGHT SIDE…
• Many objects too complex to be printed at home
• Probably will remain so for the next few years
• Growth of connected objects
• Piracy applies less for objects that are connected
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Better a small slice in a big cake than a big slice of nothing