Rights Management

Competitive Strategies for Network Economies

Economics of Information - Mike Shor 2

Overview

Legal Approach Enforcement Approach Business Model Approach

Economics of Information - Mike Shor 3

Legal Approach First sale controversy

Copy protection, right of subsequent use Permanence

Publication vs. “fleeting image” Fair Use

“General benefits derived by the public” Monetary Ramifications

Framing, deep-linking Time and space shifting

Sony, Xerox, and Napster

Economics of Information - Mike Shor 4

Legal Approach Where has publication occurred?

What furthers the “promotion of knowledge?”

What is a “copy” ?

Laws are reactionary! Contracts instead of property rights.

Economics of Information - Mike Shor 5

Enforcement Approach Watermarks (Digimarc) Web Crawlers (RIAA) “Reattaching the bits” (Hardware

Keys)

No enforcement for noncreative worksDatabasesScientific Knowledge“Trail of Argument”

Economics of Information - Mike Shor 6

Enforcement Approach But: Technologists are hard to stop

And: Protection lowers value for honest consumers

Small scale piracy hard to stop! Internet: small scale on a large scale!

Economics of Information - Mike Shor 7

Customer Acceptance What level of convenience are we willing

to give up for copyrights?

Hardware keys Active CD insertion

In all cases – DRM lowers valueOnly question is “how much”?ex. Microsoft Windows XP

Economics of Information - Mike Shor 8

Business Model Approach

“The first line of defense against pirates is a sensible business model.”

Make the content easier to buy than steal Promote traditional product with free

digital content Focus on Auxiliary Markets Pricing for Copying!

Economics of Information - Mike Shor 9

eMusic

Make the Content Easier QUALITY to Buy than Steal

Per Use (no longer available)MP3 single: $0.99MP3 album: $8.99

Per Time (unlimited download)Month: $15Year: $10 / monthOne month free

“MP3s hosted at EMusic - not someone's bedroom”

Economics of Information - Mike Shor 10

Cross-Promotion Promote traditional product with free digital

content CONVENIENCE

Tom Pettyreleased new song track for free on the web

CreedTop single from “Human Clay” released freeAlbum debuted at Billboard #1

Economics of Information - Mike Shor 11

Grateful Dead Focus on Auxiliary Markets

DEMAND CREATIONPermitted taping of live showsPermitted distribution of live bootlegsReleased for free live recordings

Increased concert attendanceStrategically played new material liveGenerated interest in new studio recordings

Economics of Information - Mike Shor 12

Unfortunate Fact

The business model approach implies that the price charged depends on the added value of information flow above that obtainable by illicit means

Economics of Information - Mike Shor 13

Pricing for Copying! If it is inevitable, make it work for you. Copiers need an original

Library journal rates Early VHS releases Franchising

Metrowerks CodeWarriorMac and Windows versions on separate CDsOne CD for documentationEncourage copying among low-value users

Economics of Information - Mike Shor 14

Pricing for Copying! Pricing to copiers is like bundling in

reverseSell one copy to multiple users, instead of

sell multiple goods to one userProfit advantage remains – group pricing

Challenge: small groups are easier to manage and price

Economics of Information - Mike Shor 15

A Unified Approach Legal

Maintain the right to your property

EnforcementMaintain “universal access” only for youKeep copying rings small or offline

Business ModelLeverage universal accessLet copying promote your product“Bundle” to small copying rings