Information Systems Research
International Journal of Electronic Commerce
An Experimental and Analytical Study of On-Line Digital Music Sampling Strategies
International Journal of Electronic Commerce
Economics of shareware: How do uncertainty and piracy affect shareware quality and brand premium?
Decision Support Systems
Application of complex adaptive systems to pricing of reproducible information goods
Decision Support Systems
Optimal Pricing of Digital Experience Goods Under Piracy
Journal of Management Information Systems
Optimal Digital Content Distribution Strategy in the Presence of the Consumer-to-Consumer Channel
Journal of Management Information Systems
Willingness to Pay in an Open Source Software Environment
Information Systems Research
The Journal of Strategic Information Systems
Impact of e-book technology: Ownership and market asymmetries in digital transformation
Electronic Commerce Research and Applications
Why give away something for nothing? Investigating virtual goods pricing and permission strategies
ACM Transactions on Management Information Systems (TMIS)
Digital goods and markets: Emerging issues and challenges
ACM Transactions on Management Information Systems (TMIS)
Entertainment Without Borders: The Impact of Digital Technologies on Government Cultural Policy
Journal of Management Information Systems
Pricing Digital Goods: Discontinuous Costs and Shared Infrastructure
Information Systems Research
The impacts of piracy and supply chain contracts on digital music channel performance
Decision Support Systems
Competitive Behavior-Based Price Discrimination for Software Upgrades
Information Systems Research
Effects of Piracy on Quality of Information Goods
Management Science
Journal of Global Information Management
Entertainment Without Borders: The Impact of Digital Technologies on Government Cultural Policy
Journal of Management Information Systems
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This paper analyzes the optimal choice of pricing schedules and technological deterrence levels in a market with digital piracy where sellers can influence the degree of piracy by implementing digital rights management (DRM) systems. It is shown that a monopolist's optimal pricing schedule can be characterized as a simple combination of the zero-piracy pricing schedule and a piracy-indifferent pricing schedule that makes all customers indifferent between legal usage and piracy. An increase in the quality of pirated goods, while lowering prices and profits, increases total surplus by expanding both the fraction of legal users and the volume of legal usage. In the absence of price discrimination, a seller's optimal level of technology-based protection against piracy is shown to be at the technologically maximal level, which maximizes the difference between the quality of the legal and pirated goods. However, when a seller can price discriminate, its optimal choice is always a strictly lower level of technology-based protection. These results are based on the following digital rights conjecture: that granting digital rights increases the incidence of digital piracy, and that managing digital rights therefore involves restricting the rights of usage that contribute to customer value. Moreover, if a digital rights management system weakens over time due to the underlying technology being progressively hacked, a seller's optimal strategic response may involve either increasing or decreasing its level of technology-based protection. This direction of change is related to whether the DRM technology implementing each marginal reduction in piracy is increasingly less or more vulnerable to hacking. Pricing and technology choice guidelines are presented, and some welfare implications are discussed.