Designing markets for open source production of digital culture goods

  • Authors:

  • Karl R. Lang;Di Shang;Roumen Zicklin

  • Affiliations:

  • Baruch College: City University of New York (CUNY), New York, NY;Baruch College: City University of New York (CUNY), New York, NY;Baruch College: City University of New York (CUNY), New York, NY

  • Venue:
  • Proceedings of the ninth international conference on Electronic commerce
  • Year:
  • 2007

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Abstract

Digital culture products are easily reproduced, easily distributed, and subject to endless transmutation, extension and recombination. This sets the stage for the emergence of maturing markets for open source modes of cultural content production. This paper explores two previously unstudied structures of such markets. First, we consider a market that offers products with content access and transmutation rights to consumers and lets them personalize products in the post-purchase environment. Second, we consider an open source production model where producers can trade content access rights that let other producer reuse their content in their own production process. Our experimental results show that, as predicted by theory, total surplus under both options is larger than under the no-tradable- transmutation-rights option. The presence of open source access and transmutation rights diffuses monopoly power without hurting producers. profits. The paper also provides a basic experimental framework for testing many other alternative copyright arrangements and provides further understanding of issues related to the production and exchange of digital information goods.