Implications of Digital Rights Management on the Demand for Digital Content
1st Edition
Published on 7. September 2006
Book
242 pages
978-3-86624-154-1 (ISBN)
Description
Content providers have new possibilities, thanks to advances in technology, for providing new products such as digital downloads. However, the same technologies also enable consumers to become provider of such content themselves. Consumers have various methods, channels, and possibilities of accessing, copying, using, sharing, and providing digital content. In this respect, content control has become one of the key factors for content providers in successful distribution and commercialization of digital content. Hence it is very important to understand the implications of content control on the consumer's behavior, choices and finally on the demand for digital content. This is what this dissertation is about. This work is structured in three main parts, each consisting of one or several chapters.
The first is the theoretical part, which outlines definitions, the key concepts, frameworks, and basics related to copyright, Internet, and digital content (chapters 2, 3). The second part, consisting of chapters 4 and 5, is empirical and provides results from a survey undertaken by students also were guided by me. Among other things, the results show the key motivators leading individuals to pirate such as the content is free, easy to find, the quality meets consumer's needs adequately, and unrestricted usage of the copy. Music is the most frequently downloaded copyrighted content, followed by films and games. Our results also show that the more a consumer copies, the higher is the percentage of such downloads of the consumer's entire collection. Most copies come from peer-to-peer networks and websites. The majority of consumers are copying for personal usage, and there are very few who also copy in order to pass on the content to friends; none is downloading to sell it afterwards.
Digital Rights Management Systems, with different technologies and rights restrictions, are perceived partially as obstacles to legal downloading. Among the technological restrictions, the perceived key obstacles are encryption and the requirement for specific software and hardware in order to use the content, whereas for rights restrictions the key obstacle was concerned with playability of the content. Currently there are very few respondents who have paid for music downloads, fewer for games, and none for films. But the same data set shows they are willing to pay for downloads and would be willing to pay even more if there were no copies available. Furthermore our data also shows there are some serious cultural, ethical, and moral issues related to the legal perception of certain down- and uploading activities where most activities are perceived as being legal despite its illegality. But the very same respondents are risk averse in the case of legal and security risks associated with copying. Most of them would not continue downloading if file-sharing systems were to be monitored by the police so that they were risking prosecution, a fine, and/or a jail sentence, and the known risk of getting viruses while copying also makes many uneasy. The second part of the empirical study includes more advanced statistics, such as box-plot and regression analyses in order to give a better understanding of the key variables explaining consumer piracy and purchasing behavior towards digital content. For the consumer piracy behavior, our results show that those who copy more are also less willing to pay for downloads. Overall, the piracy regression analyses explain between 32% and 38% of the behavior in question. The variables explaining piracy are diverse, consisting of demographic, economic, experience, technological, and risk factors, indicating that the decision is multi-dimensional. The purchasing analysis shows that consumers are willing to pay for downloads and that if there are no copies available it is not only the average price consumers are willing to pay that increases, but also the total number of consumers; indicating piracy has a negative impact on consumers' willingness to pay and the demand for legal downloads. Also our purchasing regression for digital content shows there are multiple groups which explain the said behavior consisting of mainly economic, risk, and cultural factors. Our second model explains 34% of the purchasing behavior.
The third part of the dissertation consists of an econometric model set up to determine the implications of DRMS on consumer behavior and the demand for digital content. The model is based on literature and on our empirical results. It shows and models consumer behavior when such systems are being implemented and the way content control impacts the consumer behavior for digital content and the demand for it. Our econometric model shows that DRMS have two implications. First, DRMS makes detection of and prosecution for copyright violation of digital content easier, meaning a higher probability of being caught for pirating, with a resultant increase in copying costs for consumers. Thus, on the one hand it increases the demand for originals and on the other it reduces the demand for copies. There are consumers who switch from pirating to purchasing, and there are others who switch from pirating to simply not consuming any longer, depending on what value they place on the digital content. The second implication of DRMS is related to technology and rights restrictions of the original exercised through DRMS. Our model shows that restrictions on the original will only reduce the utility of the original, hence reducing the demand for originals. Hence there will be some consumers who switch from purchasing to pirating but none will switch from pirating to not consuming the content. This section also briefly discusses alternative types of DRMS.
The last chapter provides a conclusion and discussion section, in which the author not only summarizes the results and findings, but also discusses the implications of the results for academia and business and provides an outlook to the subject studied. Finally, the author hopes this work will be of interest not only to researchers but also to practitioners, providing answers to their questions or insights into the topics studied.
The first is the theoretical part, which outlines definitions, the key concepts, frameworks, and basics related to copyright, Internet, and digital content (chapters 2, 3). The second part, consisting of chapters 4 and 5, is empirical and provides results from a survey undertaken by students also were guided by me. Among other things, the results show the key motivators leading individuals to pirate such as the content is free, easy to find, the quality meets consumer's needs adequately, and unrestricted usage of the copy. Music is the most frequently downloaded copyrighted content, followed by films and games. Our results also show that the more a consumer copies, the higher is the percentage of such downloads of the consumer's entire collection. Most copies come from peer-to-peer networks and websites. The majority of consumers are copying for personal usage, and there are very few who also copy in order to pass on the content to friends; none is downloading to sell it afterwards.
Digital Rights Management Systems, with different technologies and rights restrictions, are perceived partially as obstacles to legal downloading. Among the technological restrictions, the perceived key obstacles are encryption and the requirement for specific software and hardware in order to use the content, whereas for rights restrictions the key obstacle was concerned with playability of the content. Currently there are very few respondents who have paid for music downloads, fewer for games, and none for films. But the same data set shows they are willing to pay for downloads and would be willing to pay even more if there were no copies available. Furthermore our data also shows there are some serious cultural, ethical, and moral issues related to the legal perception of certain down- and uploading activities where most activities are perceived as being legal despite its illegality. But the very same respondents are risk averse in the case of legal and security risks associated with copying. Most of them would not continue downloading if file-sharing systems were to be monitored by the police so that they were risking prosecution, a fine, and/or a jail sentence, and the known risk of getting viruses while copying also makes many uneasy. The second part of the empirical study includes more advanced statistics, such as box-plot and regression analyses in order to give a better understanding of the key variables explaining consumer piracy and purchasing behavior towards digital content. For the consumer piracy behavior, our results show that those who copy more are also less willing to pay for downloads. Overall, the piracy regression analyses explain between 32% and 38% of the behavior in question. The variables explaining piracy are diverse, consisting of demographic, economic, experience, technological, and risk factors, indicating that the decision is multi-dimensional. The purchasing analysis shows that consumers are willing to pay for downloads and that if there are no copies available it is not only the average price consumers are willing to pay that increases, but also the total number of consumers; indicating piracy has a negative impact on consumers' willingness to pay and the demand for legal downloads. Also our purchasing regression for digital content shows there are multiple groups which explain the said behavior consisting of mainly economic, risk, and cultural factors. Our second model explains 34% of the purchasing behavior.
The third part of the dissertation consists of an econometric model set up to determine the implications of DRMS on consumer behavior and the demand for digital content. The model is based on literature and on our empirical results. It shows and models consumer behavior when such systems are being implemented and the way content control impacts the consumer behavior for digital content and the demand for it. Our econometric model shows that DRMS have two implications. First, DRMS makes detection of and prosecution for copyright violation of digital content easier, meaning a higher probability of being caught for pirating, with a resultant increase in copying costs for consumers. Thus, on the one hand it increases the demand for originals and on the other it reduces the demand for copies. There are consumers who switch from pirating to purchasing, and there are others who switch from pirating to simply not consuming any longer, depending on what value they place on the digital content. The second implication of DRMS is related to technology and rights restrictions of the original exercised through DRMS. Our model shows that restrictions on the original will only reduce the utility of the original, hence reducing the demand for originals. Hence there will be some consumers who switch from purchasing to pirating but none will switch from pirating to not consuming the content. This section also briefly discusses alternative types of DRMS.
The last chapter provides a conclusion and discussion section, in which the author not only summarizes the results and findings, but also discusses the implications of the results for academia and business and provides an outlook to the subject studied. Finally, the author hopes this work will be of interest not only to researchers but also to practitioners, providing answers to their questions or insights into the topics studied.