Price Discrimination, Personal Use and Piracy: Copyright Protection of Digital Works
44 Pages Posted: 23 Dec 1997
The growth of digital information transmission worries copyright holders who fear the new technology threatens their profits because of greater piracy and widespread sharing of digital works. They have responded with proposals for expanded protection of digital works. Specifically, they seek restrictions on personal use rights regarding digital works provided by the fair use and first sale doctrines. The proposed changes in the allocation of property rights to digital information significantly affect the ability of copyright holders to practice price discrimination. Broader user rights make discrimination more difficult; broader producer rights make discrimination easier. I argue that more price discrimination not less piracy or sharing would be the really significant effect of the proposed changes. The problem of digital piracy can probably be handled by technical means with modest changes in copyright law. The so-called problem of sharing is not really much of a problem except for price discriminators. On the other hand, copyright expansion could significantly expand opportunities for price discrimination. Curtailing personal use rights would make it easier for a price discriminator to measure buyer valuations and stop buyers from arbitraging away price differences.
JEL Classification: K29, L59
Suggested Citation: Suggested Citation
By Paul Heald