Flexibility as an Instrument in Digital Rights Management

20 Pages Posted: 21 Apr 2005

See all articles by Dirk Bergemann

Dirk Bergemann

Yale University - Cowles Foundation - Department of Economics; Yale University - Cowles Foundation

Thomas Eisenbach

Ludwig Maximilian University of Munich - Faculty of Economics

Joan Feigenbaum

Yale University - Department of Computer Science; AT&T - Research Department

Scott Shenker

University of California, Berkeley - Department of Electrical Engineering & Computer Sciences (EECS)

Date Written: April 2005

Abstract

We consider the optimal design of flexible use in a digital-rights-management policy. The basic model considers a single distributor of digital goods and a continuum of consumers. Each consumer can acquire the digital good either as a licensed product or an unlicensed copy. The availability of (or access to) unlicensed copies is increasing both in the number of licensed copies and in the flexibility accorded to licensed copies. We thus analyze the optimal design of flexibility in the presence of unlicensed distribution channels (the "greynet").

We augment the basic model by introducing a "secure platform" that is required to use the digital good. We compare the optimal design of flexibility in the presence of a platform to the one without a platform. Finally, we analyze the equilibrium provision when platform and content are complimentary goods but are distributed and priced by different sellers.

Keywords: Digital Rights Management, Platform, Flexibility, Piracy

JEL Classification: C79, D42, L15

Suggested Citation

Bergemann, Dirk and Eisenbach, Thomas and Feigenbaum, Joan and Shenker, Scott, Flexibility as an Instrument in Digital Rights Management (April 2005). Cowles Foundation Discussion Paper No. 1505. Available at SSRN: https://ssrn.com/abstract=707723

Dirk Bergemann (Contact Author)

Yale University - Cowles Foundation - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States
203-432-3592 (Phone)
203-432-2128 (Fax)

HOME PAGE: http://www.econ.yale.edu/~dirk/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Thomas Eisenbach

Ludwig Maximilian University of Munich - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

Joan Feigenbaum

Yale University - Department of Computer Science ( email )

Box 208285
New Haven, CT 06520-8285
United States
203-432-6432 (Phone)
203-432-0593 (Fax)

HOME PAGE: http://cs-www.cs.yale.edu/homes/jf/home.html

AT&T - Research Department ( email )

180 Park Ave.
Room C203
Florham Park, NJ 07932-0971
United States

Scott Shenker

University of California, Berkeley - Department of Electrical Engineering & Computer Sciences (EECS) ( email )

Berkeley, CA 94720-1712
United States
(415) 812-4840 (Phone)

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