What? You didn’t know that there was a good side to unauthorized posting of certain intellectual property? Neither did we. Which is why, now that we’ve seen this article, we believe it’s important to pass it along:
Tolerating Piracy Can Benefit Consumers, Creators and Retailers, Research Finds
New research suggests that turning a blind eye to piracy can benefit consumers, creators and retailers, all at the same time. This win-win-win situation has a positive effect on the economy at large. Using Game of Thrones as an example, the researchers conclude that tolerating piracy to a certain degree can be a wise decision.
Over the past decade, various entertainment industry groups have lobbied hard for tougher anti-piracy measures.
The harder it is for people to download something through unofficial channels, the more revenue will flow to the creators, the argument goes.
However, a new study by Indiana University researcher Antino Kim conducted together with colleagues from the University of Texas-Dallas and the University of Washington, suggests that this is not always the case.
The findings from their economic impact model are published in the latest edition of the MIS Quarterly Journal, in an article titled “The ‘Invisible Hand’ of Piracy: An Economic Analysis of the Information-Goods Supply Chain.”
According to their analysis, piracy limits the pricing power of both the creator and the retailer. This reduces the impact of double marginalization, which occurs when creators and retailers both add significantly to the price of a product.
Because piracy is seen as a form of “shadow competition” the price of a product, such as an HBO cable subscription, is pushed closer to the economic optimum. At that optimal price point, everyone is better off, including the broader economy.
“When information goods are sold to consumers via a retailer, in certain situations, a moderate level of piracy seems to have a surprisingly positive impact on the profits of the manufacturer and the retailer while, at the same time, enhancing consumer welfare,” Kim and his co-authors write.
“Such a win-win-win situation is not only good for the supply chain but is also beneficial for the overall economy,” they add….