Holm (2001)

From Copyright EVIDENCE

Advertising Architectural Publishing of books, periodicals and other publishing Programming and broadcasting Computer programming Computer consultancy Creative, arts and entertainment Cultural education

Film and motion pictures Sound recording and music publishing Photographic activities PR and communication Software publishing (including video games) Specialised design Television programmes Translation and interpretation

1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare 2. Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)? 3. Harmony of interest assumption between authors and publishers (creators and producers/investors) 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption) 5. Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

A. Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right) B. Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction) C. Mass digitisation/orphan works (non-use; extended collective licensing) D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability) E. Fair remuneration (levies; copyright contracts) F. Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Source Details

Holm (2001)
Title: The Computer Generation's Willingness to Pay for Originals when Pirates are Present – A CV study
Author(s): Holm, H.J.
Year: 2001
Citation: Holm, H. J. (2001). The computer generation's willingness to pay for originals when pirates are present: A cv study. Lund University.
Link(s): Definitive , Open Access
Key Related Studies:
Discipline:
Linked by: Handke (2015)
About the Data
Data Description: A selected group of 330 Swedish undergraduate students filled in a Contingent Valuation questionnaire. From this selection two subgroups consisting of 234 students were selected for the study. One group (social science undergraduates) is considered to be representative for university

undergraduates in Sweden and the other group (computer engineering undergraduates) belongs to the "elite" in terms of computer skills in their age group.

Data Type: Primary data
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: No
Comparative Study?: No
Literature review?: No
Government or policy study?: No
Time Period(s) of Collection:
  • Not stated.
Funder(s):
  • Not stated

Abstract

A contingent valuation method is applied to study subjects' willingness to pay for originals when illegal copies are freely available. The subjects consisted of 234 Swedish undergraduate students from the "computer generation". Only 2% of the "normal" (and 0% of the "elite") students were willing to pay the retail price for the original. However, the majority was prepared to pay a non-negligible amount for the original. Demand curves and profit maximizing behaviors are analyzed. The price elasticity of piracy indicates that piracy is insensitive to price cuts. The results have implications for the calculation of damages of piracy.

Main Results of the Study

Main results:

  • Only 2 % of the social science students are willing to pay the retail price if a copy is freely available, but the situation refers to a contingency where the subjects are supposed to be “very anxious” to get the program.
  • Only 31% of the social science students have an additional willingness to pay for originals (AWTPO) that is less than SEK 100 for the original with the retail price of SEK 1000.
  • Only 17% of the social science students have an AWTPO that is less than SEK 100 for the original with the retail price of SEK 3000.

Subjects that are more computer skilled have on average a lower AWTPO than subjects that are less computer skilled. Furthermore, this difference seems to increase with the retail price of the original.

  • If the marginal cost were zero, optimal pricing would lead the firm to cut prices by 80%. Even if such a price cut were made almost 50% of the computer generation subjects would still get an illegal copy. If marginal cost is one fifth of the original retail price (i.e., SEK 200) optimal pricing lead the firm to cut prices by 50%. If this price cut were made 86% of the subjects would still get an illegal copy.

Policy Implications as Stated By Author

Policy implications:

  • The results have implications for the firms’ and authorities’ anti-piracy strategies. The price elasticity of piracy indicates that the piracy rate is quite insensitive to price cuts for most price intervals. This suggests that moderate price cuts are likely to be a rather inefficient method to fight piracy in the computer generation.
  • The author found that although a pricing option exists, price cuts would hardly delimit piracy to a larger extent and the extra revenues earned from groups inclined to piracy would be low due to very low optimal prices. If we take into account incentive compatibility constraints from other market segments with higher prices and time consistency constraints then these mechanisms would make the price cuts even less profitable.



Coverage of Study

Coverage of Fundamental Issues
Issue Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)
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Coverage of Evidence Based Policies
Issue Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Fair remuneration (levies; copyright contracts)
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)
Green-tick.png

Datasets

Sample size: 234
Level of aggregation: University students
Period of material under study: Not stated