A theoretical analysis of product versioning in the context of commercial piracy

The study develops a vertically differentiated duopoly model in the presence of commercial piracy with two groups of consumers, a business group and a home group, with the former having higher willingness to pay for the product. A firm producing an original information good sells it with endogenously chosen product quality and acts as a price leader, and the commercial pirate becomes the price follower. There exists a stringent government policy of monitoring commercial piracy, which increases the marginal cost of the pirate. We study and compare the two regimes of no-versioning (selling a single quality product) and product versioning (selling products with different price and quality combinations to different consumer groups). In the versioning regime, depending upon demand and government monitoring parameters, two equilibria are observed. Comparing the original firm?s profit in each of these versioning cases suggests that versioning may or may not be the original firm?s optimal strategy in the presence of commercial piracy. This result is counterintuitive to existing literature on product versioning in the context of enduser piracy.

The impact of moral equity, relativism and attitude on individuals’ digital piracy behaviour in a developing country

Purpose – The purpose of this paper is to explore the impact of moral equity, relativism, and attitude towards digital piracy behaviour in a developing country. End-user piracy is more difficult to detect than commercial piracy. Thus, an effective strategy to combat piracy needs a comprehensive understanding of both the supply and demand sides of piracy. The current study focuses on the demand side by investigating the impact of moral equity, relativism, and attitude on consumer piracy behaviour in Indonesia. Design/methodology/approach – Using a convenient sample in Yogyakarta, Indonesia, questionnaires were distributed in a large private university. In addition, through snowball sampling techniques, the surveys were also distributed to other adults who live within a walking distance from the campus. The data collection resulted in 222 usable surveys (a response rate of 68 per cent). Findings – In Indonesia, moral equity had a negative and significant impact on purchases of illegal copies of music CDs and pirated software. Relativism affects the purchase of pirated software positively, but its effect on purchases of illegal copies of CDs is insignificant. Attitude towards the act was negatively impacted by moral equity for CDs and software. Relativism only significantly affects the purchase of pirated software but in the opposite direction while it has failed to reach significance for illegal music CD purchases. Attitude towards the software piracy and purchases of illegal copies of music CDs positively affect consumer’s digital piracy behaviour. Finally, Indonesian consumers feel more morally wrong to purchase illegal copies of CDs than to buy pirated software. Practical implications – In the context of Indonesia, higher moral equity has affected piracy behaviour negatively. Therefore, efforts to reduce piracy should focus on highlighting the importance of fairness and justice. One of the main drivers of digital piracy (e.g. buying, downloading, copying, and sharing digital materials illegally) is overpriced products. It has led many Indonesians to believe that it is acceptable to purchase pirated software and illegal copies of CDs. Nonetheless, if companies are able to lower prices; thus make it affordable to consumers, consumers will perceive fairness and justice in purchasing original copies of software and CDs. Originality/value – There are very limited studies investigating factors impacting the purchase of pirated software and CDs in the developing countries specifically Indonesia, the fourth most populous nation in the world and one of the biggest markets for counterfeit products. This is one of first few studies exploring this issue in Indonesia.