Transcript Copyright Incentives: Neither Left nor Right but Center

Incentives: Neither Left nor Right
but Center
Marshall W. Van Alstyne
School of Information
Copyright, 2001
©
Incentives to develop software
Software Revenue
per capita ($)
50
U.S.
40
30
U.K.
Germany
20
France
Italy
Japan
10
Korea
Brazil
Russia
China
0
0.2
0.4
0.6
Piracy Rate
Source: Software & Information Industry Association
0.8
1
Competition from OSS is Valuable
• Open Mozilla
model easy for 3rd
party dvprs to
upgrade
• Innovation in IE
stopped with IE 4
“Auto-image
resizing: It’s a
feature not a bug,
really.”
Source: Salon 9/10 2002 “Mozilla Rising”
Farhad Manjoo
What do we protect?
Look & Feel  Copyright
Function  Patent
OSS Classification
Type
Free Redist Unlimited Src. Src. Public Viral
Use
Avail. Mod. CheckIn
Commercial
Trial SW
x
Shareware
x
x
Royalty Free Bin.
x
x
x
Royalty Free Lib.
x
x
x
x
Open Src (BSD)
x
x
x
x
x
Open Src (Apache)
x
x
x
x
x
x
Open Src (Linux/GNU)
x
x
x
x
x
x
Source: Vinod Valloppillil / The Halloween Document
x
Most licenses are corner
solutions
• Let [0,1] be the
measure of
openness.
• Let t[0,1] be the
time to release
derivative works.
1
Proprietary BSD
Copyflex
t
GPL
0
0
1

Consider profits in two markets
Price
Market Two
(Acrobat Distiller)
Price
Market One
(Acrobat Reader)
p1
p2
q1
q2
Quantity
Quantity
Initially, there are profits to be made in both markets.
Consider profits in two markets
Market Two
(Acrobat Distiller)
Price
Price
Market One
(Acrobat Reader)
p2
p1
q1
Quantity
q2
Quantity
Initially, there are profits to be made in both markets.
But subsidizing market one with a free good can
increase demand and profits in market two
more than the loss in market one.
http://papers.ssrn.com/paper.taf?abstract_id=249585