3D PRINTING & PIRACYWhat lessons can we learn from the piracy of digital content?
Prof. Thierry RaynaESG Management School
PROF. THIERRY RAYNA
Professor of Economics
Department of Economics & Finance
Chair of Digital Business
ESG Management School, Paris
Email: [email protected]
THE STORY SO FAR…
• Massive consumer piracy has appeared in all industries that have become digital
• Firms have had tremendous difficulties adapting their business models
• As object go digital, will the piracy phenomenon spread to the physical world?
3D PIRACY:WILL IT HAPPEN?
NO, BUT IF I COULD DOWNLOAD A COPY, I WOULD
IT IS ALREADY HAPPENING
• “Physible” section on the Pirate Bay opened in January 2012
• Cease & Desist letters sent to online design hosting platforms
WARHAMMER 40,000
ON A SMALL SCALE?
• So far, very limited extent
• But, adoption of 3D printers by consumers is still low
• Technology is yet immature
• Early days of MP3, VCDs, etc. were similar
• Brace yourself for a far larger phenomenon!
3D Sc
anne
r 3D Printer
Piracy as easy as 1-2-3
‘HISTORICAL’ EVOLUTION OF PIRACY
t1985 1990 1995 2000 2005 2010 2015
CD-R
Internet
Napster
CD-ROM
Broadband
KaZaA
eMule
BitTorrentFloppy disks
DRM
Cyberlocker war
TabletsBlu-ray
LESSON #1:WHEN SOMETHING GOES DIGITAL,
IP INFRINGEMENT ALWAYS HAPPENS
3D PIRACYCAN IT BE PREVENTED?
THERE ARE LAWS TO PREVENT PIRACY
• Multiple means to protect IP
• Vast majority of legal systems are protective of IP
• Trend towards stronger protection of IP
• Does it work?
How different?
WHY IPR LAWS DON’T WORK AGAINST PIRACY?
Counterfeiting Consumer PiracyInfringersActivitySphere
IdentificationProfit (infringers)
Net Benefit (holders)Net Social Outcome
(of litigation)
Few (relatively) ManyProduction/sale Consumption
Public Mostly privateEasy (relatively) Difficult
High LowPositive Negative
Positive Negative
IF LAW DOESN’T WORK, WHY NOT USE TECHNOLOGY?
• Anti-piracy technologies have been used since dawn of digital age
• Digital Rights Management (DRM) have been rather ineffective
• Non-protected versions always available
• Obnoxious for legitimate users, may turn them to piracy or slow down adoption
• Costly to develop and manage
IF TECHNOLOGY AND LAW DON’T WORK WHY NOT CHANGE THE LAW?
• Graduated response “3-strike laws” adopted in France, New Zealand, U.K.
• Legal monitoring of private communications
• Reversal of burden of proof
• After 3 strikes, internet is cut and/or fine
WHY WOULD GRADUATED RESPONSE WORK AGAINST PIRACY?
Consumer PiracyMany
ConsumptionMostly private
DifficultLow
Negative
Negative
InfringersActivitySphere
IdentificationProfit (infringers)
Net Benefit (holders)Net Social Outcome
(of litigation)
Graduated responseTechnological use
Presumption of guilt/Less privacy
Moderate punishmentNo litigation cost/Market effect
Lower public expenditure
DOES THIS WORK?
• Ambiguous effect on consumers:
• improbable very high (and uncertain) cost vs more probable set and relatively low cost
• strategic behaviour with regard to warnings
• In fact, very costly
• Who bears the cost?
HOW EFFECTIVE?
• HADOPI:
• 2+ million emails in 2 years
• Including 186,000 as “second warning”
• 3 people found guilty: 1 got internet access cut for 15 days and 600€ fine, second 150€ fine, last one no fine
• No serious evidence of effect
• Dropped by new government
LESSON #2:NEITHER THE LAW NOR
TECHNOLOGY (ALONE) CAN PREVENT PIRACY
3D PIRACY:CAN IT BE AVOIDED?
YES, PIRACY CAN BE AVOIDED
• Successful examples of piracy avoidance strategies
• Lower prices (e.g. apps on iOS)
• Open Source
• Revenues linked to complementary products and services
• “O.E.M.” type contracts
• Requires radical changes in business models
LESSON #3:PIRACY CANNOT BE PREVENTED
BUT CAN BE AVOIDED
Think Different
≠
Digital Technology
Replicability
Non-rivalness
Non-excludability
Public Good
Sharing
Durability
Free-riding/Piracy
Imperfect information
SamplingBehaviour
Durable Good
Legend
Technology
Economic
characteristic
Behaviour
Type of
good
Experience Good
Delaying purchase
THE DIGITAL ECONOMY:A LAND OF OPPORTUNITIES
THE DIGITAL ECONOMY:WHAT MOST COMPANIES ARE TRYING TO DO
THE MUSIC INDUSTRYC. 2012
THE DIGITAL ECONOMY:WHAT GOOGLE IS DOING
THE DIGITAL ECONOMY:WHAT WE ARE DOING
DIGITAL ECONOMICS AIKIDO
• Stop fighting against nature
• Channel the strength of digital economy to your advantage...
• ... without harming your customers
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+
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“IT’S COMPETITION, STUPID!”
• Piracy is a sign of the problem, not the root
• Even if it were possible to totally prevent piracy, the problem would still be there
• 3D printing and digital technology empower people with creation, production and distribution tools
• Far greater supply, far more competition
ON THE BRIGHT SIDE…
• Many objects too complex to be printed at home
• Probably will remain so for the next few years
• Growth of connected objects
• Piracy applies less for objects that are connected
Better a small slice in a big cake than a big slice of nothing
