Accepting or Fighting Unlicensed Usage: Can Firms Reduce Unlicensed Usage by Optimizing Their Timing and Pricing Strategies?

Alexa B. Burmester, Felix Eggers*, Michel Clement, Tim Prostka

*Corresponding author af dette arbejde

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Abstrakt

The rise of the Internet and new online services have led to the wide-scale illegal distribution of digital entertainment products, such as music, movies, games, and books. We analyze whether firms in the entertainment industry should fight unlicensed usage by providing specific offers that maximize the utility for segments relying on unlicensed usage, i.e., by optimizing timing and pricing strategies, or whether they should simply accept a certain level of unlicensed usage. We combine Becker's (1968) economic approach to analyzing social issues with random utility theory to develop a choice model for media products in which we account for unlicensed usage. We then apply the model in two large-scale empirical studies on movies and books. The results show that consumers who prefer unlicensed usage are sensitive to the marketing mix to some extent in both markets. However, optimizing timing and pricing only has limited impact on additional revenue generation. Thus, from a managerial perspective, it is very difficult to reduce the relative loss due to unlicensed usage by providing targeted offers. (C) 2015 Elsevier B.V. All rights reserved.
OriginalsprogEngelsk
TidsskriftInternational Journal of Research in Marketing
Vol/bind33
Udgave nummer2
Sider (fra-til)343-356
Antal sider14
ISSN0167-8116
DOI
StatusUdgivet - jun. 2016
Udgivet eksterntJa

Emneord

  • Digital media
  • Sequential distribution
  • Piracy
  • Unlicensed usage
  • Optimization

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