Chapter 4Rights Management, Part II

Patrick Léger

MGT-523

Overview Impact of lower reproduction costs

– Historical examples– Leveraging lower costs

Intellectual property– Choosing terms and conditions– Transaction costs

Where are we heading?– Open source movement– Microsoft.NET– Digital Rights Management (DRM)

Lower Reproduction Costs

Is this new?

Historical examples:

– Library

– Photocopier

– Video

Potential Opportunities

Benefit from economies of scale

Grow your market

Maximize the value of intellectual property, don’t overprotect it

Intellectual Property

More liberal IP policies tend to make products more valuable to users

This increases demand, but….– Can companies ask higher prices?

Liberal terms means lost revenues to resale/substitution

More Intellectual Property

Successful firms will find the right balance

Policies should also minimize transaction costs for buyers and suppliers– Site licensing

Open Source Software

Free distributions continuously available (Linux, Apache, StarOffice, etc)

Rapidly increasing quality

Fast development cycles, network effect, and innovation

Licensing Terms of Open Source Freedom to share and change software

– Freedom as in “free speech,” not “free beer”– Redistribution freedom (program + source)– Freedom to integrate into new software– Can charge for services/products if you wish

Responsibilities:– Must give recipients all the rights that you have– No warranty on software– Cannot make software proprietary through

patents

Source: GNU General Public License, www.fsf.org

Open Source & Traditional Software Firms (…my unsolicited opinion)

Disruptive force Operating systems and basic applications

increasingly commoditized Support/consulting/training Increasing specialization in software market Seize the opportunity, don’t be threatened Grow the market

Microsoft.NET

Software as a service Easier management of licensing terms Reduced transaction costs Economies of scale on development Leverage role of WWW Higher customization/self-selection Deflect regulatory pressure (FTC)

Digital Rights Management (DRM) Aims to disseminate digital information

easily, while preserving copyright protection

Greater demand for these solutions in response to copyright infringement

Digital watermark & required infrastructure– Contents of watermark– Embedded into many media players

Will this work?

Summary:

Use lower reproduction costs to your advantage

Maximize the value of your intellectual property without overprotecting it

Watch for emerging trends in Rights Management

Discussion