Charging more helps online platforms stamp out digital piracy, research finds

Charging higher commissions on sales could help online platforms cut down on digital piracy, finds research from NEOMA Business School and Temple University.

As illegal download sites continue to attract vast numbers of users worldwide, researchers Prasenjit Mandal (NEOMA) and Abhishek Roy (Temple) reveal that higher commissions encourage positive behaviour from online platforms by incentivising more investment in anti-piracy measures to protect revenue streams.

These measures include automated content-monitoring tools, restrictions on file duplication, and traceability systems that make illegal distribution more difficult.

The challenge is that higher commissions on products and services sold through online platforms could exacerbate tensions with content creators such as authors, publishers, software and videogame developers, and artists if the amount is considered excessive or financially detrimental to the creators.

According to Mandal and Roy, coordination from both groups is essential for creating beneficial conditions for all parties involved: platforms, producers, and consumers.

The study analyses the two main contract models used in digital content distribution: agency contract, in which the creator sets the final price while the platform applies a commission, and wholesale contract, in which the creator sells the content to the platform and the latter sets the final price.

While agency contract is currently a more widespread practice, the researchers find that the wholesale model is better suited to strengthening a market plagued by piracy as a whole.

By taking steps to make piracy more complex and risky, online platforms can encourage more consumers to turn to legal purchasing, allowing creators to benefit from higher revenues that can be reinvested into developing new products and services.

At the same time, consumers benefit from a broader range of safer, higher-quality offerings, creating a virtuous cycle that reinforces the market as a whole.

The study was published in the academic journal Manufacturing & Service Operations Management.

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For more information, a copy of the study, or to speak with Prasenjit Mandal, contact Jamie Hose at BlueSky Education on jamie@bluesky-pr.com, or call +44 (0)1582 790 706.