3D Printing and Piracy: What lessons can be learned from the piracy of digital content?

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In the early 2000s the massive surge of consumer piracy took (almost) everyone by surprise. Yet, considering the radical changes that digitisation brings to the economic nature of content, this …

In the early 2000s the massive surge of consumer piracy took (almost) everyone by surprise. Yet, considering the radical changes that digitisation brings to the economic nature of content, this phenomenon could have been foreseen. Now that digitisation is coming to physical objects, it is critical to envisage the changes that this will bring to the way we do business. To do so, this presentation reviews the failures and (occasional) successes of digital industries to tackle consumer piracy and provides insights on how piracy can be turned on its head to benefit businesses.

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  • 1. 3D PRINTING & PIRACY What lessons can we learn from the piracy of digital content? Prof. Thierry Rayna ESG Management School trayna@esg.fr
  • 2. PROF. THIERRY RAYNA Professor of Economics Department of Economics & Finance Chair of Digital Business ESG Management School, Paris Email: trayna@esg.fr
  • 3. 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?
  • 4. 3D PIRACY: WILL IT HAPPEN?
  • 5. NO, BUT IF I COULD DOWNLOAD A COPY, I WOULD
  • 6. IT IS ALREADY HAPPENING • “Physible” section • Cease on the Pirate Bay opened in January 2012 & Desist letters sent to online design hosting platforms
  • 7. WARHAMMER 40,000
  • 8. ON A SMALL SCALE? • So far, very limited extent • But, adoption • Technology • Early of 3D printers by consumers is still low is yet immature days of MP3, VCDs, etc. were similar • Brace yourself for a far larger phenomenon!
  • 9. 3D Piracy as easy as 1-2-3 r te in Pr 3D an Sc er n
  • 10. ‘HISTORICAL’ EVOLUTION OF PIRACY Cyberlocker war Tablets Blu-ray Broadband Napster CD-ROM CD-R DRM Floppy disks BitTorrent eMule Internet 1985 1990 1995 KaZaA 2000 2005 2010 2015 t
  • 11. LESSON #1: WHEN SOMETHING GOES DIGITAL, IP INFRINGEMENT ALWAYS HAPPENS
  • 12. 3D PIRACY CAN IT BE PREVENTED?
  • 13. THERE ARE LAWS TO PREVENT PIRACY • Multiple • Vast means to protect IP majority of legal systems are protective of IP • Trend • Does towards stronger protection of IP it work?
  • 14. Ho ff di w t? en er
  • 15. WHY IPR LAWS DON’T WORK AGAINST PIRACY? Counterfeiting Consumer Piracy Infringers Few (relatively) Many Activity Production/sale Consumption Sphere Public Mostly private Identification Easy (relatively) Difficult Profit (infringers) High Low Net Benefit (holders) Positive Negative Net Social Outcome (of litigation) Positive Negative
  • 16. 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
  • 17. 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 • After of burden of proof 3 strikes, internet is cut and/or fine
  • 18. WHY WOULD GRADUATED RESPONSE WORK AGAINST PIRACY? Consumer Piracy Graduated response Infringers Many Technological use Activity Consumption Sphere Mostly private Identification Difficult Profit (infringers) Low Moderate punishment Net Benefit (holders) Negative No litigation cost/Market effect Negative Lower public expenditure Net Social Outcome (of litigation) Presumption of guilt/ Less privacy
  • 19. DOES THIS WORK? • Ambiguous effect on consumers: • improbable very high (and uncertain) cost vs more probable set and relatively low cost • strategic • In behaviour with regard to warnings fact, very costly • Who bears the cost?
  • 20. 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
  • 21. LESSON #2: NEITHER THE LAW NOR TECHNOLOGY (ALONE) CAN PREVENT PIRACY
  • 22. 3D PIRACY: CAN IT BE AVOIDED?
  • 23. 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 • Requires contracts radical changes in business models
  • 24. LESSON #3: PIRACY CANNOT BE PREVENTED BUT CAN BE AVOIDED
  • 25. Think Different
  • 26.
  • 27. Legend Digital Technology Technology Economic characteristic Replicability Behaviour Non-rivalness Sharing Type of good Durability Durable Good Experience Good Nonexcludability Public Good Freeriding/ Piracy Delaying purchase Sampling Behaviour Imperfect information
  • 28. THE DIGITAL ECONOMY: A LAND OF OPPORTUNITIES
  • 29. THE DIGITAL ECONOMY: WHAT MOST COMPANIES ARE TRYING TO DO
  • 30. THE MUSIC INDUSTRY C. 2012
  • 31. THE DIGITAL ECONOMY: WHAT GOOGLE IS DOING
  • 32. THE DIGITAL ECONOMY: WHAT WE ARE DOING
  • 33. DIGITAL ECONOMICS AIKIDO • Stop fighting against nature • Channel the strength of digital economy to your advantage... • ... without harming your customers
  • 34. + + + +
  • 35. “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
  • 36. ON THE BRIGHT SIDE… • Many objects too complex to be printed at home • Probably • Growth • Piracy will remain so for the next few years of connected objects applies less for objects that are connected
  • 37. Better a small slice in a big cake than a big slice of nothing