3D PRINTING & PIRACY
What lessons can we learn from the piracy of digital content?

Prof. Thierry Rayna
ESG Management Sch...
PROF. THIERRY RAYNA
Professor of Economics
Department of
Economics & Finance
Chair of Digital Business
ESG Management Scho...
THE STORY SO FAR…
• Massive

consumer piracy has appeared in all industries that
have become digital

• Firms

have had tr...
3D PIRACY:
WILL IT HAPPEN?
NO, BUT IF I COULD
DOWNLOAD A COPY, I WOULD
IT IS ALREADY HAPPENING

• “Physible” section
• Cease

on the Pirate Bay opened in January 2012

& Desist letters sent to ...
WARHAMMER 40,000
ON A SMALL SCALE?
• So

far, very limited extent

• But, adoption
• Technology
• Early

of 3D printers by consumers is sti...
3D

Piracy as easy as 1-2-3

r
te

in

Pr

3D

an
Sc

er
n
‘HISTORICAL’ EVOLUTION OF
PIRACY
Cyberlocker war
Tablets

Blu-ray

Broadband
Napster
CD-ROM

CD-R

DRM

Floppy disks

BitT...
LESSON #1:
WHEN SOMETHING GOES DIGITAL,
IP INFRINGEMENT ALWAYS HAPPENS
3D PIRACY
CAN IT BE PREVENTED?
THERE ARE LAWS TO
PREVENT PIRACY
• Multiple
• Vast

means to protect IP

majority of legal systems are protective of IP

•...
Ho

ff
di
w

t?
en
er
WHY IPR LAWS DON’T WORK
AGAINST PIRACY?
Counterfeiting

Consumer Piracy

Infringers

Few (relatively)

Many

Activity

Pro...
IF LAW DOESN’T WORK, WHY
NOT USE TECHNOLOGY?
• Anti-piracy

technologies have been used since dawn of digital

age
• Digit...
IF TECHNOLOGY AND LAW DON’T
WORK WHY NOT CHANGE THE LAW?
• Graduated

response “3-strike laws” adopted in France, New
Zeal...
WHY WOULD GRADUATED
RESPONSE WORK AGAINST PIRACY?
Consumer Piracy

Graduated response

Infringers

Many

Technological use...
DOES THIS WORK?
• Ambiguous

effect on consumers:

• improbable

very high (and uncertain) cost vs more probable
set and r...
HOW EFFECTIVE?
•

HADOPI:
•

2+ million emails in 2 years
•

Including 186,000 as “second warning”

•

3 people found guil...
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)

• Op...
LESSON #3:
PIRACY CANNOT BE PREVENTED
BUT CAN BE AVOIDED
Think Different
≠
Legend
Digital
Technology

Technology

Economic
characteristic

Replicability

Behaviour

Non-rivalness

Sharing

Type of
...
THE DIGITAL ECONOMY:
A LAND OF OPPORTUNITIES
THE DIGITAL ECONOMY:
WHAT MOST COMPANIES ARE TRYING TO DO
THE MUSIC INDUSTRY
C. 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...

...
+
+

+
+
“IT’S COMPETITION, STUPID!”
• Piracy

is a sign of the problem, not the root

• Even

if it were possible to totally preve...
ON THE BRIGHT SIDE…

• Many

objects too complex to be printed at home

• Probably
• Growth
• Piracy

will remain so for t...
Better a small slice in a big cake than a big slice of nothing
3D Printing and Piracy: What lessons can be learned from the piracy of digital content? [3D Printing Event 2013]
3D Printing and Piracy: What lessons can be learned from the piracy of digital content? [3D Printing Event 2013]
3D Printing and Piracy: What lessons can be learned from the piracy of digital content? [3D Printing Event 2013]
3D Printing and Piracy: What lessons can be learned from the piracy of digital content? [3D Printing Event 2013]
3D Printing and Piracy: What lessons can be learned from the piracy of digital content? [3D Printing Event 2013]
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3D Printing and Piracy: What lessons can be learned from the piracy of digital content? [3D Printing Event 2013]

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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 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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3D Printing and Piracy: What lessons can be learned from the piracy of digital content? [3D Printing Event 2013]

  1. 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. 2. PROF. THIERRY RAYNA Professor of Economics Department of Economics & Finance Chair of Digital Business ESG Management School, Paris Email: trayna@esg.fr
  3. 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. 4. 3D PIRACY: WILL IT HAPPEN?
  5. 5. NO, BUT IF I COULD DOWNLOAD A COPY, I WOULD
  6. 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. 7. WARHAMMER 40,000
  8. 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. 9. 3D Piracy as easy as 1-2-3 r te in Pr 3D an Sc er n
  10. 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. 11. LESSON #1: WHEN SOMETHING GOES DIGITAL, IP INFRINGEMENT ALWAYS HAPPENS
  12. 12. 3D PIRACY CAN IT BE PREVENTED?
  13. 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. 14. Ho ff di w t? en er
  15. 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. 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. 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. 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. 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. 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. 21. LESSON #2: NEITHER THE LAW NOR TECHNOLOGY (ALONE) CAN PREVENT PIRACY
  22. 22. 3D PIRACY: CAN IT BE AVOIDED?
  23. 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. 24. LESSON #3: PIRACY CANNOT BE PREVENTED BUT CAN BE AVOIDED
  25. 25. Think Different
  26. 26.
  27. 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. 28. THE DIGITAL ECONOMY: A LAND OF OPPORTUNITIES
  29. 29. THE DIGITAL ECONOMY: WHAT MOST COMPANIES ARE TRYING TO DO
  30. 30. THE MUSIC INDUSTRY C. 2012
  31. 31. THE DIGITAL ECONOMY: WHAT GOOGLE IS DOING
  32. 32. THE DIGITAL ECONOMY: WHAT WE ARE DOING
  33. 33. DIGITAL ECONOMICS AIKIDO • Stop fighting against nature • Channel the strength of digital economy to your advantage... • ... without harming your customers
  34. 34. + + + +
  35. 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. 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. 37. Better a small slice in a big cake than a big slice of nothing

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