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.

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

7. IT IS ALREADY HAPPENING
• “Physible” section
• Cease
on the Pirate Bay opened in January 2012
& Desist letters sent to online design hosting platforms

9. WARHAMMER 40,000

13. 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!

14. 3D
Piracy as easy as 1-2-3
r
te
in
Pr
3D
an
Sc
er
n

15. ‘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

16. LESSON #1:
WHEN SOMETHING GOES DIGITAL,
IP INFRINGEMENT ALWAYS HAPPENS

17. 3D PIRACY
CAN IT BE PREVENTED?

18. 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?

19. Ho
ff
di
w
t?
en
er

20. 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

21. 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

22. 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

23. 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

24. 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?

25. 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

26. LESSON #2:
NEITHER THE LAW NOR
TECHNOLOGY (ALONE) CAN
PREVENT PIRACY

27. 3D PIRACY:
CAN IT BE AVOIDED?

28. 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

29. LESSON #3:
PIRACY CANNOT BE PREVENTED
BUT CAN BE AVOIDED

30. Think Different

31. ≠

32. 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

33. THE DIGITAL ECONOMY:
A LAND OF OPPORTUNITIES

34. THE DIGITAL ECONOMY:
WHAT MOST COMPANIES ARE TRYING TO DO

35. THE MUSIC INDUSTRY
C. 2012

36. THE DIGITAL ECONOMY:
WHAT GOOGLE IS DOING

37. THE DIGITAL ECONOMY:
WHAT WE ARE DOING

38. DIGITAL ECONOMICS AIKIDO
• Stop
fighting against nature
• Channel
the strength of
digital economy to your
advantage...
• ... without
harming your
customers

39. +
+
+
+

40. “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

41. 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

42. Better a small slice in a big cake than a big slice of nothing