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News Release
February 7, 2003
CONTACT: David Fish
(202) 289-8928

Digital Marketplace
Needs Check on Mass Piracy

Lenard: Consumers Would Benefit from Cooperation, Enforcement

WASHINGTON, D.C. - A sustainable market for digitized music, movies and other popular content available on the Internet – one which results in new products consumers want at prices they are willing to pay – will depend upon a mixture of some form of cooperatively developed digital rights management and copyright enforcement measures to deter mass piracy. That is the view of Progress & Freedom Foundation economist Thomas M. Lenard. But he says it will take time for effective business models to emerge.

Speaking at a recent book forum sponsored by the CATO Institute, Lenard said, “Industries have adapted to new technologies and found new business models to appropriate the value of their property.” But the PFF senior fellow and vice president for research sided with economist and author Stan Liebowitz on the point that “current pirating techniques are very capable of destroying the value of copyright in a digital good” because they make mass distribution so easy and inexpensive. “In a digital world, all it takes is one leak to flood the market with illegal copies,” Lenard said.

The CATO forum, “Internet Cents and Nonsense: Lessons from the Dot-Com Collapse and Copyright Wars,” featured discussion of Liebowitz’s book, Rethinking the Network Economy: The True Forces that Drive the Digital Marketplace.

Lenard agreed with the author that digital rights management “can, in theory, facilitate perfect price discrimination” and “producers can be incentivized to produce their works, which will be widely disseminated – even to consumers with very low willingness to pay.”

The Progress & Freedom Foundation is a market-oriented think tank that promotes innovative policies for the digital age. It is a 501(c)(3) research & educational organization founded in 1993.



The Progress & Freedom Foundation