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Salon.com: Profits from Piracy

Sep 27, 2002, 11:00 (6 Talkback[s])
(Other stories by Sam Williams)

"Starting with a 1994 paper by Amherst researcher Lisa N. Takeyama, economists and policy researchers began advancing the argument that having a large illegal user base might actually boost vendor profitability. In a 1999 paper titled 'A Strategic Approach to Software Protection' economists Oz Shy and Jacques Thisse examined instances in which companies faced with certain duopolistic market settings dropped software protection as a marketing strategy and benefited from the decision.

"Osorio's working paper, which has yet to be published, advances the argument into a new realm. Instead of looking at competition between proprietary software vendors, Osorio looks specifically at competition between proprietary and open-source software vendors unhindered by piracy concerns. Not surprisingly, his research takes him to the Chinese marketplace, where recent government investment in software research has resulted in a number of open-source spinoffs, most notably the Beijing-based operating systems vendor Red Flag Linux..."

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