Modeling The Combination Of DRM Level And Price Of Digital Information Goods With Piracy Effect

Piracy is the main challenge for the digital information goods, as the original’s substitute, from the point of quality, the high-precision digital copy technology narrows the quality gap between original and piracy, on the other hand, from the point of price, the piracy’s is much more less and even negligible. Relying on the lower price and similar quality, piracy is eroding the original’s market share and leading to the injustice competition, which ultimately contributes to the illegal piracy effect. For the supplier of information goods, implementing digital right management mechanism or appropriate pricing strategy are effective methods to manage piracy, but the former declines the product quality, which has a significant effect on customers’perceived value of information goods, and further impacts the supplier’s price strategy, so our research combined these two methods. Meanwhile, we introduce a new concept called inertia into the piracy field to structure a more practical customer decision model. Finally, we propose an estimation to predict the market demand state on the base of market response analysis. Experimental result shows that considering the DRM mechanism and pricing simultaneously will effectively improve supplier’s revenue.In addition, compared with ignoring customer inertia, though DRM level and price is lower, the corresponding revenue is higher when take inertia into account.