5. Anti-piracy

In comparison, anti-piracy unwinds the self-selection process and forces firms to compete more vigorously on price. A high sale of legal music/video/software pushes producers to cut down on their cost to increase sales at the risk of without having sufficient breakeven amount.

In equilibrium, it may reduce firm profits despite increasing the number of customers in the market. This is definitely not benefiting to the producers.

However, this in turns benefit the consumer as the prices of products have fallen in prices.

Changes Applied

In addition, with DRM implemented to prevent unauthorized copying, music producers are now more willing to offer digital music for purchase and download. Previously, they were afraid if people can get it online for free, they will no longer purchase the legal hard copies.

Now that there is a mechanism in place to control the spread of illegal music, they feel more secured that they are still able to get a share of the market. With the increasing ease of getting legal music online, it is certainly encouraging for people to support legal products for it now offers the same convenience of accessing an illegal copy.

For instance, they allow online music stores like Apple’s iTunes, Microsoft’s Zune Pass to distribute their music, thus consumers are offered a wider range of music. This in turns benefit both parties.