Can Private Copyright Protection Be Effective? Evidence from Book Publishing

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Digitization has impacted publishing, news, and entertainment industries in recent years by lowering the cost of access. With the option to download creative works legally, however, come the possibility of doing so illegally and the issue of how to protect copyrighted works effectively. Public (legislative) and formal (legal) efforts to prevent copyright infringements have been controversial or inefficient. The book industry showcases an alternative approach in which private companies use relatively inexpensive network surveillance to protect individual titles. I estimate the effectiveness of such protection on legal sales of books that become protected using a difference-in-differences approach. I find a protection-related increase in sales of electronic books—the closest substitute for online piracy—of more than 14 percent, with effectiveness depending on popularity, genre, and search frequency. Most of the increase is due to prevention of casual infringements rather than professional piracy.

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