Forthcoming
Article
Journal of Economics & Management Strategy

Infringing Use as a Path to Legal Consumption: Evidence from a Field Experiment

By: Hong Luo and Julie Holland Mortimer

Format:Print

Abstract

Digitization has transformed how users find and use copyrighted goods, but many existing legal options remain difficult to access, possibly leading to infringement. In a field experiment, we contact firms that are caught infringing on expensive digital images. Emails to all firms include a link to the licensing page of the infringed image; for treated firms, we add links to a significantly cheaper licensing option. Making infringers aware of the cheaper option leads to a fourteen-fold increase in the ex-post licensing rate, albeit from an extremely low baseline for the control firms. Two additional experimental interventions, designed to reduce search costs for (i) price and (ii) product information, also have large positive effects. Our results suggest that ex-post monetization (e.g., licensing after use) may expand the market, and that rights holders can create value by minimizing search and transactions costs.