Online Piracy and the Emergence of New Business Models

Although often dismissed by academics andprofessionals alike, online piracy is a valuable source of innovation for bothindustry incumbents and entrepreneurs. By shaping the evolution offile-transferring technology, providing market insight to the business world,and contributing to new market creation, online pirates have pioneered the useof new technologies. This exploratory study examines the impact of online piracy on the emergenceof innovative, legitimate business models. After a summary of the evolution ofpiracy technologies and associated online communities (from Napster and itsfollowers to the new BitTorrent phenomenon and its impact on the emergence ofnew businesses), a literature review that underlines the scarcity of academicresearch in the area of online piracy is offered. It appears that online piracy will continue to have a large impact on thefast-changing media and software industries. It is also argued that onlinepiracy impacts industries through the following processes: (1) it pioneers theuse of new technologies; (2) it offers the business world market insight; (3)it contributes to new market creation; and (4) it evolves into legitimate andinnovative business models. These four processes are found to be repetitive,appearing with each technology generation. (CBS)