Abstract

The digital nature of software products combined with the advent of the internet has allowed for the proliferation of a new software delivery option: the digital distribution of software. Unfortunately, the diffusion of this new software delivery option has also facilitated copyright infringement and the distribution of pirated content. In response to these threats, software publishers have started applying various copy protection solutions to trial versions to make it more difficult for nonlicense holders to gain full access to products beyond their evaluation periods. In an escalating effort, some software publishers are now using digital rights management (DRM) technologies (among the various other distribution options they provide to their customers) when distributing software products online. By casting the software distribution channel choice as a transaction cost analysis (TCA) problem, this research proposes a theoretical model to uncover the reasons why, when purchasing a software license for a product that is marketed using a “try-before-you-buy” strategy, consumers would select the physical distribution channel not tied to any DRM technologies (ie, CD-ROM) rather than the digital distribution channel that uses DRM technologies (ie, electronic software distribution through demo-unlock).

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