Piracy and Outlaw Community Innovations∗ Celine Schulz, Stefan Wagner May 14, 2008 Preliminary conference draft for the ’Creative Industries and IP’ conference in London, May 22nd 2008. Please do note cite or circulate without authors’ permission. Institute of Innovation Research and Technology Management INNO-tec School of Management University of Munich Kaulbachstrasse 45 80539 Munich, Germany
[email protected] [email protected] Keywords: piracy, user innovation, user community, video game console, XBox ∗We greatly acknowledge helpful comments from participants of the TIME seminar at the Technical University of Munich. 1 1 Introduction It is widely recognised that user innovation occurs in various industries where users modify or improve products that they use (von Hippel 1988, 2005). Communities of user innovators – innovation communities – provide platforms for users to openly and voluntarily communicate with each other regarding innovations they are working on either collectively or independently (Franke & Shah 2003, Hienerth 2006, von Hippel 2005). As user communities have the potential to be leveraged by firms for inno- vation management, recent empirical work in this area have focussed on how firms and innovation communities can co-exist in a symbiotic relationship from which both users and manufacturers benefit (Jeppesen & Molin 2003, Mayrhofer 2005, Jeppesen & Frederiksen 2006, Pr¨ugl & Schreier 2006, Jokisch 2007). There may, however, exist another type of relationship where community innova- tions are beneficial for users and at the same time harmful for manufacturers. Examples of such a relationship are situations where innovations stemming from user communi- ties aim at bypassing legal or technical safeguards that prevent users from unsolicited usage of the manufacturer’s products (Mollick 2004).