The impact of piracy on prominent and non-prominent software developers

• We study software piracy on prominent and non-prominent developers in platform markets.
• Consumers take only prominent software into account when selecting a platform.
• We show that prominent software exhibits higher piracy rates than non-prominent software.
• However, prominent developers may lose out and non-prominent developers may benefit from better software protection.

This paper studies the impact of software piracy on prominent and non-prominent software developers in markets based on a two-sided platform business. User behavior is imperfect and, when adopting a platform, users only take prominent software into account. We show that prominent software exhibits higher piracy rates than non-prominent software. However, contrary to intuition, this does not necessarily mean that prominent software developers benefit more from increased software protection. Indeed, we show that prominent developers may lose out whereas non-prominent developers may gain from better software protection.