Content Provision Strategies in the Presence of Content Piracy

We consider a publisher that earns advertising revenue while providing content to serve a heterogeneous population of consumers. The consumers derive benefit from consuming content but suffer from delivery delays. A publisher's content provision strategy comprises two decisions: (a) the content quality (affecting consumption benefit) and (b) the content distribution delay (affecting consumption cost). The focus here is on how a publisher should choose the content provision strategy in the presence of a content pirate such as a peer‐to‐peer (P2P) network. Our study sheds light on how a publisher could leverage a pirate's presence to increase profits, even though the pirate essentially encroaches on the demand for the publisher's content. We find that a publisher should sometimes decrease the delivery speed but increase quality in the presence of a pirate (a quality focused strategy). At other times, a distribution focused strategy is better; namely, increase delivery speed, but lower quality. In most cases, however, we show that the publisher should improve at least one dimension of content provision (quality or delay) in the presence of a pirate.