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‘Piracy’ is a big problem for Vivendi Universal, EMI, Warner Music and Sony Music because »»»A) People who share music with each other online are all criminal pirates and thieves who’d be buying absolute tons of corporate product if they weren’t sharing; or,B) Piracy equals demand without supply?Tick the box you believe is true.The first is the Big 4’s official position and the second, the opinion of Alice Taylor, commissioning editor for education at Britain’s Channel 4 TV.So, “Why do some individuals pay for digital music while others choose to pirate it?” – asks a new study jointly manufactured by the RIAA’s DoJ and Duke University.Called, impressively, The Determinants of Music Piracy in a Sample of College Students, “With the development and adoption of digital music, the music industry went through a profound transformation in the way music is consumed, it says, going on »»»With this transformation, digital music piracy has emerged as a crime of national scale and concern.A “crime of national scale and concern,” eh?To quote the absrtact in full »»»Why do some individuals pay for digital music while others choose to pirate it? With the development and adoption of digital music, the music industry went through a profound transformation in the way music is consumed. With this transformation, digital music piracy has emerged as a crime of national scale and concern. Using survey data from a sample of undergraduate students at a Southern private university, we first estimate our respondents’ willingness to pay (WTP) for digital music by way of a simple random pricing experiment. We then investigate the determinants of music piracy by regressing a dummy variable for whether a respondent’s last downloaded song was obtained illegally on (i) our WTP estimate, used here as a source of artificial variation in the price of legal music; and (ii) the various transaction costs associated with the consumption of illegal music. We find that a respondent’s WTP, her subjective assessment of the probability that she will face a lawsuit, and her degree of morality all have a negative impact on the likelihood that her last song was obtained illegally.So only women students were surveyed, apparently. Says Billboard »»»While “The Determinants of Music Piracy” does not put a firm number on the percent drop in purchases caused by file sharing, it indicates there are factors that cause people to choose file sharing over purchasing. In this sense, file sharing is viewed a substitute for purchasing. But there will be cases in which a student values the song enough to buy it. So just as there are times a student chooses file sharing over purchasing, there will be some instances in which purchasing is chosen over file sharing.Here are a few notable items from the paper:• Just over 30% of students had obtained their last song illegally.• For every $0.01 increase in price faced by the student, the willingness to buy the song decreased by 0.3% on average.• For a 1% increase in the student’s assessment of the likelihood of getting caught pirating music, the likelihood the student’s last song was obtained illegally decreases by almost 0.5%.• A student who had received an iTunes gift card was 15% less likely to pirate his/her last song.• The lower the annual income of the student’s parents, the more likely he/she was to have pirated his/her last song.“The authors concluded the RIAA should not have stopped its campaign against individual file sharers if its sole goal was to deter piracy,” the story adds.Say the authors, “Our findings nevertheless indicate that the threat of legal action had a significant impact at the margin on our respondents’ decision to pirate music.
