The Determinants of Music Piracy in a Sample of College Students

Abstract

Why do some individuals pay for digital music while others pirate it? Using data on a sample of undergraduate students, we study the determinants of music piracy by looking at whether a respondent’s last song was obtained illegally. We first elicit our respondents’ willingness to pay (WTP) for digital music using a simple field experiment. We then use our respondents’ WTP to control for the preference heterogeneity between respondents and find that (i) a respondent’s subjective probability of facing a lawsuit; and (ii) her degree of morality both have a negative impact on the likelihood that her last song was obtained illegally. Our results are robust to whether WTP is estimated parametrically or nonparametrically. We conclude by discussing the practical implications of our findings.

Keywords: Music Piracy, File Sharing, Transaction Costs

JEL Classification: D12, D23, L86, K11, K42