ESTIMATING THE WILLINGNESS TO PAY FOR DIGITAL MUSIC

Abstract

The general consensus among the copyright piracy literature is that economic incentives and enforcement are both effective strategies that complement one another in reducing the occurrence of piracy. Yet, the key factor underlying these strategies is the ability of the media industries to influence an individual’s willingness to pay (WTP) for legal purchases when illegal versions exist. This article estimates the effects of factors influencing WTP for digital music downloads. Our results show that while income and risk perceptions play a dominant role in determining WTP, ethics are also important in influencing WTP. Our results are consistent with the growing consumer acceptance of fee‐based music services that can exist alongside peer‐to‐peer file sharing as well as serve as a viable substitute . ( JEL O34, K42, D12)