International Journal of Business and Management Study
Author(s) : STEVEN W. JOHNSON
An empirical study involving a national sample of 454 adult American respondents measured selected economic conditions associated with music piracy. The data collected was used to quantify the sample’s purchasing and piracy history, its willingness to pay, to determine the just price of music, the expected value of legal punishment for pirating moderate volumes of music, and to generate a theoretical demand and revenue schedule based on stated willingness to pay at given prices. The study found respondents had a willingness to pay of approximately $1, a just price of 57 cents, and that more than half of the respondents believe that the expected punishment for moderate piracy is less than $1.29, which is the most common per-song price for digital music. The generated demand schedule suggested that the per-song selling prices of 99 cents and 79 cents generate slightly more revenue than $1.29. It was also found that the economic variables highlighted in this study had a similar ability to account for the variance in piracy rates as demographic variables such as age. Of the economic variables tested, the likelihood of purchasing songs at 59 cents per song was best able to predict piracy rates, being able to account for 19.8% of the variance between these variables.