Why Consumers Pay Voluntarily: Evidence from Online Music
AbstractCustomers at the online music label Magnatune can pay what they want for albums, as long as the payment is within a given price range ($5-$18). Magnatune recommends to pay $8, and on average customers paid $8.20 (Regner and Barria, 2009). We ran an online survey and collected responses from 227 frequent Magnatune customers to gain insights about the underlying motivations to pay more than necessary. We control for individual response- and sample selection-bias, and find that reciprocity and guilt appear to be the major drivers for generous voluntary payments. Being inclined to follow social norms is a positive determinant for payments around the recommended price.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2010-081.
Date of creation: 30 Nov 2010
Date of revision:
social preferences; other-regarding behaviour; music industry; reciprocity; guilt; social norms; altruism; fairness; social-image concerns; survey;
Find related papers by JEL classification:
- C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-11 (All new papers)
- NEP-CBE-2010-12-11 (Cognitive & Behavioural Economics)
- NEP-CUL-2010-12-11 (Cultural Economics)
- NEP-EVO-2010-12-11 (Evolutionary Economics)
- NEP-MKT-2010-12-11 (Marketing)
- NEP-SOC-2010-12-11 (Social Norms & Social Capital)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:CitEc Project, subscribe to its RSS feed for this item.
- Matthias Greiff & Henrik Egbert & Kreshnik Xhangolli, 2013.
"Pay What You Want – But Pay Enough! Information Asymmetries and PWYW-Pricing,"
MAGKS Papers on Economics
201304, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- Greiff, Matthias & Egbert, Henrik & Xhangolli, Kreshnik, 2013. "Pay What You Want – But Pay Enough! Information Asymmetries and PWYW Pricing," MPRA Paper 52766, University Library of Munich, Germany.
- Sana El Harbi & Gilles Grolleau & Insaf Bekir, 2014. "Substituting piracy with a pay-what-you-want option: does it make sense?," European Journal of Law and Economics, Springer, vol. 37(2), pages 277-297, April.
- Egbert, Henrik & Greiff, Matthias & Xhangolli, Kreshnik, 2014. "PWYW Pricing ex post Consumption: A Sales Strategy for Experience Goods," MPRA Paper 53376, University Library of Munich, Germany.
- Regner, Tobias & Riener, Gerhard, 2012.
"Voluntary payments, privacy and social pressure on the internet: A natural field experiment,"
DICE Discussion Papers
82, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
- Tobias Regner & Gerhard Riener, 2013. "Voluntary Payments, Privacy and Social Pressure on the Internet: A Natural Field Experiment," Jena Economic Research Papers 2013-032, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Grazia Cecere & Nicoletta Corrocher & Fabio Scarica, 2012. "Why do pirates buy music online? An empirical analysis on a sample of college students," Economics Bulletin, AccessEcon, vol. 32(4), pages 2955-2968.
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