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Why Consumers Pay Voluntarily: Evidence from Online Music

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Author Info

  • Tobias Regner

    ()
    (Max Planck Institute of Economics, Jena)

Abstract

Customers 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 Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2010-081.

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Date of creation: 30 Nov 2010
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Handle: RePEc:jrp:jrpwrp:2010-081

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Related research

Keywords: social preferences; other-regarding behaviour; music industry; reciprocity; guilt; social norms; altruism; fairness; social-image concerns; survey;

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  1. Online free riders
    by fiveminuteeconomist in Five Minute Economist on 2010-12-17 21:57:06
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Cited by:
  1. 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).
  2. 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).
  3. 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.
  4. 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.
  5. 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.

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