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Why Consumers Pay Voluntarily: Evidence from Online Music

Author

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  • Tobias Regner

    () (Max Planck Institute of Economics,Jena)

Abstract

Customers of the online music label/store Magnatune can pay what they want for albums as long as the payment is within a given price range ($5-$18). On average, customers pay significantly more than they have to. 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- as well as sample selection-bias and find that reciprocity appears to be the major driver for generous voluntary payments. Being inclined to conform to social norms is a positive determinant for payments around the recommended price ($8).

Suggested Citation

  • Tobias Regner, 2010. "Why Consumers Pay Voluntarily: Evidence from Online Music," Jena Economic Research Papers 2010-081, Friedrich-Schiller-University Jena, revised 10 Dec 2014.
  • Handle: RePEc:jrp:jrpwrp:2010-081
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    References listed on IDEAS

    as
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Online free riders
      by fiveminuteeconomist in Five Minute Economist on 2010-12-18 03:57:06

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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, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Gerpott, Torsten J. & Schneider, Christina, 2016. "Buying behaviors when similar products are available under pay-what-you-want and posted price conditions: Field-experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 65(C), pages 135-145.
    3. Egbert, Henrik, 2017. "The Gift and Pay-What-You-Want Pricing," MPRA Paper 82066, University Library of Munich, Germany.
    4. Matthias Greiff & Henrik Egbert & Kreshnik Xhangolli, 2014. "Pay What You Want – But Pay Enough! Information Asymmetries and PWYW Pricing," Management & Marketing, Economic Publishing House, vol. 9(2), Summer.
    5. 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.
    6. Samahita, Margaret, 2015. "Pay-What-You-Want in Competition," Working Papers 2015:27, Lund University, Department of Economics.
    7. 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.
    8. Gravert, Christina, 2017. "Pride and patronage - pay-what-you-want pricing at a charitable bookstore," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 67(C), pages 1-7.
    9. 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.

    More about this item

    Keywords

    social preferences; pro-social behaviour; music industry; reciprocity; guilt; social norms; altruism; fairness; social-image concerns; survey; PWYW; pay-what-you-want;

    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
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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