Preventing Digital Music Piracy: The Carrot or the Stick?

Abstract

The goal of this article is to ascertain the factors that govern consumers' willingness to pirate a digital product, such as a digital music track. The authors assess the tendency to pirate with both indirect measures (e.g., willingness to pay for the legal alternative) and direct measures (e.g., piracy preference). Whether measured indirectly or directly, the tendency to pirate depends, to different extents, on three key factors: positive incentives (e.g., improved functionality of the legal Web site), negative incentives (e.g., perceived risk of piracy), and consumer characteristics. Based on three studies, the results suggest that negative incentives are a strong deterrent for certain consumers but can actually increase piracy tendencies for others. Conversely, positive incentives, such as improved functionality, can significantly reduce the tendency to pirate among all the consumer segments studied. The authors conclude by discussing prescriptive recommendations for the recording industry.