Online free riders

The internet must be a bewildering place for content owners. On the one hand, no one seems to want to pay for anything. On the other hand, when given a choice, some people choose to pay more than they need to.

Music the old-fashioned way

Recently, there was news of a new study on the social attitudes of “seeders” (people who share content illegally) and leechers (people who download content illegally).  Apparently many users, particularly seeders, see themselves as “masked philanthropists”, sharing out music and films for free, for the greater good, fighting the fight against the greedy copyright fat cats etc etc. They are motivated by altruistic tendencies.  They are gladly welcomed by numerous other users who are only too willing to download for free rather than pay for the content on a legal site.

This might all make you think that trying to operate a legal site where people pay for music isn’t likely to be all that successful. And the success has indeed been mixed. This week in the UK, BSkyB, a pay TV company closed its music subscription service, Sky Songs. Last.fm, a music streaming site is doing better, but only in that it is making a smaller loss than it used to.

And yet, when you let people download something for free, and leave a payment up to the kindness of their hearts, they do stump up. Economist Tobias Regner studied users of the music website Magnatune, and found that although people were allowed to pay anything between $5 and $18, people chose to pay $8.20 per album (potentially steered by the fact that $8 was selected as a default option, but the fact remains that they could easily choose to pay less).

Back in real world, last year a restaurant experimented with allowing customers to pay what they wanted: the majority paid the price on the menu, despite having the choice to pay nothing at all.

Why? People do behave and think differently in a commercial situation compared to a social one. A popular example is one described in Dan Ariely’s Predictably Irrational, when a daycare centre introduced charges for parents arriving late to pick up their children. The charge had the perverse incentive of increasing lateness: the relationship was turned into a commercial one, where parents traded off being late versus the charge. Guilt or fairness or reciprocity was no longer part of the decision.

Giving people the choice over what to pay muddies the water between a commercial relationship and a social one. People feel guilty at paying nothing. They have been offered a service with the trust that they will indeed pay what they feel is the right amount. In this very uncommercial situation, fairness and reciprocity become important.

Don’t ask, don’t get? Maybe try “ask nicely, maybe get”.

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