The Squirrels Are Watching

Why Music Piracy Happens

I used to download music on Napster (and its less than legal progeny), but more recently, I’ve started buying music through more legitimate channels such as Amazon’s MP3 download service. Why pay though? Why not go through an illegal service knowing that the odds of being caught are practically zero? I am, after all, working for a startup for zero salary. I should be trying to save money, right?

Well, in a sense, I am. Part of it is moral scruples but most of it is simple economics. When dealing with illegal downloads, the odds of downloading a song of poor quality, a virus, or something that’s been mislabeled is fairly high. That makes finding the right song in the P2P underbelly is a time consuming process. And depending on the song, downloading through a P2P network can be several times lower than going through Amazon or iTunes. I’m not exactly a voracious consumer of music but every once in a while, I hear a catchy song on the radio and I want to listen to it again. Paying 89 or 99 cents to download a song every once in a while isn’t a huge expense, and the time saved is worth every penny.

Yet it’s because of that same argument that a substantial amount of music piracy does occur. For teenagers, music piracy makes all the economic sense in the world. First, they’re either not working or not working at a job that pays a lot of money, so their time is worth a lot less. Second, they don’t have a lot of money to begin with. You can argue that if you can afford paying $50 a month for high-speed Internet, you can afford 99 cents every once in a while, but the key is that the parents are paying, not the teenagers. This is exacerbated by the fact that in order to purchase almost anything online legitimately, you need a credit card (or equivalent). Teenagers don’t have credit cards. That means the legitimate route requires going through their parents, and for teens, that’s a huge hurdle. There are tons of online users who balk at using their own credit card number — imagine how many more would be turned away if they had to get someone else’s credit card to use a service.

Yeah, they could go buy the album itself from the record store, but for teenagers without cars, that still involves going through the parents. Even if the record store is within walking distance, heading out the front door runs the risk of resulting in an inquiry from someone. No matter how legitimate the purpose, teens prefer doing something themselves over doing something with mom and dad. Also, walking involves exercise.

All of this actually ends up suggesting an interesting way to reduce piracy. Give teenagers debit cards. That is, give them an allowance with the ability to use that allowance online. Buying things through legitimate channels then becomes more economically feasible a teen, and they’ll do it because diving through the P2P underworld isn’t exactly fun. And once they’re conditioned to doing things legitimately, they’ll be more reluctant to turn to illegal means when their cash runs low. It’s no guarantee, but it’d probably save the record companies some money if they just asked parents to give their kids debit cards.

Tags: digital distribution, economics, music, piracy