Joeng and Lee (2010)
|Joeng and Lee (2010b)|
|Title:||Estimating Consumer Preferences for Online Music Services|
|Author(s):||Jeong, G., Lee, J.|
|Citation:||Jeong, G., and J . Lee. 2010. “Estimating Consumer Preferences for Online Music Services”. Applied Economics 42(30); 3885-3893.|
|Key Related Studies:|
|About the Data|
|Data Description:||Population Ranging in age from 20 to 59 years and living in Seoul. Survey period July 2006, Sample size 224 individuals Method used in drawing the sample allocation by residential region and age. Method used in collecting data was an Individual interview using a systematic questionnaire.|
|Data Type:||Primary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
This article analyses consumer preferences with regard to important attributes of online music services. Conjoint analysis and a random coefficient discrete choice model using Bayesian approach with Gibbs sampling are used to estimate the preferences. Based on the quantitative results, we use simulation to look at how a new pricing strategy and the threat of legal penalty for file sharing would influence the online music market. Findings include these: estimated willingness to pay for downloading one music file is significantly less than the actual price of the file; consumers are sensitive to longer search and download times for music files and very sensitive to the threat of legal action; and consumers are not sensitive to online music services broadening their catalogues. Finally, the simulation shows that a combination of increased transaction costs for illegal file sharing and lower-priced digital music files would inhibit illegal file sharing and bolster the number of people purchasing music legally from the online services.
Main Results of the Study
Based on survey results the authors estimated preferences using conjoint analysis and a probit model. Based on this they could use a simulation to see how decreasing the price of legal music and increasing the threat of legal action against illegal downloaders would affect downloading activityFindings:* Increased transaction costs for file sharing (such as, penalties) and lower priced digital music downloads would increase the overall amount of legal music downloaded* The authors also suggested that making legal music downloading easier for the consumer would increase the likely hood of legal music downloading by the consumer.
Policy Implications as Stated By Author
Government agencies should take legal steps in order to convince music providers to experiment with lower prices as an industry.
Coverage of Study
|Level of aggregation:||Individual|
|Period of material under study:||2006|