Academic journal article Journal of Electronic Commerce Research

Customer Willingness to Pay for Online Music: The Role of Free Mentality

Academic journal article Journal of Electronic Commerce Research

Customer Willingness to Pay for Online Music: The Role of Free Mentality

Article excerpt

ABSTRACT

Free mentality, a strong belief that everything online should be free, has been ironed into people's minds. This concept also significantly affects the development of e-commerce. However, despite the importance of this "free mentality" concept, a lack of systematic investigations inhibits our understanding of this issue. Based on the decomposed theory of planned behavior, this study focuses on free mentality and investigates its direct and interactive effects on the consumer's attitude toward paying, which, in turn, affects the intention to pay for online music services. Data collected from 268 online music users illustrates the direct and negative impact of free mentality on attitude toward paying. The moderating role of free mentality on the relationship between perceived sacrifices and attitude toward paying is also illustrated. At the conclusion of this paper, we discuss the results and their implications for practitioners and academics.

Keywords: Free mentality; Decomposed theory of planned behavior; Online music; Willingness to pay

1. Introduction

The Internet has become one of the dominant channels for information delivery. Online news readers increased from 24% to 44% during the past six years. [Kohut et al. 2010] The population of e-books (through Kindle and iPad), online music, and video on demand (such as Movielink) hint that the Internet has totally changed the way that people receive information. Meanwhile, it is also noticeable that users receive most online services without paying. This "give away for free" phenomenon is driven by the dominant logic: the attraction of a large number of users reflects a high level of advertising revenue. Indeed, after decades of development, this free content business model has been accepted by online service users. As a consequence, a free mentality concept, a strong belief that everything online should be free, has been ironed into people's minds. However, unexpectedly low advertising revenue and constantly increasing maintenance costs make this free content business model difficult to sustain. Some businesses were forced to consider the possibility of charging their users [Shachtman 2002], Unfortunately, the acceptance rate of paying for online content is extremely low. For example, the Times in the UK started charging their online readers in July, 2010. The visiting number decreased dramatically and only a quarter of their readers showed willingness to pay for online news [BBC 2010], This phenomenon highlights the critical role of this free mentality.

One of the few exceptions is the music industry, in which retailers/providers are able to charge for online content. For example, Apple's iTunes Music Store achieved dramatic success charging for online music [Austerlitz 2013], The online music market began to take off after major recording labels licensed their music to legitimate service providers such as Apple's iTunes Music Store. Several researchers noted the strong growth of the online music market and predicted that similar levels of growth will be observed in the future. For example, the International Federation of the Phonographic Industry (IFPI) report indicates that revenues received from digital channels were up 6% to US$4.6 billion in 2010 [IFPI 2011], The phenomenon of paying fees for online music services has also been happening in Taiwan. Since online music is one of the few cases in which customers are successfully charged, a better understanding of why people are willing to pay for online music will provide an important reference for other industries.

Research on online music services initially focused on pirating behaviors [e.g. Bhattachaijee et al. 2003b; d'Astous et al. 2005; Fetscherin 2009; Kwong and Lee 2002; LaRose et al. 2005; Molteni and Ordanini 2003], Following that, researchers shifted their attention to consuming behavior. For example, Kwong and Park [2008] conducted research to discover college students' intentions regarding the adoption of digital music services based on the Theory of Planned Behavior (TPB), and Chu and Lu [2007] used the value-intention framework to examine customers' intentions to purchase online music. …

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