The strategy of suing consumers for copyright infringement when they illegally download music adopted by major recording companies is premised on the assumption that actual suit raises the price of downloading and dissuades use of downloads in flavor of legal CDs or downloads. This experiments suggests that this assumption is questionable since a market for downloaded and copied music exists despite the fact that it is costless to copy, absent the prohibitions of copyright law. Consumers are willing to pay a non-zero price for a downloaded or copied music file, a price in general quite a bit below their willingness to pay for a legal product, but quite a bit more than what would be expected for a product that can be obtained at zero cost. To prove this, we asked our participants their wtp for original and burned CDs using hypothetical as well as real choices. We compare our results with the usual market pricing and we explore infringing behaviors in order to verify if an increase in lawsuits is effective in reducing infringing activities and raising legal demand. In the experiments and in the surveys we also asked subjects questions about their ethical attitudes toward burning CD and awareness about present legislation.
These result can be very important to infer useful consideration in order to redefine public policy towards piracy more effectively. This research underlines three other major results, that are strictly connected with individual behaviour and the formation of social networks.

First, the study also highlights that people who buy burned CDs in the street are also more prone to buy illegal music files through the Internet. However the higher the individual willingness to pay for an illegal copy the higher the probability of buying a burned CD in the street rather than through the Internet. More interestingly our data show that exchanging illegal copies with friends increases the probability of downloading illegal copies from the Internet, whilst affects negatively the probability of buying burned CDs in the street.

Second, feeling piracy as an illegal/criminal act has a strong, significant and negative impact on the probability of buying illegal copies in the street, but has no influence when a file is illegally downloaded from the Internet, even after controlling for the subjective probability of being detected. Incidentally this latter exerts a negative influence on buying in the street, but no influence on illegal downloading (obviously it is much higher in the former than in the latter case).
Thirdly we find a strong gender effect: males are much more prone to download illegal music files than females; this gender effect disappears when the burned CD is bought in the street, and among “heavy downloaders” (i.e. those who download more than a file per day). However females display a willingness to pay for an illegal copy lower than males, both in the survey and in the experiment. This suggests that fines and/or (moral) punishments could be more effective on women than on men.

Author note
Giovanni Battista Ramello is Associate Professor of Industrial Economics, Department of Public Policy and Collective Choices POLIS, University of Eastern Piedmont, Alessandria, Italy and Chairman of the International Programme in Comparative Analysis of Institutions, Economics and Law - IEL, Collegio Carlo Alberto, Torino, Italy.

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