We demonstrate that two intertwined activities of music piracy, unauthorized obtaining and unauthorized sharing, are differentially influenced by the same social learning environment. We develop a structural model and test it using survey data from a prime demographic set of respondents who engage in music piracy. Considering behavioral heterogeneity, we employ a factor mixture modeling technique to classify respondents into different groups that highlight distinct patterns of social learning influences. We find that the differential effects of social learning factors on obtaining and sharing persist across these groups. We further utilize demographic variables to profile members in each group for segmentation insights. From a theoretical perspective, our findings advance the understanding of music piracy and suggest the importance of separating obtaining from sharing activities when studying piracy. From a managerial perspective, our research provides new avenues for managers and policymakers to design targeted incentives to curtail music piracy.
Advances in online technologies and bandwidth availability have opened new vistas for online distribution of digital goods, but potential benefits for consumers are juxtaposed against challenges for retailers. Here, we investigate one type of digital experience good--music--whose market environment includes the very real presence of online piracy. Although arguments abound for and against online distribution of such digital goods, little research exists in this area. We develop a model of consumer search for such an experience good, and study different emerging market environments for retailers, where consumers can pirate music online. Retailer cost to publishers is modeled using a variety of licensing schemas. Survey results, together with data from online sharing networks, are utilized to validate a key assumption. Finally, computational analysis is used to develop insights that cannot be obtained analytically. Our results indicate that decreasing piracy is not necessarily equivalent to increasing profit, and online selling strategies can provide additional profits for a traditional retailer even in the presence of piracy. We show that leading strategies for business in such goods should include pricing options, provision of efficient search tools, and new licensing structures.