Please Do Not Pirate it, You Will Rob the Poor! An Experimental Investigation on the Effect of Donation on Piracy

Abstract

Producers in the recording industry frequently market products for which a part of the proceeds goes to charitable causes. We investigate whether a corporate pledge to donate a portion of profits to a charitable cause will decrease the extent to which customers illegally obtain that company's products. Donations to charitable causes may increase the moral intensity of piracy (robbing the poor rather than robbing the rich) and consequently may reduce the willingness to pirate. This rationale is empirically tested through a dual empirical strategy, that is, a market survey and a laboratory experiment. We show that market piracy decreases when a very low or very high donation mechanism is implemented. Nevertheless, for intermediate levels of transfer, piracy increases again.