Can Social Come to the Rescue? Monetizing Music in the World of Free

The music industry is facing a challenging time where, due to information technology, artists are striving to succeed in an environment where consumers can obtain music for free. To survive in this environment, online music providers must rethink the way they do business. Incorporating into their strategies a greater involvement in social progress by allowing a charitable partner to get a share of the revenues may facilitate this transformation and provide a solution to the problem of “free” currently faced. Pairing this with the adoption of a pay-what-you-want pricing scheme, the challenge to music providers becomes understanding what will appeal to the consumer, create value, and drive them to pay for music that they consume. With this in mind, we explore the role of social media features, change in the distribution of revenues including a charity partner, social influence for price, and the artist’s success in increasing consumers’ willingness to pay. Results of our conjoint analysis demonstrate that—independent of the social features implemented—the most important factor that impacts willingness to pay is the inclusion of a charitable partner in the distribution of revenues; consumers were also willing to pay more for artists that are not well-established. In terms of social media features, we found, through a multi-level analysis, that status building increased willingness to pay but displaying a user’s payment did not. Altogether, this study provides important implications for online music providers as well as the artists themselves for operating in the current music environment. It provides an important step towards understanding what drives consumers to pay for music, a good that can also be found for free.