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Chitu Okoli

Posted on Aug 26, 2010 in Research summaries

Raghu et al 2009: Willingness to Pay in an Open Source Software Environment

TS Raghu, Rajiv Sinha, Ajay Vinze, and Orneita Burton (2009). Willingness to Pay in an Open Source Software Environment. Information Systems Research (20:2), June 2009, pp. 218-236.

I read this paper because of my interest in theoretical perspectives on open source software.

  • Rationale: Various issues related to and in response to software piracy affects consumers' willingness to pay (WTP) for software. In particular, the nature and extent of anti-piracy controls and the presence of viable OSS alternatives are pertinent. This paper is really about software piracy; this should have been reflected in its title.
  • Objectives: The study investigates consumers' WTP for software (specifically Microsoft Office) in the presence of preventive piracy control, deterrence piracy control, and a viable OSS alternative (
  • Theoretical background: This study fits in the literature on software piracy. Although it considers OSS, it considers OSS mainly related to its implications on piracy, not based on OSS theory per se. As such, the study distinguishes preventive piracy controls that apply technological measures to impede privacy (this study only examines software-based controls, such as activation keys) from deterrence controls that use legal or social measures to discourage piracy. (This study hypothesizes that pirated versions of MS Office print all documents with a visible water that say that the software was pirated. This is a very unrealistic scenario, and I believe it nullifies the validity of their tests of the effects of deterrence controls.) In addition to software piracy theory, the study draws from ethical theories related to piracy issues.
  • Key questions: Concerning the WTP for non-freeware proprietary software: H1: OSS lowers WTP. H2: Preventive piracy controls increases WTP. H3: Social deterrence piracy controls increases WTP. H4: Joint use of preventive and deterrence controls backfires and reduces WTP. H5: Preventive controls in the presence of OSS alternatives decreases WTP. H5: Social deterrence controls in the presence of OSS alternatives decreases WTP.
  • Methodology: This study uses a contingent valuation approach to measure WTP (an approach used to measure the value of tangible and intangible products in the absence of clear market pricing), since the value of proprietary software to consumers is not always clear when piracy and OSS are viable alternatives. The authors developed a WTP mathematical model to represent their theory. They designed a 2x2x2 between-subjects experiment to empirically test the model. "The basic experimental task for the subjects was to make a series of decisions on the amount the subject was willing to pay for MS Office" (p. 225). Different groups were given contexts where there was or was not piracy prevention controls, piracy deterrence controls (the artificial watermark indicating piracy), or the option to acquire, a functionally equivalent OSS alternative. Various covariates were also tested in the form of survey questions.
  • Data sources if any:   A pilot study was conducted on 75 undergrad and grad business students. The main study was conducted on 1,076 undergrad and grad student, including 63 evening MBA students. There were 803 usable responses. The authors argued that the sample is representative of true purchasers of MS Office; they used educational pricing in their estimations.
  • Key findings: The presence of OSS lowered WTP significantly; the presence of preventive controls greatly increased WTP; the presence of deterrence controls had no direct impact on WTP. However, in an interaction model, the presence of both preventive and deterrence controls lowered WTP, and in such a model, deterrence controls did have a very effect in increasing WTP. Among covariates, "consideration of software as a public good" significantly increased WTP–but I have no idea what "software as a public good" means, even after multiple re-readings of sections that referred to that. Additionally, when MS Office was perceived to not be useful, the presence of OSS made little difference in WTP.
  • Key contribution to knowledge: The presence of did lower the WTP for MS Office, and preventive piracy controls greatly increased WTP, even in the presence of
  • Key implications: Functionally equivalent OSS software is a competitive factor to be reckoned with for proprietary software. However, preventive piracy controls are even more important in increasing users' WTP in the presence OSS alternatives. Preventive controls do produce the desired effect, with or without OSS alternatives.

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