Willingness to Pay in an Open Source Software Environment

• Published in: Information systems research Vol. 20; no. 2; pp. 218 - 236
• Main Authors: Raghu, T. S, Sinha, Rajiv, Vinze, Ajay, Burton, Orneita
• Format: Journal Article
• Language: English
• Published: Linthicum INFORMS 01-06-2009; The Institute for Operations Research and the Management Sciences (INFORMS); Institute for Operations Research and the Management Sciences
• Subjects: Behavior deterrence; Computer software; Consumers; contingent valuation; Correlation analysis; Cost control; Deterrence; Evaluation; Freeware; Information industry; Information storage and retrieval systems; Intellectual property; Moral development; Open source software; Piracy; Pirates; Prevention; Profitability; Profits; Proprietary software; Public domain; Public software; Social norms; Software development; Software industry; Software piracy; Studies; Valuation; Willingness to pay; United States; United States > US
• ISSN: 1047-7047; 1526-5536
• DOI: 10.1287/isre.1080.0176

Competition from open source software and free software (OSS/FS) alternatives is causing proprietary software producers to reevaluate product strategies. OSS/FS alternatives complicate an already complex information goods market plagued by piracy concerns. Although producer perspectives on software pricing and piracy controls have been addressed extensively, consumers' perspective and willingness to pay for commercial software is not very well understood. This paper empirically determines willingness to pay for a leading commercial software application (Microsoft Office) in the presence of an OSS/FS alternative. A contingent valuation approach is used to elicit willingness to pay for the application. The research design employs a 2 × 2 × 2 experiment to investigate the impact of preventive control, deterrence control, and OSS/FS alternative. The results indicate that the availability of an OSS/FS alternative has little impact on willingness to pay for Microsoft Office. However, piracy controls significantly increase willingness to pay for Microsoft Office, even in the presence of OSS/FS alternatives.