Why record labels will never win the war against free: An experiment.
The whole file sharing phenomenon (and legal music downloading) is largely driven by a powerful psychological aversion to being cheated.
It turns out that free is so powerful not because it’s free, but because it allows us to minimize the risk of being cheated. Duke University behavioral economist Dan Ariely conducted an interesting experiment to understand “free”, which he writes about in his book Predictably Irrational.
First, he and his colleagues sold random college students two kinds of chocolates. One was Lindt Truffles from Switzerland. The second was Hersheys Kisses. The truffles were 15 cents and the Kisses were 1 cent. The students reasoned that the difference in price between the two chocolates was due to quality. 73% chose the truffles and 27% chose the Kisses.
Then Ariely did something interesting. He introduced free into the experiment. He lowered the price of each chocolate by 1 cent, so the truffles were now 14 cents and the Kisses were free. All of a sudden, preference for the Kisses skyrocketed.
Ariely concluded that free is so enticing because it eliminates the risk of buyer’s remorse, or what I like to call the “Oh, crap!” factor. Nobody wants to buy something and then discover that it’s not what they expected. Even if the price of that thing is just a few cents, the psychological aversion still exists. When something is free, that risk is eliminated entirely. It may still not be what you expected, but at least you didn’t lose anything by paying for it.