A new study finds three things have a negative impact on the likelihood a person will obtain a song illegally: willingness to pay; perceived likeliness of facing a lawsuit; and morality. Marc F. Bellemere of Duke University and Andrew M. Holmberg of the Department of Justice presented their findings in a working paper titled "The Determinants of Music Piracy in a Sample of College Students."

Download a PDF of the 44-page paper here.

In determining willingness to pay, students were asked if they would pay a random price for Flo Rida's "Right Round." The random price was the last two digits of the student's social security number. While those two digits are indeed random, each person places a unique value on that song. Some may love it, some may hate it. The average willingness to pay was $0.68 and the range was $0.11 to $1.37. (So, the researchers estimated students' willingness to pay for "Right Round," not for a song each student desires the most. Also, the random prices given students ranged from $0.00 to $0.98 - the standard $0.99 price point was not used.)

For a $0.01 increase in willingness to pay for digital music, the likelihood the student's last song was obtained illegally increased by 0.3%. A 1% increase in the student's perceived likelihood of facing a lawsuit for piracy, the likelihood that last song was obtained illegally falls about 0.4%. Lastly, a one-point increase in the average student's 30-point morality score the change of piracy falls 0.2%.

The study by Bellemere and Holmberg enters a growing and divided collection of academic papers on the subject of P2P file sharing. Conclusions on P2P's impact on legal purchases are all over the board. One of the more well known papers on the topic, presented in 2007 by Felix Oberholzer-Gee (Harvard University) and Koleman Strumpf (University of Kansas), found no correlation between file sharing and purchases. Stan Liebowitz of the University of Texas at Dallas, who weighed in on file sharing in a rebuttal testimony in the Tenenbaum file-sharing case and gave a statement before the House Judiciary Committee on "The Performance Rights Act," has found file sharing to be detrimental to recorded music revenues.

While "The Determinants of Music Piracy" does not put a firm number on the percent drop in purchases caused by file sharing, it indicates there are factors that cause people to choose file sharing over purchasing. In this sense, file sharing is viewed a substitute for purchasing. But there will be cases in which a student values the song enough to buy it. So just as there are times a student chooses file sharing over purchasing, there will be some instances in which purchasing is chosen over file sharing.

Here are a few notable items from the paper:

• Just over 30% of students had obtained their last song illegally.
• For every $0.01 increase in price faced by the student, the willingness to buy the song decreased by 0.3% on average.
• For a 1% increase in the student's assessment of the likelihood of getting caught pirating music, the likelihood the student's last song was obtained illegally decreases by almost 0.5%.
• A student who had received an iTunes gift card was 15% less likely to pirate his/her last song.
• The lower the annual income of the student's parents, the more likely he/she was to have pirated his/her last song.

The authors concluded the RIAA should not have stopped its campaign against individual file sharers if its sole goal was to deter piracy. "Our findings nevertheless indicate that the threat of legal action had a significant impact at the margin on our respondents' decision to pirate music," they wrote.

In addition, the two researchers argued that the lower tier, $0.69 price point at iTunes "will almost surely contribute to eliminating music piracy" (based only on students' willingness to pay and ignoring transaction costs). Songs at $0.81, they estimated, would decrease music piracy by 25 percent.

And what happens when a song is priced below a student's willingness to pay? Does the student seek the song through illegal means or does he/she go to a legal streaming service (like YouTube) to experience the song? Streaming options are a glaring omission in this paper. Given the recent growth in streaming alternatives to P2P, pricing decisions - as well as academic research - need to take into account the many different alternatives to purchasing legal downloads. It's not all about P2P any more.