Why Do People Pay for Information Goods? A Study of the Online Porn Industry

Information goods are costly to produce. However, replicating an information good is practically costless. As a result, many information good industries have severe problems with piracy. The pornography industry is an information good industry that thrives despite piracy. This research-in-progress examines why consumers are willing to pay for pornography despite the availability of free pornography. We attempt to obtain both free and paid pornography and compare and contrast the outcomes. Our preliminary results suggest that free pornography has hidden costs, while paid pornography is low cost. Specific costs to free pornography include long wait times (depending on the approach, up to 7.5 hours with no result), and the risk of virus infection. In contrast, access to large libraries of high-quality paid pornography can be obtained for as little as US$14.95 a month. Our results suggest that lawsuits will not help information goods producers, because consumers of pirated goods value money over time.