Purchasing illegal copies of movies' videos as an unethical consumer behavior: An Israeli study

Consumer piracy could include buying illegal copies of music CDs or movie videos or brand-name knock-offs and its cost is estimated at billions of dollars. Piracy by consumers is a severe problem to manufacturers. The annual global loss from counterfeiting, such as pirated software and purchases of counterfeited brands (e.g., fashion), is $80 billion (Wee, Tan, and Choek, 1995). Moreover, sales of pirated music exceed $4.0 billion (Mariano, 2002). Furthermore, the Global Software Piracy Report (Smith, 2003) showed that software piracy had cost the USA 109,000 jobs, $4.5 billion in lost wages, and $1.0 billion in lost taxes. We tested a model interrelating consumers' ethics, their sentiments toward marketing, and their attitudes to piracy, and actual piracy itself. Attitudes about piracy served as a partial mediator of the impacts of consumer sentiments, morals, and ethics on actual piracy. Most hypothesized relationships, including the role of piracy attitudes as partial mediators were supported by data from Israeli consumers. Piracy by consumers is a severe problem to manufacturers. The annual global loss from counterfeiting, such as pirated software and purchases of counterfeited brands (e.g., fashion), is $80 billion (Wee, Tan, and Choek, 1995). The music industry exemplifies the potential losses with sales of pirated music exceeding $4.0 billion (Mariano, 2002). Furthermore, at the macro-country level, the Global Software Piracy Report (Smith, 2003) showed that software piracy had cost the USA 109,000 jobs, $4.5 billion in lost wages, and $1.0 billion in lost taxes. Previous research has studied piracy as a behavioral outcome of consumers' ethics and morals, which impact the use of pirated software, shoplifting, shirts, and cameras (e.g., Babin and Griffin, 1995; Cordell, Wongtada, and Kieschnick, 1996). Our research follows this approach and will be reviewed later. Here, we emphasize two contributions of our study. First, we develop a nomological model with internal ethical/moral attitudes and externally-based sentiments toward marketers' products and prices as antecedents leading to attitudes about the act of piracy, which serves as a partial mediator of the impact of these antecedents on actual piracy. Inclusion of consumers' sentiments is novel to our model. Second, our study was conducted in Israel, a unique setting for testing the model because most computer games, movie videos, and music CDs used in Israel are illegal copies (Hecht, 2001; Kara and Dror, 2002). Thus, the reality of Israel being a developed economy does not preclude consumers from piracy, which is a widespread local phenomenon (Bergerfreund, 2002; Kara, 2002; Koren, 2002). We first review the literature, develop a set of research hypotheses, and suggest a nomological model. After describing the study the findings are discussed. An implications section concludes the paper.