Supposing AB had real information that would be harmful to DPR if released, it's in DPR's interest to prevent this release. One major risk is that even if he pays, he is still susceptible to future extortion. His approach sends a message to AB (true or not) that he is a casual killer, and that it would be an unwise risk to attempt this stunt a second time.
It also further implicates AB in DPR's crimes: in the same way that DPR will have great trouble explaining in court that he was not actually arranging a murder but deterring an extortionist, it would be unwise to try to argue in court that one accepted money to commit a murder, but is innocent because the murder was not actually performed due to a complicated backstory.
Also, the extended negotiation provides DPR more opportunity to discover more information about his adversary --- rather like the 'try to keep them on the line so we can trace the call' trope. It seems likely that if there is any substance to the accusation, that AB is a Silk Road seller and not a third party. Perhaps this dance helps DPR to gain more information so as to take future action against this seller? Or buys time so as to warn others that their buyer information is compromised?