Digital Goods and the New Economy

Digital goods are bitstrings, sequences of 0s and 1s, which have economic value. They are distinguished from other goods by five characteristics: digital goods are nonrival, infinitely expansible, discrete, aspatial, and recombinant. The New Economy is one where the economics of digital goods importantly influence aggregate economic performance. This Article considers such influences not by hypothesizing ad hoc inefficiencies that the New Economy can purport to resolve, but instead by beginning from an Arrow-Debreu perspective and asking how digital goods affect outcomes. This approach sheds light on why property rights on digital goods differ from property rights in general, guaranteeing neither appropriate incentives nor social efficiency; provides further insight into why Open Source Software is a successful model of innovation and development in digital goods industries; and helps explain how geographical clustering matters.aspatial, emergence, idea, information, innovation, intellectual asset, Internet, knowledge, Open Source, weightless economy

White Knight or Trojan Horse? The Consequences of Digital Rights Management for Consumers, Firms and Society

Due to its ability to solve all main problems associated with digital goods, Digital Rights Management is the favourite option used by companies to tackle piracy. The aim of this article is to discuss the consequences of DRM for consumers, firms and society. The rationales of DRM are discussed and the expected benefits for firms are presented.. In contrast, consumers are shown to be likely to see few benefits in DRM. This article demonstrates that even a standard DRM system is unlikely to improve social welfare. The article concludes with some public policy recommendations.Digital Rights Management, Digital Goods, Piracy, Excludability, Durability, Sampling.

"Download for Free" - When Do Providers of Digital Goods Offer Free Samples?

In a monopoly setting where consumers cannot observe the quality of the product we show that free samples which are of a lower quality than the marketed digital goods are used together with high prices as signals for a superior quality if the number of informed consumers is small and if the difference between the high and the low quality is not too small. Social welfare is higher, if the monopolist uses also free samples as signals, compared to a situation where he is restricted to pure price signalling. Both, the monopolist and consumers benefit from the additional signal

The Apple E-Book Agreement and Ruinous Competition: Are E-Goods Different for Antitrust Purposes?

Publishers have spent the last decade and a half struggling against falling prices for digital goods. The recent antitrust case against Apple and the major publishers highlights collusive price fixing as a potential method for resisting depreciation. This Article examines the myriad ways in which digital distribution puts downward pressure on prices, and seeks to determine whether or not collusive price fixing would serve as an appropriate response to such pressure given the goals of the copyright grant. Considering retailer bargaining power, increased access to substitutes, the loss of traditional price discrimination methods, the effects of vertical integration in digital publishing, and the increasing competitiveness of the public domain, I conclude that the resultant downward price pressure might in fact significantly hamper the commodity distribution of digital goods. I remain unconvinced, however, that price fixing is an appropriate solution. The copyright grant affords rights holders commercial opportunities beyond simple commodity distribution. These other methods for commercializing e-goods suggest to me that current pricing trends are not indicative of market failure, but rather of a changing marketplace

Pricing of digital goods and services

An appropriate pricing strategy is inevitable in achieving competitive advantage; however, firms have to be aware of the key resources needed for successful pricing and invest in developing the firm’s pricing ability. Pricing of digital goods and services is especially challenging due to the high-volatility environments and the special characteristics that these offerings have as compared to other economic goods. Despite of its importance, the literature, to date, did not investigate the pricing of digital goods and services from the resource-based perspective (RBW) and the capability-based view (CBV). After conducting a multi-case study of five firms, this research provides an in-depth view on the pricing practices of digital goods and services through the theoretical lenses of RBV and CBV and proposes a model that captures the key activities and the key resources needed for pricing of digital goods and services

Confused, Frustrated, and Exhausted: Solving the U.S. Digital First Sale Doctrine Problem Through the International Lens

Users worldwide enjoy digital goods such as music and e-books on a daily basis. They have become a major part of people\u27s lives, with uses ranging from lighthearted entertainment to serious educational pursuits. In many cases, convenience and affordability make digital goods more preferable than their analog counterparts. However, users often cannot use digital goods as freely as they would analog goods. Courts, legislation, and businesses prohibit those users, accustomed to reselling unwanted hard-copy books or vinyl records, from reselling digital books and music. This confuses users as to what they can actually do with their digital goods. This Note proposes that the United States adopts a digital first sale doctrine based on normative principles pulled from E.U. and Canadian copyright law