Large sunk cost of development, negligible cost of reproduction and distribution and substantial economies of scale make information goods distinct from industry goods. In this paper, we analyse versioning strategies of horizontally differentiated information goods with shared feature sets, discrete hierarchical groups and continuous individual consumer tastes. Based on our modelling results, when cannibalization is considered among different market segments, it is always sub-optimal to differentiate information goods if market is not fully differentiated or characteristics of the information goods are not specifically designed to relate to certain market segments
