Pricing of Digital Information 2011

The emergence and rapid growth of Internet has made it an important media for distributing digital products including computer software, stock quotes and financial information, news, books, journals, music, and videos, searching and online services. However, the distinctive characteristics of digital products, such as a significant investment cost to produce the first copy, low marginal production cost, low distribution cost, indestructibility, transmutability, and easy to reproduce, suggest that the traditional pricing policies (e.g., setting price equal to marginal cost) may not apply. Yet, little has been educated on pricing for digital products distributed over the Internet, and so far few businesses offering digital products have made money on the Internet.