How do firms make money selling digital goods online?
We review research on revenue models used by online firms who offer digital goods. Such goods are non-rival, have near zero marginal cost of production and distribution, low marginal cost of consumer search, and low transaction costs. Additionally, firms can easily observe and measure consumer behav...
| Main Authors: | , , , , , , , , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
| Published: |
Springer-Verlag
2015
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| Online Access: | http://hdl.handle.net/1721.1/98512 https://orcid.org/0000-0002-9150-2334 |
| _version_ | 1826210992149757952 |
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| author | Lambrecht, Anja Goldfarb, Avi Bonatti, Alessandro Ghose, Anindya Goldstein, Daniel G. Lewis, Randall Rao, Anita Sahni, Navdeep Yao, Song |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Lambrecht, Anja Goldfarb, Avi Bonatti, Alessandro Ghose, Anindya Goldstein, Daniel G. Lewis, Randall Rao, Anita Sahni, Navdeep Yao, Song |
| author_sort | Lambrecht, Anja |
| collection | MIT |
| description | We review research on revenue models used by online firms who offer digital goods. Such goods are non-rival, have near zero marginal cost of production and distribution, low marginal cost of consumer search, and low transaction costs. Additionally, firms can easily observe and measure consumer behavior. We start by asking what consumers can offer in exchange for digital goods. We suggest that consumers can offer their money, personal information, or time. Firms, in turn, can generate revenue by selling digital content, brokering consumer information, or showing advertising. We discuss the firm’s trade-off in choosing between the different revenue streams, such as offering paid content or free content while relying on advertising revenues. We then turn to specific challenges firms face when choosing a revenue model based on either content, information, or advertising. Additionally, we discuss nascent revenue models that combine different revenue streams such as crowdfunding (content and information) or blogs (information and advertising). We conclude with a discussion of opportunities for future research including implications for firms’ revenue models from the increasing importance of the mobile Internet. |
| first_indexed | 2024-09-23T14:59:01Z |
| format | Article |
| id | mit-1721.1/98512 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T14:59:01Z |
| publishDate | 2015 |
| publisher | Springer-Verlag |
| record_format | dspace |
| spelling | mit-1721.1/985122022-10-01T23:43:38Z How do firms make money selling digital goods online? Lambrecht, Anja Goldfarb, Avi Bonatti, Alessandro Ghose, Anindya Goldstein, Daniel G. Lewis, Randall Rao, Anita Sahni, Navdeep Yao, Song Sloan School of Management Bonatti, Alessandro We review research on revenue models used by online firms who offer digital goods. Such goods are non-rival, have near zero marginal cost of production and distribution, low marginal cost of consumer search, and low transaction costs. Additionally, firms can easily observe and measure consumer behavior. We start by asking what consumers can offer in exchange for digital goods. We suggest that consumers can offer their money, personal information, or time. Firms, in turn, can generate revenue by selling digital content, brokering consumer information, or showing advertising. We discuss the firm’s trade-off in choosing between the different revenue streams, such as offering paid content or free content while relying on advertising revenues. We then turn to specific challenges firms face when choosing a revenue model based on either content, information, or advertising. Additionally, we discuss nascent revenue models that combine different revenue streams such as crowdfunding (content and information) or blogs (information and advertising). We conclude with a discussion of opportunities for future research including implications for firms’ revenue models from the increasing importance of the mobile Internet. 2015-09-15T17:11:26Z 2015-09-15T17:11:26Z 2014-06 Article http://purl.org/eprint/type/JournalArticle 0923-0645 1573-059X http://hdl.handle.net/1721.1/98512 Lambrecht, Anja, Avi Goldfarb, Alessandro Bonatti, Anindya Ghose, Daniel G. Goldstein, Randall Lewis, Anita Rao, Navdeep Sahni, and Song Yao. “How Do Firms Make Money Selling Digital Goods Online?” Mark Lett 25, no. 3 (June 24, 2014): 331–341. https://orcid.org/0000-0002-9150-2334 en_US http://dx.doi.org/10.1007/s11002-014-9310-5 Marketing Letters Creative Commons Attribution-Noncommercial-Share Alike http://creativecommons.org/licenses/by-nc-sa/4.0/ application/pdf Springer-Verlag SSRN |
| spellingShingle | Lambrecht, Anja Goldfarb, Avi Bonatti, Alessandro Ghose, Anindya Goldstein, Daniel G. Lewis, Randall Rao, Anita Sahni, Navdeep Yao, Song How do firms make money selling digital goods online? |
| title | How do firms make money selling digital goods online? |
| title_full | How do firms make money selling digital goods online? |
| title_fullStr | How do firms make money selling digital goods online? |
| title_full_unstemmed | How do firms make money selling digital goods online? |
| title_short | How do firms make money selling digital goods online? |
| title_sort | how do firms make money selling digital goods online |
| url | http://hdl.handle.net/1721.1/98512 https://orcid.org/0000-0002-9150-2334 |
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