Paid-Content.org - Scientific Publications and Articles

"Buying, Sharing and Renting Information Goods"

Publication Title: Buying, Sharing and Renting Information Goods
Author(s): Hal Varian

Year: 2000
Published in: The Journal of Industrial Economics

Topic of the Publication: - Business Strategy
- Economics
- Consumer Behavior
- Information Goods
- Paid Content

Abstract:
Information goods such as books, journals, computer software, music and videos can be copied, shared, resold, or rented. When such opportunities for sharing are present, the content producer will generally sell a smaller amount at a higher price which may increase or decrease profits. I identify three circumstances where profits increase: (1) when the transactions cost of sharing is less than the marginal cost of production; (2) when content is viewed only a few times and transactions costs of sharing are low; and (3) when a sharing market provides a way to segment high-value and low-value users.
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