<Article Review> Pricing; Why Customers Won't Pay As Much for Digital Goods [HBR May-June, 2018]

Recently, in a regular meeting that discuss some topics related to business administration, I'd got a chance to read pretty famous and influential business magazine Harvard Business Review. And I found an interesting article that made me think about the reason why customers are not paying as much for digital goods. In this post, I want to share my opinion about the article.

In the article, the writer insists that people are tending to pay less money to buy digital goods because physical goods are facilitating the feeling of ownership more than digital goods. The writer also cited a result of an experiment that researchers conducted with ordinary people. The result shows that people have a tendency of preference for physical stuff because of the feeling of ownership. Because digital goods are not material, customers can't feel the sense of ownership enough. At the end of the article, the writer cites a suggestion of the researchers for marketers who want to increase the value of digital goods.

While I read the article, I partially agreed with the conclusion and thought further about the topic. I think it is a transition period of consumption pattern nowadays. I, as a late 80's born, am pretty familiar with both physical and digital goods; from 5.25" floppy diskette to cloud disk, from cassette tape to online streaming, from book to e-book and so on. Because I had a chance to own both types of goods, and know the difference comes from a different type of ownership, I have a preference of type of goods.

On the contrary, the former generation had less chance and experience to buy and use digital goods than me. Therefore, they are not used to digital goods and they might have a preference for physical goods naturally. For them, the result of the research mentioned above could be applied in the same way. The less they feel ownership, the less would they pay for digital goods. The later generation, on the other hand, they are familiar with digital goods. Furthermore, because various goods and services are changing their method of provision from physical type to digital type and the later generation is exposed much more than me, it is no longer a weird idea that pays digital goods as much as physical goods. Who knows? Whether buying and keeping physical goods might be regarded as a kind of maniac taste or not in the future.

I think the approach of the article is meaningful because it is written in present; transition period of provision way for goods and services. As time goes by and the way of provision for goods and services by digital would be expanded far more than now, then this kind of topic would not attract the attention of people.