The price of quality in digital information goods: an empirical investigation
by Jerald Hughes
International Journal of Services and Standards (IJSS), Vol. 7, No. 1, 2011

Abstract: The popularity of consumer digital information goods is disrupting incumbent firms' business models, which must seek new sources of profitability. One critical factor is quality standards of distribution formats. Do higher-quality versions command price premiums, and if so, how large? Conversely, do lower-quality versions exhibit price discounts? How much will consumers with differing musical preferences pay for these different quality standards? This study examines prices of digital music products offered at multiple quality levels, finding that strategies of quality versioning have potential to produce profits by segmenting consumer markets to address differing quality preferences both within and across product genres.

Online publication date: Fri, 27-Feb-2015

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