Digital goods

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Digital goods or e-goods are intangible goods that exist in digital form.[1] Examples include this Wikipedia article; digital media, such as audible ebooks e-books, downloadable music, internet radio, internet television and streaming media; fonts, logos, photos and graphics; digital subscriptions; online ads (as purchased by the advertiser); internet coupons; electronic tickets; online casino tokens; electronically traded financial instruments; downloadable software (Digital Distribution) and mobile apps; cloud-based applications and online games; virtual goods used within the virtual economies of online games and communities; workbooks; worksheets; planners; e-learning (online courses); webinars, video tutorials, blog posts; cards; patterns; website themes; templates.

Legal concerns of digital goods[edit]

Special legal concerns regarding digital goods include copyright infringement and taxation.

Also the question of the ownership (versus licensed use or service only) of purely digital goods is not finally resolved. For instance, the software installers of the digital software distributor gog.com are technically independent to the account but are still subject to the EULA, where a "licensed, not sold" formulation is used.[2] Therefore it is not clear if the software can be legally used after a hypothetical loss of the account; a question which was also raised before in practice for the similar service Steam.[3] In July 2012, for instance for the European Union the European Court of Justice ruled in the case UsedSoft vs. Oracle that the sale of a software product, either through a physical support or download, constituted a transfer of ownership in EU law, thus the first sale doctrine applies; the ruling thereby breaks the "licensed, not sold" legal theory, but leaves open numerous questions.[4] Therefore it is also permissible to resell software licenses even if the digital good has been downloaded directly from the Internet, as the first-sale doctrine applied whenever software was originally sold to a customer for an unlimited amount of time, thus prohibiting any software maker from preventing the resale of their software by any of their legitimate owners.[5][6][7] The court requires that the previous owner must no longer be able to use the licensed software after the resale, but finds that the practical difficulties in enforcing this clause should not be an obstacle to authorizing resale, as they are also present for software which can be installed from physical supports, where the first-sale doctrine is in force.[8][9] The ruling applies to the European Union, but could indirectly find its way to North America; moreover the situation could entice publishers to offer platforms for a secondary market.[6]

Perceived Value[edit]

Consumers value digital goods less than comparable physical goods, despite acknowledging that digital goods have many product features that make them objectively superior to physical good (e.g., greater accessibility, imperviousness to damage, taking up no space, weight, etc.).[10] Atasoy and Morewedge found, in five experiments, that consumers value digital goods less than physical goods whether value was measured by letting participants pay what they wanted (PWYW) for comparable physical and digital goods (e.g., a souvenir photograph), was measured by eliciting consumers' willingness to pay for comparable physical and digital goods (e.g., business course textbooks, fiction, or popular movies), or was measured by eliciting how likely consumers were to purchase comparable physical and digital-file-based goods if both were sold at the same price.

The lower value ascribed to digital than physical goods is not due to their lower marginal cost of production, lower market prices, differences in consumption utility or perceived permanence. Rather a lack of perceived control over digital goods leads consumers to feel that they never truly own digital goods to the extent that they do comparable physical goods. As a result of this lack of psychological ownership, digital goods do not enjoy the same value-enhancing endowment effect[11] that is observed for physical goods that consumers own. This psychological mechanism also predicts when consumers value digital goods as much as comparable physical goods. For instance, consumers who did not expect to own a good (e.g., students who would rent a textbook and return it at the end of the semester) in their experiments valued physical and digital-file-based goods equally.[10]

See also[edit]

References[edit]

  1. ^ "Digital Goods". Webopedia. Retrieved 23 March 2013.
  2. ^ https://www.academia.edu/6129809/GOG.com_End-User_License_Agreement
  3. ^ Walker, John (2012-02-01). "Thought: Do We Own Our Steam Games?". Rock, Paper, Shotgun. Retrieved 2014-12-27. I asked gamer lawyer Jas Purewal about this a short while back, not specifically about Valve, and he explained that the matter is still unresolved. “In fact,” he says, “it’s never been completely resolved for software generally[...]"
  4. ^ Jas Purewal. "The legality of second hand software sales in the EU". gamerlaw.co.uk. (mirror on gamasutra.com)
  5. ^ hg/mz (AFP, dpa) (2012-07-03). "Oracle loses court fight over software resale rules". dw.de. Retrieved 2014-12-30. A European court has ruled that it's permissible to resell software licenses even if the package has been downloaded directly from the Internet. It sided with a German firm in its legal battle with US giant Oracle.
  6. ^ a b Voakes, Greg (2012-07-03). "European Courts Rule In Favor Of Consumers Reselling Downloaded Games". forbes.com. Retrieved 2014-12-30. Could this be the victory we need for a “gamer’s bill of rights” ? DRM is an oft-cited acronym, and resonates negatively in the gaming community. The Court of Justice of the European Union ruled in favor of reselling downloaded games. Simply put, legally purchased and downloaded games will be treated like physical copies of the game, and consumers can then sell their ‘used’ game.
  7. ^ "JUDGMENT OF THE COURT (Grand Chamber)". InfoCuria - Case-law of the Court of Justice. 2012-07-03. Retrieved 2014-12-30. (Legal protection of computer programs — Marketing of used licences for computer programs downloaded from the internet — Directive 2009/24/EC — Articles 4(2) and 5(1) — Exhaustion of the distribution right — Concept of lawful acquirer)
  8. ^ Timothy B. Lee (2012-07-03). "Top EU court upholds right to resell downloaded software". Ars Technica.
  9. ^ "EU Court OKs Resale of Software Licenses". AP.
  10. ^ a b Atasoy, Ozgun; Morewedge, Carey K. "Digital Goods Are Valued Less Than Physical Goods". Journal of Consumer Research. doi:10.1093/jcr/ucx102.
  11. ^ Kahneman, Daniel; Knetsch, Jack L.; Thaler, Richard H. (1991). "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias". The Journal of Economic Perspectives. 5 (1): 193–206. doi:10.2307/1942711. JSTOR 1942711.