I want my digital information goods

It’s been a while since I wrote a post, so today I’m going to bombard you with three posts (look out!).

A few stories I saw on the interwebs this week have compelled me to write about developments in the use of digital information goods by consumers. First, iTunes has just passed Wal-mart to become the #1 music retailer (via Ars Technica) in the US. Just a few months ago, iTunes passed Best Buy to become #2, and the continued growth of their sales (combined with the decline of CD sales across all retailers) has pushed them to #1 fairly quickly. More and more people are purchasing (not just stealing) their music in purely digital form. This bodes well for the continued slow death of the CD and maybe, just maybe, the increased profits from lower manufacturing, inventory, and transportation costs (see digital info goods are helping the environment!) with the decrease in physical CD production will mollify the RIAA. Also, Amazon’s strategy of selling both CDs and DRM-free mp3s will likely payoff in the long-run since they can hedge their bets until the transition to digital is complete.

Second, and also in music news, Radiohead seals their place as the leader of the digital music re-revolution. Sure there were tons of artists who tried similar approaches in the past – Prince and his digital distribution efforts, Trent Reznor’s mash-up/remix and “steal my music, please” campaign, and who could forget The Bare Naked Ladies and their novel (sarcasm…) “hey you can buy our album on a USB stick” stunt. But this is Radiohead, they are much cooler and taken way more seriously by the industry and fans than any of these other “revolutionary” artists. They recently made the individual tracks of their new single “Nude” available for purchase on iTunes and are encouraging fans to remix the single and upload it to their website which can be voted on a la digg style. The fact that the number one mix on the site is by Canadian electronic band Holy F*ck (who are ridiculously good live btw), shows the scope of this effort. What do you think the record execs are saying about this? Probably stuff like “How do we monetize the creative fan interactions and leverage increased distribution opportunities” or some such nonsense, while Radiohead is likely thinking “let the music be free and we may learn a thing or two.”

Finally, eBay will no longer allow the sale of purely digital goods (via Techdirt) in their auction or direct sales channels. The main argument for this move is the infinite reproducibility of the digital info good (duh) and therefore the ability for sellers to continuously relist the same item over and over again. Apparently this is causing problems for ebay ops and provides some ability to manipulate seller ratings (like they’re not all manipulated anyway – in a paper I’m currently working on with Kim Huat Goh we found that 99% of all the ebay sellers selling a nintendo Wii in a 3 week period last February had 100% positive feedback, only honest people sell Wii’s on ebay apparently). I’m not sure how I feel about this position. On one hand I think that ebay is potentially losing out on a growing trend and consumers will probably suffer. On the other hand I’m so sick of seeing all these blogs on how to make an eBay business selling useless information goods (like an eBook on how to create eBooks to sell on eBay) that I think this might be a good thing.

So their is irony in this week’s digital information goods news – the demand is growing for them and the music re-revolution is in full swing, but ebay wants no part of it, hmm.