Dimensions of Digital Product Design

April 30, 2007

I read a very interesting interview with Ramon Casadesus-Masanell (an assistant professor in the Strategy unit at Harvard) at the HBS Working Knowledge website:

He made me think about the different dimensions that influence the decision making process of purchasing a digital product like music. I think these are the most important (in no particular order):

– Legal Considerations (or how Steve Jobs would say: good or bad karma)
– Price
– Availability of content (catalogue, licencing… vs. rare songs/artists on p2p networks)
– Packaging (file format, DRM)
– Metadata (Database Organizing)
– Digital encoding quality
– The process of obtaining content (location/interface, purchase, consumption)
– Download speed
– Support / service
– Context

Most discussions are only about price and packaging (DRM)…
which fails to recognize many other factors.

How can we find out which dimensions customers value the most?

One very important point in the working paper “Peer-to-Peer File
Sharing and the Market for Digital Information Goods” by Ramon is the comparison of the business models p2p filesharing and itunes.

The paper demonstrates that record companies should explicitly consider the
competition from p2p networks when making pricing decisions.
For a large portion of potential customers, the decision is not “buying the product at  $x vs. not buying” but “buying at $x vs. downloading from p2p.”

Here some bullet points from his analysis in the interview:

p2p:

  • Strengths
    • It`s free
    • Variety of content
    • No restrictions on content (no DRM)
    • Constantly improving due to technological race
    • Decentralized—makes it hard No anonymity
  • Weaknesses
    • Under constant attack by industry players
    • Downloading time varies
    • Congestion problems
    • Sometimes content is unreliable (spoof files)
    • No anonymity

iTunes:

  • Strengths
    • Legal
    • Easy to use
    • High reliability
    • Metadata (i.e., information about the
      files)
    • Fast downloads
    • Works well with iPod
  • Weaknesses
    • Customers must pay for content (relatively expensive
      at $0.99)
    • Restrictions on content (DRM)
    • Less variety of content

When I read this, I was thinking about two questions:

How will the strengths and weaknesses change in the future cause of the development of technology ?
How are the various dimensions influencing each other?

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