The Sad State of Digital Software Distribution

#101

foobar, you completely miss the point with your Economics 101 post. Jeff was pointing out that this particular corner of “the market” (himself, and also me and evidently a few others) will not bear full retail price for downloadable software. We are perfectly free to reason what prices we personally wish to accept, and we are also perfectly free to include the estimated production and distribution costs in our reasoning.

You are confusing statistical evaluation of market behavior with the individual actions that create this behavior in the first place. You are also confusing the theory of an efficient overall market with perfectly efficient pricing of every single individual product, which is obviously not the case.

Downloadable software at high price points is clearly not a sustainable business by itself, as evidenced by the fact that Microsoft, Valve etc. still try very hard to push the same products on retail shelves. It’s merely a little extra profit from rich and impatient people, as Jeff pointed out. The publishers did not even select this price point; as others have pointed out, they are forced by brick mortar retailers not to undercut them. Hence, the download price is not actually the price the publishers would have chosen in their own evalution of what the market will bear.

Back on topic, I think it’s enlightening that the BM retailers themselves feel that they add no value whatsoever to the downloadable product. They fear their business would go away entirely if the downloadable alternative were significantly cheaper. That more than anything else suggests that they are truly doomed, just like any stores still trying to sell pop music CD singles.

#102

The market will bear it, 'cause Jeff here paid for it. 'nuff said.

But it’s all food for thought. A number of people have made the correct observation that going to an all-download distributorship might a href="http://tailguard.blogspot.com/2007/11/hidden-costs-of-digital-distribution.html"cost more than you think/a. And some other Chris has got it exactly right, but we’ll leave that post for another day.

#103

Now how did that other guy get his link to display?

http://tailguard.blogspot.com/2007/11/hidden-costs-of-digital-distribution.html

Oh.

#104

Piracy is the world’s most efficient distribution network. Instead of hiding from it, vendors should be figuring out ways to embrace it, and harness its power.

If that’s what you really want, then perhaps instead of using the overloaded and demonising term “piracy”, we should more accurately talk about it as “file sharing”.

Seriously, people. If you keep using terms designed to frame the debate against actually sharing information, like “pirate”, “intellectual property”, “copy protection”, then how can you expect the discussion to go in favour of sharing information?

#105

I totally agree, I have been arguing this same stuff with my friends over the new online DVD craze! How is it that we are using our own bandwidth and hard drive space to download these softwares and still paying the same price! I will tell you how supply and demand, people are paying the prices so why should they cut it? As long as people are willing to pay the retail price for something they are downloading no company in their right mind would drop the prices. Until that day comes though, I will not be purchasing downloadable content, at least if I purchase the hard copy I get manuals and cases. Save myself some printing fees and hard drive space.

#106

What makes me mad is when you pay a bill online and they want to charge a fee to do it online. Let’s see, no light bill, no rent, no employees…shouldn’t I get a discount.

#107

I stick to Free Software. If I’m going to spend money on it, it will be via donation. Other data is harder to do that with, but I’m trying.

These days I use Ubuntu Studio and get my music from jamendo.com

If you don’t want us enjoying your infinitely replicable art without paying you, fine… but you can’t stop us from competing you out of a job. If you don’t embrace the nature of information, we will. It’s a matter of time, nothing more.

#108

Ubuntu add/remove programs actually works. Whenever I have to look for a piece of functionality for Windows or Mac these days I cringe, why can’t it just be there–apt get…

And Mac’s Port thing is no help, by the way. Poor selection and it requires compiling. On my mac they failed left and right.

#109

What happens when Steam goes out of business?

What happens when Microsoft/EMI goes out of business? You’ve still got the DVDs/CDs you paid for and burnt.

#110

Consider this. If you want to maintain your brick and mortar sales channel, you can’t undercut them with your online store.

So, the safe thing to do is to charge full list price at the online store and let the traditional channel undercut you with discounted product.

#111

Simple solutuion: Don’t buy it.

#112

I have not found prices for digital distribution to be higher, but I have found delivery times to be much higher. Specifically, via a national software reseller, I cannot (read, will not) purchase electronic copies of software from Apple or Adobe. There is little to no price difference between buying 20 boxes of Adobe CS3 and 20 licenses. The difference is that the boxes can be overnighted and the licenses take 2-3 weeks to process.

The same goes for Mac OS. I wanted to purchase 20+ Leopard upgrades and the time to process electronic licenses was weeks where as boxes were sitting in a warehouse ready to ship in just days.

It is simply ludicrous that we are dumping boxes, DVD CD’s into landfill and transporting media across states, using tons of fuel in the process, when electronic bits over a wire will more than suffice.

#113

I am similarly frustrated with the pricing of content on XBox Live. Guitar Hero 2 downloadable song packs raised a lot of ire for their price: $6.25 for 3 songs. Yes, that is more than twice the price you would pay from iTunes, and you can’t choose all 3 songs, you buy them as a bundle.
The defenses that I read mentioned the cost of licensing, and the certification and deployment preparation needed for each piece of content that was required for each downloadable unit on XBox Live (which is why it you would package 3 songs into a single unit, rather than go through the process for 3 different units).
If that truly is the case, and the price is justified by the expenses, it just proves to me that the micro-payment XBox Live model is a failure. We know that a publisher can put 70 songs in a box on a store shelf for $59 (as they did with Guitar Hero 2 and Guitar Hero 3). If the songs were instead made available via XBox Live, they would cost over $140.

#114

Another issue is that, especially for PC games, there are fewer and fewer actual stores where you can walk in and buy them in the first place. Most stores have very limited selections, so in most of the U.S. you’re stuck with either ordering it on the internet (as a digital download or to be shipped to you), or going to Best Buy (one of the few places that keeps a decent selection of PC games available across the nation). Most of the game stores, especially now that they’ve consolidated into one entity, no longer carry PC games in the majority of their locations.

So, when looking at shipping costs and so forth, it’s still a shame that I can manage to buy something from one of the major online retailers and receive the manuals and disks and get a better price than I can through steam or some other digital distribution method.

The upside to steam, as already mentioned, is the ability to download it as many times as you wish. Of course, you have to remember your login information, and even if you bought the disks you’re pretty much screwed if you can’t remember that (for Valve’s games, anyway).

#115

Though I am glad to hear it’s helpful for non-US residents, who evidently get shafted on software pricing…

Alas, we not only get shafted on software pricing but on hardware as well. I recently looked at nVidia’s webpage and found you can buy a Geforce 8800 Ultra for $597, here in Sweden you can buy it for SEK 5700, which would be ok if $1 ~ 10 SEK, but $1 is actually ~6.35 SEK which means we pay 50% more than americans for essentially the same hardware. Same deal with computer books, I’ve seen a $20 book in the US, retail for $100 here in Sweden. What would we Swede’s do without Amazon?

#116

This is not a problem that is unique to the broadband age. Back when I was doing game development for an indie developer in the early and mid 90’s, we self-published all of our titles. We had distribution though both the retail channel and by direct sales from us. We could easily have charged 20% less than full retail and still made more profit than selling wholesale to the retailers, but we didn’t dare. The danger of having a retailer pull a title from the shelf and losing exposure was just too great.

The retail channel may be weaker than it was, but no marketing hack is willing to risk losing that exposure yet. As long as software is still sold by the “Brick and Mortar” retailers, you won’t see any price difference.

#117

You are not alone, but think about this:

Try comparing prices for Adobe CS3 Master Collection in the Adobe web store.

So, exactly same, english version costs about ~1645.37eur (currency converted with Google) if you are located in the US and have US credit card (they check for it) and if you are located in Finland it’ll cost you 3386.79€ if you take the digital download (13,2 Gigabytes…) That is twice as much as in the US! The software ISN’T localized, since it’s the same version, downloaded from the same server.

It’s cheaper to take few days off and FLY to the US for short vacation, and while there - buy the damn software from some retailer.

#118

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#119

Your view is too much user oriented.
Enable Digistal software Distribution is not free:

  1. Data storage.
  2. Internet connection (WW or centralized)
  3. Catlaog maintenance.
  4. Dev of new update system for instance
  5. maintenance of hardware and software behind this distribution.

You are right is cheaper than physical shipment, buroing etc but its’ absolutly not free.

Just an example:
What is the cost for you of an internet conenction in a country allwoing to distribute deserve 100 concurrent download at 200KB/s.
(about 150Mb/s UPLOAD line)…it’s free for you ? And with a 24/24 support service ?

And now in europe you acheive 1500 concurrent users…what is the price ? hmmmm

It’s absolutly not free !
We are not speaking about personnal dat exchange bewteen 2 PC around the world but about software distribution, saclable and with a minimum service for consumer)

#120

I am going to diverge from popular opinion. I love Steam. The other day I got Bioshock for 5 bucks and downloaded it at 3 megabytes a second. Hard to complain about that.