Information Goods and Information Markets - Essay Example

According to him, one has to experience at least some amount of an information good before deciding to buy it, because only through experience one can come to know to what extent the commodity is worth buying. According to Coiera (2000), other goods like oranges or batteries do not require these pre-use since people know that they would meet their expectations. Another major characteristic of information goods is that initial production cost of such goods is higher whereas the marginal cost of reproduction is very low.

In addition, regardless of the high cost, most of the information products like music, books, sound track, web pages are highly vulnerable to re-production or copying. Another finding of the author regarding information goods is that unlike other goods or services, information is never consumed. For instance, digital information can be copied exactly whereas normal goods cannot be copied this way. Hence, the laws of supply and demand ‘do not easily apply to many information goods’. Finally, unlike other normal goods, information can be easily transmitted across communication networks in bulk at lower costs or for absolutely free of cost.

Since information goods are prone to copying, producers must create some form of monopoly in order to ensure profit from producing and selling information goods. . 117) comments, information goods will be sold for no cost if marginal cost is zero. The market involves numerous other issues as well despite the current copyright laws. Pirates have easy access to various information products illegally as there is no unanimous international regulation in this regard. As Coiera (2000) finds, if free access to information is the goal of a producer, the current feasibility is an advantage whereas if the producer intends to raise revenue from information provided, the advantage turns to be a challenge.

Hence, in order for making profits from information goods, one has to create monopoly by acquiring a patent or copyright, although property theft is still likely. The tactic is termed as ‘avoidance’ which mainly involves avoiding the production of ‘information goods that must be traded in such openly competitive environments’. Coiera believes that the avoidance tactic would make considerable amount of delay for the product to reach pirates by when the creator would gain revenue. Another tactic which information sellers normally apply is attaching the brand identity to their products or websites so as to help customers to differentiate the original products from the pirated ones.

Yet another recent trend in the market is the pay-per-view model. This tactic allows the producer to charge the customer only for particular visit or for getting access to specific information. Selling the particular product bundled with other several products is another technique used by information sellers. The logic is that only a potential buyer would be willing to buy the whole package even at higher costs. Creative pricing and marketing is another useful tactic information producers can try to enhance their revenue. To