Take media – music, movies, books, for example. You can buy, store, and enjoy them in digital format without having to run to the local video rental to carry out a movie or two or find somewhere in your home to store hundreds of CD cases.
What’s more, these digital products often have their outdated counterparts beat on quality – and perhaps also convenience. They don’t degrade over time and they can be consumed immediately. How great is that? We can even share our pictures instantly and share our experiences in real time with our loved ones.
If these products are so much better, why do we ascribe less value to them as compared to their physical counterparts? Recent research has found that people financially value physical goods more than digital equivalents. In five studies, researchers Ozgun Atasoy and Carey K. Morewedge found that people were willing to pay more for books, photographs, and movies. They did so whether the researchers were measuring the consumer’s willingness to pay, the pay-what-you-want paradigm, or purchase intention.
Atasoy and Morewedge argue that physical goods provide more opportunity to generate association with the self and this is why consumers value physical goods more. The physical format of a good, they say, leads to a stronger sense of ownership, and in turn a higher valuation.
They believe that the features of an object impact our ability to find psychological ownership. For example, if a good is rented or accessed through subscription, then it is likely to endow a lower sense of ownership because of a decreased sense of permanence. Additionally, the researchers found that if the good is symbolically relevant to one’s identity, it might boost a consumer’s valuation of the physical version.
If you are a retailer of digital goods, you might be feeling a bit uncomfortable right now. What can you do to boost ownership of digital goods in order to keep up revenues? Try adding a feature that allows for customization, something that consumers can have control over. Or maybe try bundling with a physical good to see what works best for your product offering.
There are many reasons why the proliferation of digital goods is a good thing. Less environmental impact, the possibility for instantaneous consumption, and maybe even an increased ability to share experiences among friends and loved ones. Online retailers that will win in this world will be able to cultivate a sense of ownership over the intangible.