Do People Value Digital Goods Less than Physical Ones?

For the past 10 years, digital goods have been proliferating. Online information, streaming television,  e-books, and downloadable mp3s are just four products that offer improved consumer convenience. There’s no need to travel to receive them. They can’t be damaged or lost. And in many cases, acquiring them takes less money than acquiring the physical versions (DVDs, physical books, magazines, and newspapers, and CDs).

Consumers will pay more for physical goods than for digital ones.

But not so fast. Despite the availability and popularity of all these digital goods, there’s evidence that people value physical goods more than digital ones. This seems counterintuitive to a lot of technology news that assumes the digital world will gradually take over, so let’s look at it.

Physical Products Are Valued More…

First piece of evidence? The physical analogues are not going away. Many more books and DVDs are sold than e-books and streaming films, even now.

Second piece of evidence? Researchers have invested much time studying the value consumers ascribe to digital goods versus the value they ascribe to physical ones. Time after time, physical goods win out.

In a memorable study described in a recent Harvard Business Review, for example, tourists were asked to pose with a Paul Revere look-alike as they ambled around Boston and have their picture taken. They were then asked to donate to a historical association in the city.

The researchers divided the tourists into two groups. One was given a digital picture via email, the other group was handed a Polaroid.

The group that received a Polaroid from another person donated, on average 48% more.

The researchers conducted multiple similar experiments, all designed to either have people assign a value or come up with a theoretical value. In every case, the physical object was valued more.

…Because It Connotes Ownership

Why? Well, people like to own things. The fact is, it appears that the sense of ownership is much greater with a physical object than with a digital one.

Perhaps the best indication of this is the status of books people planned to sell once their use was over. Students were polled about the value of a textbook they planned to return once the course for which it had been completed. They had premium value over digital. Why? Because there was no sense of ownership. The books were, effectively, rented.

Perhaps this is not too surprising after all. As Inc. points out, physical objects have for years fulfilled psychological needs, given pleasure, and confirmed status. They do this more easily than digital products in many cases, because digital products such as e-books, streaming films, and music are not easily displayed and viewed.

Implications for Business

What are digital businesses to do? After all, it’s surprising that the convenience of digital goods is appreciated but doesn’t command a premium.

Inc. suggests that digital businesses need to develop a business strategy that recreates the psychological, display, and status needs that physical objects have. Display? One example is Apple’s e-books, which are pictured on a wooden shelf.

Another solution is making digital products customizable, to create a sense of ownership. A third solution is encouraging display and sharing of digital objects via social media and other channels.

Although digital goods are becoming more ubiquitous, they are not becoming more valuable. Physical goods still demand a premium. Digital businesses need to come up with products that fulfill the same needs for ownership, display, and broadcasting of status.