2 Define a digital market and digital goods and describe their distinguishing features.

Digital markets are said to be more “transparent” than traditional markets. The Internet has
created a digital marketplace where millions of people are able to exchange massive amounts of
information directly, instantly, and for free. Information asymmetry is reduced. Digital markets
are very flexible and efficient, with reduced search and transaction costs, lower menu prices, and
the ability to change prices dynamically based on market conditions. Digital markets provide
many opportunities to sell directly to the consumer, bypassing intermediaries, such as
distributors or retail outlets. Other features include delayed gratification, price discrimination,
market segmentation, switching costs, and network effects.

Digital goods are goods that can be delivered over a digital network and include music, video,
software, newspapers, magazines, and books. Once a digital product has been produced, the cost
of delivering that product digitally is extremely low. New business models based on delivering
digital goods are challenging bookstores, publishers, music labels, and film studios that depend
on delivery of traditional goods.

The Internet has created a digital marketplace where millions of people all over the world are able to
exchange massive amounts of information directly, instantly, and for free. As a result, the Internet has
changed the way companies conduct business and increased their global reach.

Digital Goods
The Internet digital marketplace has greatly expanded sales of digital goods. Digital goods are goods that
can be delivered over a digital network. Music tracks, video, Hollywood movies, software, newspapers,
magazines, and books can all be expressed, stored, delivered, and sold as purely digital products.
Currently, most of these products are sold as physical goods, for example, CDs, DVDs, newspapers, and
hard-copy books. But the Internet offers the possibility of delivering all these products on demand as
digital products.

Digital goods can be bought online, consumed immediately, and used without worry
for their degradation or loss. All of a person’s digital books, documents, music,
photographs, and videos can be stored in one pocket-sized device, providing the
individual access to a library of content anywhere at any time. Digital goods have
proliferated widely. Digital photographs, for instance, were first commercialized in
1990 and now are taken more often than print photographs

In electronic commerce, digital goods is a general phrase used to describe any goods that are
stored, delivered and used in its electronic format. Digital goods are shipped electronically to the
consumer through email or download from the Internet.

How to Purchase Digital Goods

Usually when you purchase digital goods online, after payment has been received the merchant
will provide you with your digital item as an e-mail attachment or they may provide you with a
secure link where you can download the item.

Examples
Examples of digital goods include e-books, music files, software, digital images, Web site
templates, manuals in electronic format, and any item which can be electronically stored in a file
or multiple files.