99 seems to have become the normal price for a song on web platforms, such as iTunes and Google Play. Even though today this price seems obvious to most people, the basis on which it has been fixed is not always as clear. When songs were recorded on a storage device such as a CD or a tape, their pricing did not really differ from those of any other physical goods, as it followed the same production process. It thus involved the same stages and actors in the calculation of the price. However, digitalization has almost entirely changed the way a good was priced. How relevant is it to price, and to pay, $0.99 for something that has no physical existence and that can be reproduced almost infinitely and in no time by doing a simple copy-and-paste? What makes the pricing of digital goods different from the one of normal, physical goods, and what are the logics currently applied in the business world?.
I. Digitalization changes most rules of the game.
The category "digital goods " includes a huge variety of types of products, from texts to pictures, from songs to videos, from software to information processing services. All of them however share some characteristics: they are completely digitalized, which means that in the end they are just a series of 0s and 1s which needs a very specific process to be computed the way it is meant to be. Without the said process, the digital good becomes unusable.
Those goods have no physical existence, except in a way from the device they are stored on. The number of such devices can be infinite as those goods can be easily reproduced. Consequently and as opposed to physical goods, digital ones are not determined by physical characteristics such as their location, their physical definition, and their contingencies (except in the case when a digital good is purposely distributed in limited numbers).
