>about quote: "We live in a world where digital products are inherently undervalued relative to other products."
That author describing it as a single category called "digital products" doesn't really explain it. There are lots of non-physical digital products that people will pay for. It's really the smartphone apps in particular that's a special category of negative psychology.
After the initial novelty[1] of buying apps in 2008 died away, people realized that smartphone apps were a waste of money. People would buy an app and then later experience buyer's remorse. They felt ripped off.
Therefore, the previous bad experiences provide no reinforcement for future purchases. Compare that with consumers who buy a digital song for $0.99 from Taylor Swift and then that enjoyment reinforces the idea that it's ok to pay $0.99 again for an Adele song. Or Kindle owners who pay $9.99 for the latest ebook from Stephen King and then willingly pay that amount again months later for another bestseller. There are many other examples of repeated digital purchases.[2] (Using the positive reinforcement framework of thought, it's not that people pay for $5 coffee because it's a physical product -- it's that the previous $5 purchase of Starbucks gave them pleasure and therefore they willingly pay it again.)
If consumers really felt they got value from app store purchases like they do with iTunes songs, Kindles, Netflix, etc, they'd buy more. Therefore, the conclusion that smartphone owners undervalue digital products is not actually correct -- they actually value digital app store purchases as near-worthless because that's the utility they got from them.
Also, the avoidance of buying smartphone apps seems related to The Market for Lemons[3] and the thousands of terrible apps written by copycat incompetent programmers prevent people from discovering the truly quality apps that could improve their lives. A lot of bad apps flooding the market ruins it for everyone else.
That author describing it as a single category called "digital products" doesn't really explain it. There are lots of non-physical digital products that people will pay for. It's really the smartphone apps in particular that's a special category of negative psychology.
After the initial novelty[1] of buying apps in 2008 died away, people realized that smartphone apps were a waste of money. People would buy an app and then later experience buyer's remorse. They felt ripped off.
Therefore, the previous bad experiences provide no reinforcement for future purchases. Compare that with consumers who buy a digital song for $0.99 from Taylor Swift and then that enjoyment reinforces the idea that it's ok to pay $0.99 again for an Adele song. Or Kindle owners who pay $9.99 for the latest ebook from Stephen King and then willingly pay that amount again months later for another bestseller. There are many other examples of repeated digital purchases.[2] (Using the positive reinforcement framework of thought, it's not that people pay for $5 coffee because it's a physical product -- it's that the previous $5 purchase of Starbucks gave them pleasure and therefore they willingly pay it again.)
If consumers really felt they got value from app store purchases like they do with iTunes songs, Kindles, Netflix, etc, they'd buy more. Therefore, the conclusion that smartphone owners undervalue digital products is not actually correct -- they actually value digital app store purchases as near-worthless because that's the utility they got from them.
Also, the avoidance of buying smartphone apps seems related to The Market for Lemons[3] and the thousands of terrible apps written by copycat incompetent programmers prevent people from discovering the truly quality apps that could improve their lives. A lot of bad apps flooding the market ruins it for everyone else.
[1] example: http://venturebeat.com/2008/12/23/iphone-fart-app-pulls-in-n...
[2] Netflix $9.99/month
Adobe Cloud apps $49.99/month (more digital subscribers than customers of physical CDs/DVDs)
boxing pay-per-view $99 (Mayweather vs Pacquiao)
[3] https://en.wikipedia.org/wiki/The_Market_for_Lemons