Which business model is most suitable for the sale of digital goods?

If you are selling digital products, you probably receive 80–10% royalty. This means, in many cases, the author only receives a small portion per sale. For physical goods, such as paperback books, the picture may be much worse. Although I must say that now, there are services, which pay 90–80% royalty for virtual goods. However, I wonder which model is beneficial to the author. How much money are they willing to pay to sell their works. Of course, the digital products, “always are enough at your warehouse”, and if you have a good distributor providing sales, then it will probably neutralize any commission.

However, we decided to experiment and proposed a new business model — a subscription with a fixed price of $1 for each file sold, monthly.

This means, that until your product is on our platform, you pay $1, monthly. This model is quite unusual, but it raises some questions to the whole ecosystem and the sales process. What have we learned? If an author has content, which attracts buyers, then this model is highly profitable for a seller. For example, if the value of your book is $19, and it sells well, you receive 100% of the royalty, and your monthly cost is only $1.

However, we did receive responses from authors who do not like this business model. After analyzing their accounts, we learned that their content never sold. Of course, if the seller’s monthly income is $0, then the paying $1 is a net loss. Therefore, the question arises, “what is the point?” It turns out that it is self-deception and an illusion of professional activity. I am not, in any way, trying to offend anyone, but this is the way things are. However, many questions remain.

It is likely that certain products do not find their buyers. Indeed, today as much content there is to offer, finding your product can be difficult. Especially, if a writer (e.g. musician, designer, coder, etc.) is young and unknown. One year ago, we provided a solution, which would help to find the relevant audience. It seeks to involve creators in the sales process, and we received a social graph for categories of customers. In practice, most of the authors refused to take any steps to build their audience, which for me, is still a mystery.

Today, we see the same problem — finding a buyer is quite difficult, especially for new authors and content creators. Hopefully, we will soon offer the Intubus Crowd Selling business model, which will help solve this problem. In the meantime, I have questions, such as “which business model do you prefer to use to sell your digital products?”, “What amount of royalty is ideal?”, and “If you would like to receive 100% royalty, would you mind paying a fixed amount for the processing of sales and all services?”

I am very interested in hearing your opinions. We would like to solve the problem of the delivery of the virtual goods directly to interested and readily paying consumers.

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