Cases of Individualized distribution of digitized goods


Hi everybody!!!

Our minicase was about the Individualized distribution of digitized goods. First of all, what are the consumer costs-benefits of P2P sharing? Benefits of Digitization are: (a) Product access, (b) Wide range and newer products, (c) Low price distribution and (d) Fun to share. The Costs are (a) Risk of sharing process (e.g., computer virus) and (b) Relatively complex process – effort. The companies we selected were Marktplaats and Bol.com.

Some facts about Marktplaats:

The website was founded in 1999 by René Mullem. Every day, more than 1.3 million people visit Marktplaats, buy and sell a large variety of new and used products and services. Every day an average of 300,000 new ads on the website. Marktplaats contains at any time more than 7 million ads. On November 10, 2004, the site was sold for an amount of 225 million euros to the American Internet auction house eBay. Marktplaats is located in Amsterdam and is the tenth most visited site in the Netherlands.

How does Marktplaats work for sellers?

Sellers can manage their ads through “My Marktplaats”. Then, sellers can see what the highest bid and how often the ad is viewed. Sellers have different ways to encourage more the sales of their products. They have to pay for: (a) Place the ad at the top day, (b) Place the ad during three days on the home page, (c) Place the ad on the group link or (d) Place the ad on the top ads.

Costs:

  • Time and effort
  • Financial transaction costs
  • The safety of the transaction
  • The consumers take the risk to buy a defect product or not to receive the good.
  • If the seller does not pay for the placement, its ads can sometimes not be viewed by a lot of buyers.

Benefits

  • Lower prices- Consumer makes good deals.
  • Many suppliers – product availability

The second company was Bol.com:

Bol.com is founded in 1999 by the German media group Bertelsman. It stands for Bertelsman On Line. It sells books and CD’s. In 2002: joint venture of three German shareholders. 2009: managed by Dutch investment company Cyrte a unit of Delta LIoyd. The headquarters are in Utrecht and the distribution center in Waalwijk. Since 2010 it is also available in Belgium.

Improved by Bol

  • Design supply chain – IT structure to support content generation and delivery: Facilitate sharing process; Provide feedback, generate community feeling to promote sharing
  • Design reward mechanisms: Advertising income, “outside” opportunities

We also invite you to read the article Bundling and Distribution of Digitized Music Over the Internet by K Altinkemer, S Bandyopadhay. This article is about how the Internet is radically changing the way music is created and distributed. The initial activities seem to be concentrated in the area of distribution as a traditionally “tangible” product gets digitized and is therefore capable of electronic distribution. Fundamental rethinking needs to be considered, as we have to contemplate drastic changes in the traditional model that has connected the artist to the music enthusiast. In this article, They summarize the spectrum of these changes and start a formal analysis of the underlying issues. Specifically, they consider the effect of unbundling of music items that traditionally came bundled as part of an entire album and present a model for the same. The model considers a bundle of 2 individual music items that might either be sold individually or as a bundle. They look at the problem in 2 ways: (a) the effects of varying the proportion of the consumers liking the individual items and the bundle, and (b) the effect of varying the pricing of the items and the bundle. Analysis of the model for a few specific cases confirms the validity of some hypotheses that were derived from earlier research. More important, the analysis provides some real-life pointers for the recording company chief executive officer for creating and pricing effective digitized music bundles. This analysis could be readily generalized to all “information goods,” products that can be reproduced digitally and distributed over the Internet.

Have a nice day!!!

Group 2: Sofia Hamdi, Sahereh Ravaei, Philip Overduin

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