Practical Ecommerce

Digital Assets: What Are They, And How Are They Sold?

Digital assets, often called digital content, are products that can be consumed via an electronic handheld device or used online.

The forms digital assets take vary greatly. Digital content might be auditory, such as a song (Apple’s iTunes) or ring tone for your cell phone; it can include media like streaming video, movies or online TV (MobiTV or Joost). Then there are entertainment options like online video games played via broadband-enabled gaming consoles (Nintendo, PlayStation 3, XBOX 360) and sites that allow the creation of digital content like karaoke (Ksolo.com). Finally, digital assets can be streaming downloads of any type: video on demand, software, e-books and more.

Although the list is wide-reaching, it’s still just a sample of ever-growing possibilities. The opportunity to sell digital assets has never been more exciting than right now.

The compelling question is how exactly can an entrepreneur monetize his/her digital assets?

A few basic guidelines provide a framework for making money through digital asset sales:

Possess the right to sell the asset

This sounds like a no-brainer, but it isn’t. Do you own the asset or have you negotiated the right to sell it? If you do have the rights to the content in question, it’s important to understand the digital rights management (DMA) implications. DMA is technology that allows content owners to control who has access to content — for example, media files on the Internet — and how that content is used. This is a big issue that we’ll cover in detail in a future article.

Provide an intuitive experience

It’s critical to offer an easy-to-use site that is more about function than form; functionality is king. With that as the priority, it’s still possible to plan for and execute an up-sell and cross-sell capability. Additionally, enable a robust search function to ensure your library of search terms is active and growing.

Whenever possible, offer your guests options. Consider a subscription model with varying tiers of content. This helps create recurring revenue streams. Keep in mind that those costs should be transparent to the online guest.

Another possibility is a pay-per-view option that allows content to be consumed in eight-hour increments as opposed to the standard 24-hour period. This allows guests to enjoy the content within a limited frame of access at work or home. During the last eight hours of the day, most people sleep and therefore don’t see total value in a 24-hour offer strategy.

Simply put, enable visitors to enjoy your brand or content in a way that is relevant and appealing.

Determine your business model

Web 2.0 initiatives have facilitated many creative business structures. For example, at the independent music store Amiestreet.com, the market interest drives the price of the asset. The cost to download songs at this site starts at zero and increases as a song becomes more popular.

Consider a dual revenue stream

A site can maximize revenue by having multiple revenue options. If you plan to have ad-based revenue for your site, create one tier for visitors willing to view advertising in exchange for free content. Offer another tier that allows guests to avoid seeing ads if they pay a monthly fee. Again, the goal is to give the guest options.

Enable more than debit/credit cards

Accepting only debit and credit simply puts handcuffs on your own online initiatives and reduces your online revenue potential. Look at expanding your online payment options.

Accept micro payments as appropriate

If you deal in smaller sales amounts (less than $5, traditionally), make sure your payment processor has the ability to aggregate payments, thus increasing profits. You do not want the revenue to eaten up by transaction costs.

For each category of content listed at the beginning of this article (music, video, e-books and more), there are “best practices” to help monetize the digital assets. Additionally, there are online best practices from other verticals where the sales process is far more complex (travel, for example) that could aid conversion for the digital assets business. We’ll explore best practices for monetizing various categories of digital assets in future articles.

Practical Ecommerce

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Comments ( 9 )

  1. Legacy User March 21, 2007 Reply

    Thanks for the informative article. I have a website, YogaDownload.com, that sells digital assets in the form of audio yoga classes. We are having our site redesigned and the new site will allow customers to purchase various subscription options. I am curious what you meant when you said "those (subscription) costs should be transparent to the online guest." I want to make sure we do what we can to keep our subscription members around as long as possible. Thanks!

    — *Jamie*

  2. Legacy User March 22, 2007 Reply

    Not all shopping carts support downloads. For example, the GoDaddy Quick Shopping Cart does not. It's just one more issue you need to resolve before setting up your business.

    — *zanybooks.com*

  3. Legacy User March 22, 2007 Reply

    I believe you'll find that the GoDaddy cart system does include the option to sell digital products for download. The company's issue is a crippling file size limit on the products you can offer for sale and download. But, during a transitional period for our estore http://shop.renebooks.com, I ran a temporary ebook sales site using GoDaddy to sell downloadable text files quite successfully for three months until our main store site was back up and running. File size is the drawback for large audio, video or software titles at GoDaddy, however.

    — *Bill Mills*

  4. Legacy User March 24, 2007 Reply

    Very informative article indeed. However, I have some comments about your point number 2 – 'Provide an intuitive experience.'

    On the one hand, you say it must be 'easy-to-use,' on the other you say 'functionality is king.' The problem with that is that under the guise of functionality, too many websites try to pack a big punch on the site, making it too cluttered, too complex with navigation so cumbersome that visitors get frustrated.

    Rather than trying to pack too much upfront for the first 'prospect,' I would focus on ensuring a very simple, clean 'single click' buying process for the content so as to develop, build and nurture a relationship with the customer and then try to cross/upsell.

    I would also like to point out that the entire concept of 'shopping cart' as a carryover from the brick-and-mortar analogy is obsolete in the digital content world. So, why think about shopping carts when they are not even relevant?

    Chandresh J. Shah

    — *Chandresh Shah*

  5. Legacy User March 27, 2007 Reply

    Greetings all! As my mother used to say, "Feedback is a gift!" Thank you!

    To touch on each question:
    Jamie's Question re: Transparency: What I am referring to is making your "offer" transparent…as in, totally logical and understandable to the online guest. An example would be that if you offer an eight-hour subscription, then simply make a 24-hour subscription three times your eight-hour price. Now, in terms of creating incentives, of course you can consider a discount for volume buying (10 percent off if they buy a second or third subscription). The key is to be very clear about how you came to your value proposition so the guest trusts you, because that is the ultimate goal: Building trust and a relevant experience.

    zanybooks.com/Bill/Chandresh: Re shopping carts
    Chandresh is absolutely correct, in that a shopping cart is used for physical goods (something you touch, feel and have shipped to you). Digital downloads do not require a shopping cart. Shopping carts are prevalent for a variety of reasons, including wanting to present a "familiar" online shopping experience for the online guest. However, it's an unnecessary attribute of your digital asset site.

    To aid conversion, having a one-click buying experience does aid conversion and maximize spontaneous purchases…which is easily accomodated for digital assets.

    To explain the "functionality is king" statement…determine if your site is for: 1) Information 2) Commerce or 3) Design beauty. While all sites generally combine elements of each, and my creative media friends want things to spin, bark and change colors, in my opinion it is essential to understand what your guest has come to your site to do.

    Have a great day and thank you for your feedback! :)
    All the best
    Jamy

    — *Jamy Nigri*

  6. Legacy User March 27, 2007 Reply

    On that subject, here is a link to an open-source, role-based, access-controlled digital asset manager built using Ruby on Rails. If nothing else, it illustrates Jamy's point that a "shopping cart" is not always required for digital asset management.

    <a href="http://www.locusfoc.us/ram/&quot; title="Ruby Asset Manager">Ruby Asset Manager</a>

    — *Brian Getting*

  7. Legacy User March 28, 2007 Reply

    Hi Brian! Thanks for posting that comment!

    As monetizing digital assets continue to explode, those who offer them need not pay the associated costs of maintaining a shopping cart unnecessarily!

    If anyone has questions that they'd like to ask directly, I always try to act as a resource to the industry and good representative of http://www.practicalecommerce.com, so feel free to ping me at jamynigri [@] gmail.com.

    If you have some DRM related concerns and want an enterprise wide solution, Entriq has a great DRM solution for global enterprises (www.entriq.com)! Plus…they are really good people!
    All the best
    Jamy

    — *Jamy Nigri*

  8. Legacy User October 9, 2007 Reply

    I am thinking of starting a software store, allowing digital downloads of the purchases – kind of like handango.com. I have not been able to find a host that allows both the digital downloads AND a decent storage space to allow those files to be stored.

    I have looked at places like volusion, but they allow a max of 1 GB, that too on the platinum plan. Another site, lunarpages.com, allows unlimited storage, but I am not sure the shopping carts they offer have digital download capabilities, or how easily configurable they are (they offer oscommerce, zcart etc).

    I'd like to get some advice on my situation, and any hosting recommendations. How do people generally host and run a digital goods ecommerce site?

    Thank you,
    HK

    — *HK*

  9. Legacy User November 16, 2007 Reply

    I was wondering if there are off-the-shelf apps that can let a company sell it's own media if they provide their own servers, storage, support, etc… or does it need to be hosted by third parties?

    Also the graphics code to post messages is a pain since they seem to use 0 or O and l and 1… hasn't taken my first 2 attempts…

    — *andy rak*