MARKET AND MARKET STRUCTURES OF DIGITAL PRODUCTS

Abstract

Information and communication technologies (ICTs) have revolutionized the changes in all spheres of social life, especially affecting the changes in the economy in which new realities and a new way of thinking have been brought. The use of ICT in the economy has led to a new economic reality that has reflected on major organizational and other changes in business and requires a different way of behavior. By applying the digital economy to business, new economic rules have been created; new business models and new consumer behavior have been created. The significant influence of these changes is reflected above all on changing the perception of the economic role of the market. In recent years, due to the application of digitization in the operations of an increasing number of companies, there have been dramatic changes in the market. These changes have caused the emergence of electronic markets known as electronic market places, which are directly affected by the change of a few "important" processes and functions in business and society. Traditional market functions of the old economy have been replaced by the market economy of the new economy. In the new economy, the market has different functions, it coordinates buyers and sellers, facilitates the exchange of information and payments, and provides institutional infrastructure for more efficient functioning. These changes, in the new market, have positively reflected on the improvement in economic efficiency, lower transaction and distribution costs, and influenced the more efficient functioning of the market. Unlike the traditional market, the costs of digital products and services are different from the new market. Fixed costs of initial investments in the creation of digital products and services are high, while the marginal costs of its distribution are low. This cost dynamics allows a high production volume with lower average (variable) costs per unit, and both types of costs have a special structure. High fixed costs and low marginal costs on the digital product market have important implications for the market structure of the digital economy. The market of digital products and services has all the characteristics of the market structures of monopoly and oligopoly. The monopoly on the digital product market may or may not produce the very best product, but thanks to the size and economies of scale, it has a great advantage over the competition. The formation of prices for digital products differs from the way in which prices of physical products are formed. Some digital products are available free of charge, (free), which implies an alternative option of securing revenue that is necessarily associated with those products. Other, digital products are linked to other products, digital or physical, in order to somehow avoid problems related to their prices. However, the most common way to determine the price of digital products is to use a licensed approach to both sales methods. Regardless of the way prices are determined, it is important that prices of digital products are not formed on the basis of production costs, but into the basis of the values that customers assign to that product. The exchange of products and services between consumers and businesses, unlike the traditional market, is done by the use of a multi-platform platform that plays the role of intermediaries between different user groups.