Like physical products, digital products can have many variations. But the economics of versioning is very different. In the digital world, versioning is a revenue multiplier, while in the physical world it is a pricing instrument. Thus, digital versions are not created to just lower the prices by offering cheaper substitutes. Paperback editions are a cheaper substitute for hardcover books. This kind of versioning is a price instrument because by lowering the price the producer gains incremental sales. Lower-priced versions segment the market by the price sensitivity of the consumers.
This strategy is well known and widely adopted in the physical world. Small and large goods have versions; brands have regular and ...
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