Private markets for public goods: Pricing strategies of online database vendors

The online database industry has annual sales of US$6.5 billion for a produ ct that can be easily appropriated, duplicated, reused, and redistributed. This paper examines how the industry developed dynamic pricing and delivery strategies as a response to technological and market changes, and shows ho w each strategy specifically compensated for the public good properties of information. Readers will see that specific pricing strategies reduce the i ncentive to improperly reuse downloaded information. Thus, these strategies can lead to the sustainability and growth of the online database industry. These findings are then extended to the broader context of information del ivery via the Internet.