Final answer:
Digital goods incur lower distribution costs compared to traditional goods, with significant savings on printing, shipping, and warehousing. They also have lower marginal costs per unit, as copying digital goods is nearly costless, and the industry shift has reduced the role of intermediaries through disintermediation.
Step-by-step explanation:
Compared to traditional goods, digital goods incur lower distribution costs. Traditional goods typically involve expenses for printing, shipping, warehousing, and managing returns, while digital goods bypass these steps entirely and can be distributed through online platforms with minimal costs. For example, digital book publishing eliminates the need for physical materials, leading to substantial cost savings on printing and delivering the books to customers. The transition to digital goods means that authors and publishers can sell directly to consumers through devices like iPads, often resulting in disintermediation, which is the reduction or elimination of intermediaries in the supply chain.
Moreover, the cost of copying digital goods is negligible compared to the production of additional units of traditional goods, thereby suggesting that digital goods have much lower marginal costs per unit. With advancements in technology, industries such as music and film have shifted from producing physical media like CDs and DVDs to streaming and downloading services, which offer substantial savings in terms of physical manufacturing and distribution costs. This shift towards a more information-centric economy signals the rising value and commoditization of information and creativity over physical manufacturing inputs.