12 April 2020

Why there are no software equivalents of Rolex

Smart, very interesting article, Signaling as a service, by Julian Lehr, mainly about the signaling (or signalling?) virtues of software compared to hardware, or, to put it shortly and in Lehr’s words, why there are no software equivalents of luxury products such as Rolex watches or Louis Vuitton handbags,” and also why Fortnite is doing so well:

Digital products have one crucial disadvantage over atom-based products and services: Intangibility. Apps live on your phone or computer. No one can see them except for you. […]

I believe that this is the main reason why consumer software companies have a harder time monetizing than their physical counterparts.

Here’s another example: eBooks have never caught up with paper books despite being more convenient. On the contrary, physical book sales have remained stable (and in some markets even increased) in recent years. Interestingly though, people spend less time reading them. Their value seems to stem from lying around the house to impress visitors (see also coffee table books) — a benefit digital books simply can’t offer.

If you have one thing to read this weekend, I strongly suggest that you read this excellent article.

On top of the examples mentioned in it, I would add: This is why The New Yorker sends tote bags to its subscribers, why there are no black AirPods, and why having a verified badge on Instagram, or a blue bubble on Apple Messages, is apparently so valuable. I would also argue that the Sorry, I don’t have Facebook” beat or the I refuse to have a smartphone” stance are forms of signal messaging too…

Did I tell you that I don’t have Instagram anymore by the way?


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