What Is Information Good?

An information good is something that is valued for the information it contains rather than the material of which it is made. A common example of an information good is a book. The paper and glue that makes up the material part of the book is not what generates the price of the good. The price is derived from the material written and drawn on the pages. These goods are in contrast to a material good, whose value comes from the material of which it is made and the final shape it takes.

What actually makes up an information good is often not as direct as material goods. In most cases, books, magazines, music, and movies are information-based and the physical method of delivery is unimportant. These terms were extended to software, documents and other computer-based materials as those items became more common.

Even though an information good is valued for its content, it will typically have a physical component as well. Books are made of a variety of papers, glues even textile products such as string or fabric, and software will typically come packaged in a box made of paper and plastic. While these physical components of the goods are material, the actual value of the good is only marginally influenced by its cost. If a video game package didn’t give access to the actual game, it is unlikely that consumers would place any value on the product.

Some information goods are more likely to exist as simple information. One of the earliest examples of this is paid television broadcasts; a consumer would pay for the service of having information sent to him through his television. The actual displayed programs were purchased information that utilized a material good — a television — for consumer interaction. A more modern example is online software. Users may purchase the software online and then download it to a computer, making the entire good electronic.

While the rules governing material goods are very straightforward, the ones that govern information goods are not. Since an information good may be perfectly copied without destroying the original, the final ownership of information will often become unclear. For example, if a person owns a piece of music and copies it to give to his friends, that is illegal, unlike a material object, which is generally free to give away. In that case, the ownership of that music is in doubt. The consumer may have purchased the music, but he only has partial rights over it.