Selling Digital Goods with Bitcoin

[Peter Lambert]

Presently, it's just that it seems like it's easier for frozen molasses to run uphill in winter than it is to sell a digital product with a bitcoin payment gateway.

Digital goods are a natural use of bitcoins, the digital cash.

I have bought digital books using bitcoins, I have also used bitcoins to buy amazon credit to buy other digital books.

One problem with selling for bitcoins is that transaction confirmation takes too long. I suppose users could be emailed the link to download after confirmation. But there are problems with that approach as well. For instance what do you do if the email ends up in the spam folder and the user doesn't see it? Email tends to be unreliable.

This goes into the issue of real-time payments. For small purchases it might even be acceptable to do 0 confirms, 1 is plenty.

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[altsay]

It's a wide range issue. I suppose you meant selling digital "goods and (also) services". As a developer of wordpress, a blogging tool and a content management system, i've recently made a "trade", offering some customizations on one of my clients' website in exchange for LTC where the transaction was relatively slow but it's a thing we agreed upon. It was a little work and experimental but i will gladly accept BTC, LTC and even some other coins like YAC, WDC, ONC (and many more, who knows) in exchange for my service in the future.

[jnagyjr]

Presently, it's just that it seems like it's easier for frozen molasses to run uphill in winter than it is to sell a digital product with a bitcoin payment gateway.

CoinDL makes selling or bitcoins and delivering digital goods very easy.

It would be if they were actively approving new applications for sellers and affiliates.

[Stephen Gornick]

Presently, it's just that it seems like it's easier for frozen molasses to run uphill in winter than it is to sell a digital product with a bitcoin payment gateway.

Hosted / online / e-Commerce:
 - http://coinuploads.com
 - http://coindl.com
 - http://satoshibox.com
 - http://coinlock.com
 - http://btcfile.com
 - http://www.coinuploads.com
 - http://min.io/create

Upcoming:
 - http://signup.yumcoin.com
 - http://www.coindesk.com/yumcoin-offers-bitcoin-venue-to-content-creators/

As far as Bitcoin payment gateways, they all presume you are using some third-party eCommerce software/shopping cart or hosted service.  So the recommended payment processor will vary based on which shopping cart you want to use.

For isntance, Foxycart supports Bitcoin transactions.   Here's how to sell self-hosted MP3s using Foxycart:
 - http://wiki.foxycart.com/integration:foxycart:self_hosted_downloads

There is a thread on trying to get self-hosted digital downloads using the Blockchain.info API:
 - http://bitcointalk.org/index.php?topic=57450.msg1771496#msg1771496
 - http://efjz.in/?d=test.mp3 <-- Example of a site with self-hosted media, simply needs a way to require payment.

[btcdlc]

Very, very late to this party, but just wanted to add BTCDLC to the list of offerings 

https://www.btcdlc.com/

You make your own shops (with easy-to-share shop and product URLs). It's free, we don't take a commission.

[itsAj]

Presently, it's just that it seems like it's easier for frozen molasses to run uphill in winter than it is to sell a digital product with a bitcoin payment gateway.

Anytime that you have a slow rate of sales you are likely either overpricing your product or are not installing the proper safeguards for your customers (willing to use escrow).

You also need to understand that it is important to build a reputation for yourself and provide good customer service. If there is a problem with a product that you sell then you need to make it right for the customer, if the public can see this then they will be more willing to buy from you verses your competitor.

[Keyara]

Digital goods are vulnerable to piracy and copy.

Unless someone solve the piracy issues, the market will not be able to support the artist and author.

[halfawake]

Digital goods are vulnerable to piracy and copy.

Unless someone solve the piracy issues, the market will not be able to support the artist and author.

Sure, but look at iTunes.  Make the product (music in this case) reasonably priced and people seem to be happy to buy the legit versions of music.  Piracy will always be around, alas, but with good enough platforms, I don't buy your statement that the market will not be able to support the artist and author...

Is that true?  In a lot of cases, yes.  In all of them?  Absolutely not.  I've read a lot about a guy named Hugh Howey.  Ever heard of him?  If you haven't, well...that's the amazing thing.  The guy wrote a couple books that sold so well that he made seven figures on them.  Yes, that's right, seven figures, over one million dollars in one year on his novels. 

Granted, he is in the top 1% or more of recently published authors, but my point is that it IS possible.  And probably more so with written work like novels than music because the stuff's enough longer that I think more people are willing to pay for novels / books than they are for music where it may just be a 5 minute song.

[AlexMine]

Blockchain API is ridiculously simple (demanding simple authentication if needed and returning trivial JSON responses); therefore, any programmer can easily implement logic to let the user download a software product upon receiving the 3-rd confirmation of users's Bitcoin payment. I have personally made it work in my ASP.NET Web App.

[AlexMine]

However, if an automatic conversion to a fiat currency is needed, things become far more complex. In this case you need an integration with a payment gateway API, which may take time + there are usual formalities

[zorke]

Digital goods are vulnerable to piracy and copy.

Unless someone solve the piracy issues, the market will not be able to support the artist and author.

Sure, but look at iTunes.  Make the product (music in this case) reasonably priced and people seem to be happy to buy the legit versions of music.  Piracy will always be around, alas, but with good enough platforms, I don't buy your statement that the market will not be able to support the artist and author...

Is that true?  In a lot of cases, yes.  In all of them?  Absolutely not.  I've read a lot about a guy named Hugh Howey.  Ever heard of him?  If you haven't, well...that's the amazing thing.  The guy wrote a couple books that sold so well that he made seven figures on them.  Yes, that's right, seven figures, over one million dollars in one year on his novels. 

Granted, he is in the top 1% or more of recently published authors, but my point is that it IS possible.  And probably more so with written work like novels than music because the stuff's enough longer that I think more people are willing to pay for novels / books than they are for music where it may just be a 5 minute song.

The iTunes store is designed to make it so that apple can sell more iPods. The prices are artificially low. Apple makes a lower profit then they really should on song sales because they are trying to sell more iPods and similar devices

[halfawake]

The iTunes store is designed to make it so that apple can sell more iPods. The prices are artificially low. Apple makes a lower profit then they really should on song sales because they are trying to sell more iPods and similar devices

No arguments there, except for your point about Apple not doing well on iTunes sales.  They're taking a 30% cut on each sale in iTunes, so all in all, I think they're doing pretty well.

[johncarpe64]

The iTunes store is designed to make it so that apple can sell more iPods. The prices are artificially low. Apple makes a lower profit then they really should on song sales because they are trying to sell more iPods and similar devices

No arguments there, except for your point about Apple not doing well on iTunes sales.  They're taking a 30% cut on each sale in iTunes, so all in all, I think they're doing pretty well.

You need to remember that this is only revenue. Apple still needs to pay for infrastructure to have the songs delivered to consumers. This is more then a one time download per song as consumers can essentially download unlimited times after buying a song. They also need to pay for things like credit card fees based on their top line (total sales) but is likely paid for entirely out of the 30% margin

[Eastwind]

You need to remember that this is only revenue. Apple still needs to pay for infrastructure to have the songs delivered to consumers. This is more then a one time download per song as consumers can essentially download unlimited times after buying a song. They also need to pay for things like credit card fees based on their top line (total sales) but is likely paid for entirely out of the 30% margin

So if Apple adopts Bitcoin, it can save money.

[leannemckim46]

The iTunes store is designed to make it so that apple can sell more iPods. The prices are artificially low. Apple makes a lower profit then they really should on song sales because they are trying to sell more iPods and similar devices

No arguments there, except for your point about Apple not doing well on iTunes sales.  They're taking a 30% cut on each sale in iTunes, so all in all, I think they're doing pretty well.

They spend a lot on advertising as well. Plus as stated above they cover the credit card fees which are generally a small fixed amount plus a percentage of the price so they likely spend a lot on credit cards fees on a $0.99 purchase.

They also have to pay for customer service related issues on iTunes, like double charges, buying a song 2x, buying the "explicit" version of a song when they wanted the "safe" version. All of these tasks take manpower and money.

[jjacob]

You need to remember that this is only revenue. Apple still needs to pay for infrastructure to have the songs delivered to consumers. This is more then a one time download per song as consumers can essentially download unlimited times after buying a song. They also need to pay for things like credit card fees based on their top line (total sales) but is likely paid for entirely out of the 30% margin

So if Apple adopts Bitcoin, it can save money.

They do link your name, credit card details, etc to your account.
People would be making specific transactions with bitcoins.
That is a disadvantage from their point of view.

[kittycatbtc]

You can do it in this forum. Marketplace section.

[rarebitproject]

Digital goods are vulnerable to piracy and copy.

Unless someone solve the piracy issues, the market will not be able to support the artist and author.

The corporate model of content distribution (eg., iTunes) relies on control and force of law to prevent people from using alternative pipelines.  This approach has had some success, but it comes with high negative social costs (to maximize profits, greater control over the networks will be exercised - i.e, Net Neutrality Lost Cause - the result is greater and greater wealth concentration - one might correctly assert that millions are driven into poverty as a result).

There are alternative models that allow content to be freely distributed while still providing income to the artists and authors.

As a case in point, I've been working on a system that issues records of a digital work into the blockchain and allows those records to be exchanged.  That digital content can thus be considered 'unique' and collectible.

  See http://rarebit.github.io/project  (you can use testnet to play around with the web client without spending actual bitcoins)

The record is like a stock certificate that could potentially increase in value if the content originator becomes celebrated (it's not unusual to see works by living artists selling for millions apiece).

A photographer on flickr, for example, might issue limited editions of a few photographs and allow fans to buy them.  The sale might include legal rights, like allowing the purchaser to print the file and exhibit it in a public place, or resell that physical print alongside the blockchain record that authenticates it.

For an unknown artist just starting out, the tokens might be worthless at first, and people might pay for them simply because they want to support work they think is worthwile (like receiving a thank you gift for a donation).

Another use case might be a musician that issues a special 'collectors edition' MP3 (perhaps limited to 1000 copies).

An author might perform an online book signing (and still remain anonymous if the content is seditious).

Yet another use case might be signing autographs for people who show up on a twitter account at a specific time (if this were done randomly it might help encourage people to visit the page more often - these sorts of manipulations I hereby denounce).  In this case just the digital signature would be recorded and traded.

[zorke]

The iTunes store is designed to make it so that apple can sell more iPods. The prices are artificially low. Apple makes a lower profit then they really should on song sales because they are trying to sell more iPods and similar devices

No arguments there, except for your point about Apple not doing well on iTunes sales.  They're taking a 30% cut on each sale in iTunes, so all in all, I think they're doing pretty well.

30% is low when compared to what music labels make on music distributed and their cut is often taken after expenses are paid. Apple's cut is pre-expenses, which means their net profit is less then 30%. They also (used to) advertise heavily and do aggressive giveaways which would also eat into their net profits   

[polynesia]

Digital goods are vulnerable to piracy and copy.

Unless someone solve the piracy issues, the market will not be able to support the artist and author.

Music companies have to adopt to the new digital world.