Tag Archives: licence

digital products

Digital Products – Why Relying on Customers to Tell You What They Want Won’t Work

digital productsIf you prefer to listen/watch a video instead of reading then click here to go to my youtube channel.

What’s the big deal with digital products? Why are so many people creating online products to sell? What are digital products anyway, and how do you create a digital product that sells?

Digital products are intangible assets, meaning they can’t be held, tasted, or touched.  What makes them especially appealing is that digital products can be created once and sold repeatedly to different customers without having to replenish your inventory.

Using digital media intellectual property assets such as downloadable or streamable files, MP3s, PDFs, videos, plug-ins, and templates – it’s possible to make products ranging from music to videos, ebooks to online courses, and more.  Be sure to check that you will own the IP rights as I’ve discussed in previous posts.


Low Overhead Costs

Digital products appeal to people because they involve low overhead costs to create and sell. 

You don’t have to hold inventory or incur any shipping costs. Once you have something that sells you benefit from extremely high-profit margins: There’s no recurring cost of goods, so you retain the majority of your sales in profits. You could even automate everything so orders are delivered instantly, letting you be relatively hands-off with fulfilment.

Digital products are ideal for creatives, artists, educators, and freelancers looking for new income streams that require less effort to maintain. The income can supplement the income that has to be earned on a traditional “time for money” consultancy basis. As such it should enable you to cover your regular running costs so you’re not on a roller coaster every month, constantly reliant on new business to cover your overheads.

An added benefit of creating digital products is that you can offer products for free to build your email list, or use them as part of your offerings. You could bestow a bonus or licence your digital products for use under a monthly paid subscription plan.  There are lots of options as to how to incorporate digital products into your business.

Due to their ease of distribution, many entrepreneurs build entire businesses around such intangible goods or launch digital product lines to complement the physical products or services they offer.


Some Challenges With Digital Products

Digital products come with specific challenges you’ll need to watch out for, particularly the fact that you’re competing with free content: 

With digital goods, consumers can probably find free alternatives to what you’re selling. You’ll have to think carefully about the niche you target, offer premium value with your products and build your brand in order to compete.

Selling digital products does involve having an online presence and being out there on social media platforms. If you run a business, that would be an appropriate activity in any event.

Digital products are susceptible to piracy and theft so take precautions to reduce these risks by making sure you’re using the right tools to protect your products and that your terms of business incorporate the right provisions.

Making sure your product offering is good is of paramount importance, so how do you go about making a great product?


The Journey to Product Creation.

It’s not uncommon for people to have little success initially when they launch their digital products, even if they hire mentors to help them through the process.

Some people gradually get there and achieve success with their online offerings.  Many don’t even achieve sales of £1000 after years of trying.

People tend to invest quite a lot of time and energy into creating their courses, using a trial and error approach, sometimes relying on surveying consumers to find out what they want.

But as Ford famously put it “If I had asked my customers what they wanted, they would have told me a faster horse” So, while it’s fair enough to ask people what they want, you are the one who will ultimately need to decide what to create. Take people’s responses into account by all means, but some of them need to be taken with a large pinch of salt.

Certainly, during my own journey of creating a digital course on the intellectual property, I have discovered that most people don’t even know what intellectual property is, let alone being able to tell me what they want from a course on the intellectual property!

I was also quite surprised to find that having any sales at all on your first attempt is considered a success!

People are pouring their heart and souls into creating their courses, some spending thousands of pounds on coaching and other support, only to have no sales or only a few sales and they are being congratulated on their “success” because they created something and achieved a handful of sales!

There must be a better way I think.


Ideas First Approach

The notion that you need to keep trying till you achieve success with new product creation generally probably lies at the heart of the prevailing attitude to digital product creation – that you need to just keep trying to make incremental improvements until suddenly something clicks into place and works.

The concept was developed by Tom Peters in his book, Thriving on Chaos  Peters said companies should, “test fast, fail fast, adjust fast—pursue new business ideas on a small scale and in a way that generates quick feedback about whether an idea is viable.”

IBM founder Thomas Watson also reportedly said: “If you want to succeed, double your failure rate,”. He supported this thinking and adopted a management style that did not punish failure.

As a result of such “ideas-first” thinking, which is still in widespread use in many organisations, innovation cannot be counted on for predictable growth and is inherently doomed to failure.  Companies using this approach to innovation struggle to achieve success rates greater than 10 to 20 percent.


A New Approach to Innovation

According to Anthony W. Ulwick in his book  Jobs to Be Done companies struggle to predictably create winning products because they fail to define their customers’ needs with the rigor, precision, and discipline that is required to discover, prioritize and capitalize on opportunities for growth.

So, extrapolating from his message, to avoid this trial and error approach to digital product creation involves looking at customer needs in a totally new way.

This involves gaining a deep understanding of what a customer is trying to accomplish. What “job” is your customer looking to get done? Understanding what they’re trying to achieve is the key to creating products that are likely to meet their needs.

Having delved into this Jobs to Be Done Theory which was developed by Clayton Christianson, Harvard Business Professor in his book Competing Against Luck I’m committed to using the approach to get to the bottom of what outcome people desire when they look to “protect their IP”. What job are they really trying to get done?

If one can uncover related jobs that they’re trying to accomplish, particularly the emotional and social aspects of them, it’s much more likely you would create a product that customers want to use.

However, it’s worth noting that wants, needs, requirements, benefits, problems, tasks that the customer is trying to accomplish, and jobs which the customer is trying to get done are all terms that people use. These are not conceptually the same. The trick is to understand the nuanced differences between these terms and use Jobs-to-be-Done Theory to work out what your customers want.

I feel that the Jobs to Be Done Theory represents a breakthrough in innovation which I want to fully introduce into my own business, and then help my clients with.

I will discuss it in future pieces. For now, the important message I want to convey is that the current approach of trial and error when creating digital products is wasteful of time and resources. You would do better to focus on understanding what outcomes your customers are trying to achieve before attempting to create any digital products.

Formula One Trade Mark Dispute IP Licensing

Formula One Trade Mark Dispute underlines need for Careful IP Licensing

Formula One Trade Mark Dispute IP LicensingThe High Court recently published its judgment in a case involving the Marussia Formula One team. The case related to a claim for trade mark infringement and underlined the importance of businesses ensuring they properly manage their IP rights.


The court heard how the claimant had licensed its trade mark to the defendant Formula One team, but that the defendant team had continued to use the trade mark after the licence term had expired. The team was refused permission by Formula One’s governing body to change its name during the course of a season, leaving them with little option but to continue racing and infringe the claimant’s trade mark as a result. Refusing to race would mean forfeiting the team’s entitlement to a substantial amount of money due to it.


The court held that the defendant therefore had no real prospect of proving, as it had asserted, that the use of the claimant’s trade mark had occurred with the claimant’s consent. It further held that the defences advanced by the defendant were unlikely to succeed and that the defendant would need to provide £1.75 million by way of security for costs if it wished to proceed to trial.


The case shows the importance of considering IP rights at an early stage and ensuring any agreements entered into properly reflect the needs of the parties and protect their interests. In particular, the defendant in this case would have benefitted from ensuring the licence was not timed to expire part way through a season. The facts of the case show the balance of power was strongly weighted in the trade mark owner’s favour, since the licensee was heavily dependent on the owner providing the funds which would allow it to participate in the Formula One season.


Many SMEs could potentially benefit by holding their IP in a separate IP company and having the holding company licence that IP to the company through which the business is operated. This has the benefit of protecting a business’ investment in its IP by ring-fencing its intangible assets. This will be particularly important if the main business falls into difficulties and should be considered at an early stage.


Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd & Anor [2016] EWHC 809 (Ch)

Software Licences and the US First Sale Doctrine – Psystar judgment handed down

Key to Apple’s surging popularity have been the ease of use of its products and software, and seamless integration between its devices and services.

Arguably unique in the personal computer industry, Apple exercises strict controls over every element of its product line. This control over both the hardware and software used in its computers, peripherals and devices has enabled the company to ensure a consistent user experience worldwide, and to avoid compatibility issues which have in the past plagued other platforms.

However, this monopoly also means less choice for consumers. Often, PC users choose to buy their own commodity hardware, put it together and install their operating system of choice. The motivations for this are varied: some users are searching for bleeding edge performance; others are looking for value; and some simply enjoy the experience of building their own PC.

In the past a number of businesses have established themselves as alternative Mac hardware vendors – typically selling cheaper PCs tailored to be compatible with Apple’s OS X. A recent example of such a business, fighting Apple in the courts for the right to do so, is Psystar.

Some would argue that Apple are shooting themselves in the foot by preventing other vendors from selling compatible packages that might increase the user base of OS X, sell more copies of the operating system and, possibly, sell more devices developed to integrate with that operating system. However, Apple differs from companies like Microsoft in that it is arguably a hardware business. Allowing hardware competitors into the marketplace to increase software sales is not good business sense for the company. Particularly as the strength of Apple’s brand depends upon its ability to exercise strict controls over the user experience – “It just works”.

So, Apple’s software licence for OS X imposes significant restrictions on licensees. A recent US ruling highlights the utility of software licences in enabling developers to control how their work is used. At issue was whether the US first sale doctrine applied such that a purchaser could sell on Apple’s software as they saw fit – think buying a car and selling it on second hand. The court found, unsurprisingly, that customers are not buying the software itself – they do not own the software after they buy a disc holding a copy of OS X, or download it – they are merely granted a licence to use it subject to a range of restrictions. The terms of the licence they are granted preclude its use on other hardware.

This is bad news for Psystar but, as Groklaw points out, good news for proponents of Open Source Software. It affirms the (albeit widely accepted) presumption that a US purchaser of open source software is not entitled by way of the first sale doctrine to resell it on their own terms and thereby circumvent an open source licence.