One would expect an easily pirated version of a product to cost more than a protectible one. TurboTax pricing offers a nice example of how this works with software.
“Shrinkwrapped” software that runs locally on your machine is easy to copy and give away; it’s a non-rival good which is largely non-excludable. “Online” software, which runs on a server and is accessed over a network, is easier to protect, since it is never distributed. It is both rivalrous and excludable: all users have to share the same pool of server-side resources, and the vendor can decide who can access the software.
TuboTax offers two product lines: Online and Desktop. Online Premier costs $40, and Desktop Premier $70. One could call that $30 difference the “price of non-rivalrousness”.
It’s not quite as simple as this, since the seller has other reasons to encourage purchase of the Online version, like customer lock-in through holding their data on the server, and the desire to promote a new product by offering discounts.
We see something similar occurs in the digital music market. Music is another intangible good that can either be downloaded to run locally (eg iPod/iTunes) or streamed from a central server (eg Rhapsody). There are more differences between the product offerings than in the TurboTax case, but the trend is clear. Rhapsody offers unlimited streaming access to more than a million songs for $10/month; if you want to buy and keep a song it’ll cost you almost a buck each.
