Determinants of distribution channel choice for online software licence purchases: A transaction cost perspective

Abstract

The objective of this paper is to test empirically a research model proposed in a previous paper, entitled ‘Determinants of distribution channel choice for online software licence purchases: A theoretical model’, which was published in the Journal of Digital Asset Management in 2008 (Vol. 4, No. 6). By casting the software distribution channel choice as a transaction cost analysis (TCA) problem, the research model that the authors proposed in that first paper aimed to uncover the reasons why, when purchasing a software licence for a product that is marketed using a ‘try-before-you-buy’ strategy, consumers would select the physical distribution channel not tied to any digital rights management (DRM) technologies (ie, CD-ROM) rather than the digital distribution channel that uses DRM technologies (ie, electronic software distribution through demo-unlock). With data collected from 224 customers of a software product, this follow-up paper shows that customers consider two transactions in the software ownership life cycle: the initial licence acquisition transaction and the licence management transaction related to software re-installations. The results also show that both transaction costs and TCA dimensions influence customers’ choice of software distribution channel.