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Why People Buy Beats Headphones

On the face of it, buying Beats seems like a very bad deal. With just a little bit of research, you can easily find cheaper alternatives that have better reviews. Even in this article by Consumer Reports, a very reputable reviewer, they say, “In almost almost every category there are lower-priced models that offer the same, and sometimes better, sound quality”. So why do people buy the headphones and earbuds? If you’re an audiophile, the answer is probably, “you don’t”. If you ask pretty much anybody that is very invested in good quality sound and has even a small background in the subject, they will likely tell you exactly what the article says – that while Beats aren’t awful, if you’re just looking at specs, they are pretty objectively not your best option.

However, the principle of network effects comes into play very strongly here. Most people are informed consumers, hopefully, and do not buy and object as expensive as headphones on impulse. Rather, they know about about the headphones, and probably know exactly what this article says, that there are other, better options out there. So they aren’t looking at other people to gain information about the quality of the headphones, but they are gaining something else. Because of Beats’ popularity, they have become a fad and a status symbol. Therefore, other people having Beats increases the benefit of buying Beats in and of itself, independent of the actual quality of the headphones themselves. This is a positive externality, a direct benefit rather than informational effect, from buying headphones that potential consumers can take advantage of. Therefore, people that buy these headphones are not necessarily simply following the crowd and being lemmings, but making an informed decision based on their perceived benefit from owning the headphones.


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November 2015