Digital distribution (also called content delivery, online distribution, or electronic software distribution (ESD), among others) describes the delivery of media content such as audio, video, software and video games, without the use of physical media usually over online delivery mediums, such as the Internet. Online distribution bypasses conventional physical distribution methods, such as paper or DVDs. The term online distribution is typically applied to freestanding products; downloadable add-ons for other products are more commonly known as downloadable content. With the advancement of network bandwidth capabilities, online distribution became prominent in the 2000s.
Content distributed online may be streamed or downloaded. Streaming involves downloading and using content "on-demand" as it is needed. Meanwhile, fully downloading the content to a hard drive or other form of storage media allows for quick access in the future.
Specialist networks known as content delivery networks help distribute content over the Internet by ensuring both high availability and high performance. Alternative technologies for content delivery include peer-to-peer file sharing technologies. Content can only be delivered if it exists on a computer that another user has made available to others. If it does not exist, several techniques and methods can be used for content creation or content regeneration.[original research?] Alternatively, content delivery platforms create and syndicate content remotely, acting like hosted content management systems.
The major attraction for online distribution is its direct nature. To make a commercially successful work, artists usually must enter their industry’s publishing chain. Publishers help artists advertise, fund and distribute their work to retail outlets. In some industries, particularly videogames, artists find themselves bound to publishers, and in many cases unable to make the content they want; the publisher might not think it will profit well. This can quickly lead to the standardization of the content and to the stifling of new, potentially risky ideas.
By opting for online distribution, an artist can get their work into the public sphere of interest easily with potentially minimum business overhead. This often leads to cheaper goods for the consumer, increased profits for the artists, as well as increased artistic freedom. Online distribution platforms often contain or act as a form of digital rights management.
Online distribution also opens the door to new business models (e.g., the Open Music Model). For instance, an artist could release one track from an album or one chapter from a book at a time instead of waiting for them all to be completed. This either gives them a cash boost to help continue their projects or warns that their work is not financially viable. This is hopefully done before they have spent excessive money and time on a project deemed unviable. Videogames have increased flexibility in this area, demonstrated by micropayment models. A clear result of these new models is their accessibility to smaller artists or artist teams who do not have the time, funds, or expertise to make a new product in one go.
An example of this can be found in the music industry. Indie artists are for the first time able to access the same distribution channels as major record labels, with none of the restrictive practices or inflated manufacturing costs; there is a growing collection of 'Internet labels' that offer distribution to unsigned or independent artists directly to online music stores, and in some cases marketing and promotion services. Further, many bands are able to bypass this completely, and offer their music for sale via their own independently controlled websites; this gives even further advantage to the artist, as it completely cuts out a distributor—and their cut of the profits.
Impact on traditional retail
There is some uncertainty surrounding whether online distribution should be considered a positive or negative for the various media industries; however, the rise of online distribution has upset the traditional business models and resulted in challenges as well as new opportunities for traditional retailers and publishers. Online distribution affects all of the traditional media markets including music, press, and broadcasting. In Britain, the iPlayer, a software application for streaming television and radio, accounts for 5% of all bandwidth used in the United Kingdom.
The move towards online distribution led to a dip in sales at the start of clarify] when CD sales were nearly cut in half. One such example of online distribution taking its toll on a retailer is the iconic Canadian music chain Sam the Record Man who blamed online distribution for having to close a number of its traditional retail venues in 2007-08. One main reason that sales took such a big hit was that the pirating of digital music was very accessible. With piracy affecting sales, the music industry realized it needed to change its business model to keep up with the rapidly changing technology. The step that was taken to move the music industry into the online space has been successful for several reasons. The development of the MP3 file format allows users to compress music files into a format which insignificant affects on sound quality when played on low grade speakers or earbuds, but major quality loss when played on mid to high quality speakers or headphones after being compressed down to a ~3 Megabyte (MB) file. In comparison, the same song would require 30-40 Megabytes of storage on a CD. The smaller file size makes it much easier to transfer a file across the Internet. A benefit to legal owners of MP3 files was that it does not contain digital restrictions management. The lack of digital restrictions management content in MP3 reduces piracy because customers will rather legally purchase an MP3 than pirate the song or listen to it on a streaming service. Streaming services create a multitude of issues such as: a constant internet connection needed to playback the music, music never being stored locally, the music not being transferable to physical media, and the power of the owners of streaming service operator to block and censor content at their discretion. The FLAC format allows for music to be transferred with a much lower file size than CD, while having the same sound quality as a music DVD, all without the abuse of digital restrictions management. The transition into the online space has boosted sales, and profit for artists, the transition into the online space has also allowed for lower expenses such as lower coordination costs, lower distribution costs, as well as the possibility for redistributed total profits. These lower costs have allowed up and coming artists to break onto the scene and become recognized. In the past, emerging artists struggled to find a way to market themselves and compete in the various distribution channels. The online domain has also given artists more control over their music in terms of ownership, rights, creative process, pricing, and more. The Internet prevents artists from incurring any distribution costs even into the international scene since the Internet allows users from all over the world to access the same material. In addition to providing users with easier access to music, it allows users to pick and choose the songs they wish instead of having to purchase an entire album from which there may only be one or two songs that the buyer enjoys. Now more than ever, more and more customers are choosing to purchase select tracks instead of an entire album. The number of downloaded single tracks rose from 160 million in 2004 to 795 million in 2006 which accounted for a revenue boost from US$ 397 million to US$ 2 billion.[
One of the major challenges for traditional television is that almost all network shows are now available online. YouTube and other Internet based video services allow users to watch network shows on demand on their computers by using TiVo and other set-top boxes such as Nintendo's Wii, Microsoft's Xbox 360 and Sony's PlayStation 3. The integration of Internet capabilities into televisions has also given users the ability to access Internet content such as YouTube and other video services directly from their television.
Some companies, such as Bookmasters Distribution, which invested US$ 4.5 million in upgrading its equipment and operating systems, have had to direct capital toward keeping up with the changes in technology. The phenomenon of books going digital has given users the ability to access their books on handheld digital book readers. One benefit of electronic book readers is that they allow users to access additional content via hypertext links. These electronic book readers also give users portability for their books since a reader can hold multiple books depending on the size of its hard drive. Companies that are able to adapt and make changes to capitalize on the digital media market have seen sales surge. Vice President of Perseus Books Group stated that since shifting to electronic books (e-books), it saw sales rise by 68%. Independent Publishers Group experienced a sales boost of 23% in the first quarter of 2012 alone.
Tor Books, a major publisher of science fiction and fantasy books, started to sell e-books DRM-free by July 2012. One year later the publisher stated that they will keep this model as removing DRM was not hurting their digital distribution ebook business. Smaller e-book publishers such as O'Reilly Media, Carina Press and Baen Books had already forgone DRM previously.
Video game industry
The possibilites of the digital distribution is changing also the structure of the whole video game industry. Gabe Newell, creator of the digital distribution service Steam, formulated the advantages over physical retail distribution as:
The worst days [for game development] were the cartridge days for the NES. It was a huge risk – you had all this money tied up in silicon in a warehouse somewhere, and so you’d be conservative in the decisions you felt you could make, very conservative in the IPs you signed, your art direction would not change, and so on. Now it’s the opposite extreme: we can put something up on Steam, deliver it to people all around the world, make changes. We can take more interesting risks.[...] Retail doesn’t know how to deal with those games. On Steam [a digital distributor] there’s no shelf-space restriction.
Therefore, there is since the 2000s a increasing number of smaller and niche titles available and commercially successful, like e.g. remakes of classic games. The new possibility of the digital distribution stimulated also the creation of game titles of very small video game producers like Independent game developer and Modders (e.g. Garry's Mod), which were before not commercially feasible.
The years after 2004 saw the rise of many digital distribution services on the PC, such as Amazon Digital Services, Desura, GameStop, Games for Windows – Live, Impulse, Steam, Origin, Direct2Drive, GOG.com, and GamersGate. The offered properties differs significantly: while most of these digital distributors don't allow reselling of bought games, Green Man Gaming allows this. Another example is gog.com which has a strict non-DRM policy while most other services allow various (strict or less strict) forms of DRM.
- Online shopping
- Bel Air Circuit
- Cloud gaming
- Comparison of online music stores
- Content delivery network
- Digital distribution in video games
- Electronic publishing
- Electronic commerce
- Film distribution
- Film distributor
- Internet pornography
- List of Internet television providers
- List of mobile software distribution platforms
- Streaming media
- Video on demand
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- Walker, John (2007-11-22). "RPS Exclusive: Gabe Newell Interview". Rock, Paper, Shotgun. Retrieved 2013-06-28. "The worst days [for game development] were the cartridge days for the NES. It was a huge risk – you had all this money tied up in silicon in a warehouse somewhere, and so you’d be conservative in the decisions you felt you could make, very conservative in the IPs you signed, your art direction would not change, and so on. Now it’s the opposite extreme: we can put something up on Steam, deliver it to people all around the world, make changes. We can take more interesting risks.[...] Retail doesn’t know how to deal with those games. On Steam [a digital distributor] there’s no shelf-space restriction. It’s great because they’re a bunch of old, orphaned games."
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