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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.^[1] Digital 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. An online service for distribution of application software is usually called an "application store" or "app store". With the advancement of network bandwidth capabilities, digital distribution become 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 digital 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.

Basis[link]

The major attraction for digital 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 digital 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.

Digital 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 such as the one in Gunbound. 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^[1]; 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[link]

There is some uncertainty surrounding whether digital distribution should be considered a positive or negative for the various media industries; however, the rise of digital distribution has upset the traditional business models and resulted in challenges as well as new opportunities for traditional retailers and publishers. Digital 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^[2].

Music[link]

The move towards digital distribution led to a dip in sales at the start of the decade when CD sales were nearly cut in half ^[3]. One such example of digital distribution taking its toll on a retailer is the iconic Canadian music chain Sam the Record Man who blamed digital distribution for having to close a number of its traditional retail venues in 2007-08.^[4] 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 ^[5]. 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 does not affect the sound quality while being compressed down to a ~3 Megabyte (Mb) file. In comparison, the same song would require 30-40 Megabytes of storage on a CD^[5]. The smaller file size makes it much easier to transfer a file across the internet. The main drawback to the mp3 file format was that it provides no protection against would be pirates looking to distribute copies of files illegally over the internet.

Despite the drawbacks that the digital space has caused the music industry, the transition into the online space has allowed for lower expenses such as lower coordination costs, lower distribution costs, as well as the possibility for redistributed total profits^[5]. 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 digital 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 digital single tracks rose from 160 million in 2004 to 795 million in 2006 which accounted for a revenue boost from $397 million (USD) to $2 billion (USD)^[5].

Television[link]

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.

Books[link]

Some companies, such as Bookmasters Distribution, which invested $3.5 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^[6] . Companies that are able to adapt and make changes to capitalize on the digital media market have seen sales surge. Vice President of Perseus Distribution 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^[7].

Differences between traditional and digital retailers[link]

Purely digital online media retailers, such as iTunes, are not faced with the problem of limited physical space, as traditional physical retailers are, and thus are able to house and sell a virtually unlimited number of recordings because of the relatively low cost of database entry and storage. While traditional physical media retailers concentrate on selling the top 10 to 20 percent of sellers in order to maximize the profit-per-inch of shelf space, digital online media retailers are able to make money from selling all titles, whether they are within that top 20 percent or not.^[8]. This phenomenon is commonly referred to as the Long Tail.

See also[link]

• Electronic commerce
• Content delivery network
• Digital distribution in video games
• Video on demand
• Gaming on demand
• eBooks
• Comparison of online music stores
• List of digital distribution platforms for mobile devices
• List of Internet television providers
• Film distribution
• Film distributor
• Streaming media

References[link]