Digital Distribution and the Evolving Publishing Marketplace

Personal media consumption has exploded in the last few years as a direct result of digital distribution.  Nearly all of our content that we consume is online, whether it be academic, news, research, or entertainment in purpose.  Publishing and distribution have made it much easier for creative professionals of all types to publish their works without having to go through an agent or company to do much of the work. 

These trends also result in greater convenience for the end user.  Single tracks can be downloaded rather than only an entire album.  This is largely because the manufacturing cost to produce a physical single and a cost to produce a physical album are the same, but the profit margin is much higher on albums since they carry a higher retail value.  Digital downloads require no manufacturing cost, so profit margin remains high whether the sales are focused on high-volume small dollar value sales (singles) or small-volume large dollar value sales (such as albums and compilations.)

Already we see many companies moving away from physical distribution entirely.  Netflix’s streaming plan is now the norm, and they have made their physical distribution plans for DVD’s more expensive as the cost to mail physical DVD’s, carry hard-copy inventory, and process the materials is much higher than streaming content delivery.  (Gemstone Equity Research, 2013.) Thus, I think that while there is no replacement for physical albums (sic. vinyl is still around, but not for the every-day end-user) largely this trend will continue and perhaps new methods of digital distribution will emerge as technology continues to evolve.

Reference:

Gemstone Equity Research.  Netflix Right Move at the Right Time.  November 19, 2013.  Accessed on Wednesday, March 26, 2014 at http://seekingalpha.com/article/1848321-netflix-right-move-at-the-right-time.