The rise of online distribution has provided controversy for 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.
Music The move towards online distribution led to a dip in sales in the 2000s;
CD sales were nearly cut in half around this time. One such example of online distribution taking its toll on a retailer is the Canadian music chain
Sam the Record Man; the company 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 unlicensed downloads of music were very accessible. With copyright infringement 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 lossy audio compression file formats such as
MP3 could take 30 MB for a typical 3-minute song and bring it down to 3 MB without any serious loss of quality. Lossless
FLAC files can be up to six times larger than an MP3 while, in comparison, the same song might require 30–40 megabytes of storage on a CD. It has also allowed for potentially lower expenses such as lower coordination costs, lower distribution costs, as well as the possibility for redistributed total profits. but despite the
vinyl revival and CDs holding its own, the physical formats account for only 11% revenue as of 2023, while streaming services are dominant with 84% of the US industry.
Videos With the advancement of network bandwidth capabilities, online distribution became prominent in the 21st century, with prominent platforms such as
Amazon Video, and
Netflix's
streaming service starting in 2007. Many traditional network television shows, movies and other video content is now available online, either from the content owner directly or from third-party services.
YouTube,
Netflix,
Hulu,
Vudu,
Amazon Prime Video,
DirecTV,
SlingTV and other Internet-based video services allow content owners to let users access their content on computers, smartphones, tablets or by using appliances such as video game consoles, set-top boxes or
Smart TVs. Many film distributors also include a
Digital Copy, also called Digital HD, with
Blu-ray disc,
Ultra HD Blu-ray,
Blu-ray 3D or a
DVD.
Books 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 games Online distribution is changing the structure of the
video game industry.
Gabe Newell, creator of the digital distribution service
Steam, formulated the advantages over physical
retail distribution as such: Since the 2000s, there has been an increasing number of smaller and niche titles available and commercially successful, 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 Services,
Desura,
GameStop,
Games for Windows – Live,
Impulse,
Steam,
Origin,
Battle.net,
Direct2Drive,
GOG.com,
Epic Games Store and
GamersGate. The offered properties differ significantly: while most of these digital distributors do not 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. Digital distribution is also more eco-friendly than physical. Optical discs are made of
polycarbonate plastic and
aluminum. The creation of 30 of them requires the use of 300 cubic feet of
natural gas, two cups of oil and 24 gallons of water. The protective cases for an optical disc is made from
polyvinyl chloride (PVC), a chemical that is dangerous to produce,
vinyl chloride monomer being a known
carcinogen. ==Challenges==