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A World of Change for Content Distribution

New channels for distributing content are opening up great business opportunities.

• By Srikanth Desikan
• March 01, 2006

It’s a transformation that every company with digital products or content should watch closely. In this new world, all kinds of applications, content, services and experiences will be delivered online faster and cheaper than ever before. That evolution -- or revolution -- is already causing waves, with no less than Microsoft Chairman Bill Gates predicting "very disruptive" times ahead. [See the cover story, "Get Ready for Software as a Service" -- Ed.]

This transformation is also generating new business opportunities. Among the most promising: new, cost-effective online channels giving providers a simple, direct way to offer a wide range of digital content.

These new direct-to-consumer channels, already becoming available, offer huge advantages over traditional server-based content delivery. For content providers, they can cut distribution costs by 80 percent or more, reduce the need to alter digital goods for online delivery, enable flexible licensing terms and enhance cross-promotional capability.

For consumers, the new channels offer an improved content-delivery experience. They can find, select and buy exactly the content they want and have it securely delivered to their desktops or devices -- often in a fraction of the time required for traditional server-based downloads and installations.

The new channels provide the distribution power of peer-to-peer (P2P) networks backed with substantial security controls. These new private P2P networks are far more secure than existing public P2P networks. Because of their open nature, the public P2P networks offer inadequate protection for the assets being distributed on them, leaving their contents vulnerable to theft or tampering. But with private P2P networks, companies can control their content even after it’s been released to the network, updating, upgrading and patching it automatically as needed.

And because the technology creates a secure one-to-one channel between provider and consumer, those changes will automatically be delivered to everyone who’s received that content. If necessary, providers can even roll back to an earlier, more stable version of a particular piece of content -- or recall it entirely.

Following are a few suggestions on how content providers can prepare for this transformative tidal wave:

• Evaluate options. Look beyond traditional distribution channels. Consider ways in which you might use these new direct-to-consumer channels to make your products more visible and easier to find.
• Take inventory. Remember that with the dramatically lower distribution costs, you may be able to profitably break larger products into smaller chunks, such as selling monthly installments to new game modules for $2.99 rather than selling a new game every year for $19.
• Compare costs. Determine your current content distribution expenses. Estimate the likely savings or new revenues that these new private P2P channels might offer. Use those calculations to prioritize what should "go digital" first.
• Create new licensing models. Think about options that high distribution costs or bandwidth limitations have prevented you from offering before. For example, you may find it profitable to offer software "rentals" for just a few days because the new channels can deliver even very large applications quickly and inexpensively.
• Explore brand-building opportunities. Some direct-to-consumer channels can be customized with your brand’s specific look and feel. And some offer the ability to deliver in-context ads -- that is, ads directly related to the content, game or software that a particular consumer is using.

Bottom line: If you are, or plan to be, in the business of delivering content and products online, now’s the time to learn how these new direct-to-consumer channels can help your business. Look for ways to monetize existing content while seizing opportunities for new development. Taking these steps will help ensure that your company rides that fast-approaching wave of change rather than being swept away by it.