Online distribution, digital distribution, or electronic software distribution (ESD) is the practice of delivering content without the use of physical media, typically by downloading via the internet directly to a consumer's device. Online distribution bypasses conventional physical distribution media, 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. A online service for distribution of application software is usually called application store or app store.
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.
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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 overheads. This often leads to cheaper goods for the consumer and 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 or warns that their work is not financially viable before they have sunk excessive money and time into it. 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; 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.
The rise of online distribution of music in particular has been blamed for a number of traditional retail venues closing, such as the iconic Canadian music chain Sam the Record Man in 2007-08.[1]