Forrester Projects Increase in Digital Downloads

New data from Forrester Research, Inc. projects that 25 percent of all Internet purchases will be delivered by digital download by 2004.

Software and music products are commonly delivered via download at the current time, but books, games and videos are expected to be added to that roster in the coming years.

Forrester expects the rush of download delivery to accelerate as a greater number of consumers use high-speed access, or broadband, to go online. Fifty percent of the 50 e-tailers surveyed already offer downloads as an option for the delivery of software and music. Further, 60 percent of all e-tailers, regardless of product type, expect to use digital delivery in the future.

New Products

Most e-tailers recognize that digital delivery is a quick and inexpensive method of fulfillment. However, some merchants are apprehensive about security issues involved with digital delivery. Accordingly, Forrester found that the merchants who are already delivering software and music through downloads are the most optimistic about future revenues from digital downloads.

Forrester also showed that book and video e-tailers are the most skeptical, noting that they presently see no market for downloads. Book merchants generally do not expect their customers to take to e-books, and video merchants believe that the market for video rentals is well-covered by the pay-per-view television market.

Eager Consumers

The research indicates that consumers are eager to have more products delivered via downloads, and Forrester suggests that this enthusiasm is derived from the success of the Netscape browser and America Online’s ability to put 20 million subscribers through the complicated process of accessing online services.

Video, game and music downloads are expected to increase dramatically as consumers move to broadband access. Less than 2.5 million consumers now have high-speed access, but Forrester’s research indicates that the number will skyrocket to 38 percent of online households by 2003.

Distribution and Security

In order to facilitate escalating downloads, new distribution platforms are being developed to aggregate, store and send digital content to retailers. Fears of bootlegs and digital theft of copyrighted products remain a barrier.

Authentica, Intel and DigitalOwl.com have created anti-piracy software that maintains persistent control of files so that they cannot be printed, sent to friends by e-mail or copied onto a disk without proper licenses and fees.