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Economy 13 June 2013

Discussion paper on the contribution of the Internet to content creation

The Internet is a platform that is ideal for the distribution of digital content such as music or video. In general, given that the Internet empowers technology at its edges, it allows companies to introduce innovative services that can grow quickly; more specifically, digital content can be copied perfectly an endless number of times and distributed at low cost, particularly compared with physical manufacture and distribution. Like in most cases, however, there are two sides to the coin: these same attributes can equally facilitate the illegal exploitation of content.

Analysys Mason Limited has been commissioned by the Internet Society to consider the contribution of the Internet to global content creation. Although online distribution does present some threats to the businesses of content owners, our view is that it allows for even greater opportunities. These are already being exploited to a substantial degree and there is large potential for further growth related to the online distribution of content in the future.

We have seen evidence that while, in some cases, traditional methods of content distribution are declining in popularity and being displaced by online distribution, overall growth persists. In particular the growth in adoption of the emerging, Internet-based, distribution of high-quality content is beginning to exceed the decline in physical distribution and overcome digital piracy, such that any declines in overall revenue from content associated with the emergence of online distribution are being turned around.

In our analysis we have considered the evolution of the content industry in terms of spending, content development and device adoption, with a focus on the new business strategies developed by content owners and distributors in order to take advantage of, and monetise, online distribution. In summary, by making rights available for online distribution, content providers are not only able to shrink the demand for pirated content, but also expand their markets and overcome corresponding decreases in the sale of physical content.

Read the full report online

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