Distribution - Digital Goods

Digital goods, also known as soft goods or virtual goods, exist in an electronic format. Digital goods normally include different varieties of information, including text documents, audio, and video. The vast majority of computers used by the public, and by those engaging in e-commerce, are digital devices. At their most basic level, digital computers understand and process information in a binary format of zeroes and ones (0, 1, 10, 11, 100, 111, and so on). The programming languages used to create software like Web browsers, databases, word processors, and spreadsheets are written in formats closely resembling human grammar that ultimately are converted to a computer's machine language of ones and zeroes.

One of the advantages of digital goods is their minimal storage requirements. Unlike videocassettes, record albums, compact discs, and paper books, large amounts of digital goods can be stored on magnetic media like a computer's hard drive. This requires less physical storage space for buyers and seller alike. Digital goods also are perpetual. This means that text documents, computer software, digital audio, and digital video can be preserved without fear of deterioration from environmental conditions that might affect physical goods over long periods of time. Additionally, digital goods can be duplicated infinitely with each copy retaining the exact properties of the original, without a loss in quality. While this is an advantage in one regard, it also is a weakness because digital goods can be easily pirated and distributed illegally.

In the early 2000s digital goods presented several different areas of opportunity for third party companies. For example, in November 2000 Virage Inc., a provider of Internet video production software and services, joined with digital commerce services provider Qpass to offer video content providers with an outsourced means of managing, selling, and distributing their content via the Web. Another leading area of opportunity was in the area of security.