Internet gains higher ground
No technology has had such a rapid impact on our lives and businesses as the Internet. To put it into perspective, radio took 38 years to acquire 50 million listeners worldwide, TV 13 years. Even the PC took 16 years to reach this number. The Net achieved the same figure in four years.
The Net continues to grow at an exponential rate. As many people as live in the UK gain Net access every six months. Businesses have been quick to use it as a delivery channel to sell everything from books and clothes to cars and houses – commonly referred to as e-commerce.
Companies are looking at ways to make the technology work harder by distributing goods digitally. Unlike e-commerce, digital commerce is immediate as the consumer can download a product at the click of a mouse.
Whether it is music in an MP3 format, the latest anti-virus software, a new edition of a computer game or the most recent Mintel report, the Net can be used to distribute content digitally.
According to new research carried out on behalf of NatWest’ digital commerce service Magex, businesses are recognising the potential of being able to receive payment for their content and building their brands on the Web.
Investment bank JP Morgan believes the market for digital content and online intellectual property is worth $185bn (&£116bn) and is projected to rise to $275bn (&£172bn) by 2003.
Digital commerce is not without its challenges, such as the well-publicised fear that the copyright of digital content could be infringed.
Digital music piracy cost was about $4.5bn (&£2.8bn) in 1998 and software piracy was about $11bn (&£6.9bn) in 1999, according to the Business Software Alliance.
The Intellectual Property Mess report, by technology research company Forrester, says digital content, including images, business information and business reports worth $300bn (&£188bn), is under threat from online piracy.
Technology was introduced in 1999 to address the secure and cost-effective collection and distribution of small payments through the Net.
Well-known names such as Microsoft, Intel and IBM have developed technology which protects digital content to various degrees. New names, such as InterTrust Technologies, are extending protection to new portable devices, for example, the Rio MP3 player, Sony Music Clip and WAP mobile phones.
One of the first major companies to explore digital commerce seriously is Universal Music Group (UMG), which has a 25 per cent share of the worldwide music market, with artists such as Bryan Adams, Sting and The Cranberries.
UMG is looking to maximise the Net’s potential by allowing consumers to download and purchase enhanced music tracks, alongside sleevenotes, video footage and Web links, digitally.
UMG uses Intertrust Digital Rights Management to protect the copyright of artists’ tracks and a clearing solution from Magex which allows consumers to pay instantly using an electronic wallet.
Mark Taylor, former managing director of Creation Records and founder of the YoYo Partnership, says: “Until now, the music industry has been wary of the Net because of the severe problems piracy has presented.
“Now, with the development of effective encryption and viable payment solutions, the industry can at last embrace the Net and use its potential to distribute music in truly imaginative ways.”
As Net use continues to spiral globally, companies will be competing to build brands and businesses online. Digital commerce presents businesses with a unique opportunity to distribute content securely and efficiently.
Moreover, the direct, information-rich and versatile interaction offers new, and more subtle, ways to build stronger relationships than some conventional channels.
Behind the Net hype, marketing and business professionals can see a way to build profitable relationships based on enduring customer franchises in a wider market.
