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The Sky is Rising: Data Shows Wealth of Opportunities for Digital Content

· October 23, 2014

Perennial concerns about piracy might suggest that ‘the sky is falling,’ but the latest economic data from the “Sky is Rising” series reaffirms that an unprecedented amount of creative content is reaching consumers, through a growing number of authorized means.  With today’s release of the third Sky Is Rising report (infographic below), research firm Floor64 updates its previous surveys (1, 2), focusing on the significant growth in the U.S. in four segments of the digital content market: music, video, books, and games.

Internet-enabled access to content continues to drive growth in digital content consumption and availability, even in the wake of an economic downturn.  Data collected in the report reflects growing overall creative output, with more creators able to sell their work through more venues.  As a result, consumers are enjoying a greater and more diverse amount of entertainment, findings that are consistent with recent media accounts and DisCo posts.

Music:  Today’s report indicates that that legal digital music consumption continues to grow, with users streaming more than 118 billion tracks in 2013.  Total music transactions reached record highs in 2011 and 2012, with legal downloads of current releases growing by 9.1%.  In related music news, patronage site Patreon announced last week that it is now enabling payments of more than $1 million per month to creators, many of them musicians who make a living from advertising on their YouTube videos.  And new Credit Suisse research finds that streaming revenue will soon surpass physical sales.

Video:  The new Sky Is Rising report cites projections showing a steady increase in the U.S. video sector, driven by online services, estimated to exceed $36 billion by 2017.  The global and domestic box offices continue to break records; international returns exceeded $35 billion in 2013 according to the MPAA, up 20% over 2009.   Just last week YouTube announced that its ContentID service has generated $1 billion in revenues for rights-holders.  DisCo has also been following innovation in OTT content, with a post this week and a post last week about the rise of OTT services, including new offerings from HBO and CBS, and the decline of the cable bundle’s reign.

Games:  Research cited in the report demonstrates that while total gaming sales fell off during the economic downturn, games grew from $79 billion to $93 billion between 2012 and 2013, and forecasts continue to look up.  Estimates suggest even brighter futures for mobile game revenues, which tripled from 2011 to 2013, reaching between $1.78 and $3 billion.  DisCo has written about innovation in gaming this year, including Amazon buying Twitch, and Kevin Spacey being featured in Call of Duty.

Books:  Floor64 finds that the ebook explosion continues, growing from $64 million in 2008 to more than $3 billion in sales in 2012, with independent and self-published authors contributing to the growth.  And even as total book market revenues are down, U.S. printed title production has tripled over recent years.

Although each of these segments are moving through challenging transitions as new technology eliminates existing barriers, today’s report reflects that the Internet hasn’t devalued creative works, but rather democratized content creation and distribution.

 

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.

Innovation

New technologies are constantly emerging that promise to change our lives for the better. These disruptive technologies give us an increase in choice, make technologies more accessible, make things more affordable, and give consumers a voice. And the pace of innovation has only quickened in recent years, as the Internet has enabled a wave of new, inter-connected devices that have benefited consumers around the world, seemingly in all aspects of their lives. Preserving an innovation-friendly market is, therefore, tantamount not only to businesses but society at large.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.