Digital products have been around as long as digital technology. And with the current trend towards social distancing, working from home, and avoiding crowded rooms, they appear to be set for another massive leap forward.
What is a Digital Product?
The term “digital product” means virtually any type of property that is created, sold, and delivered online. E-books are one of the best examples. Unlike physical books, e-books are delivered and consumed digitally, usually on tablets, phones, and computers. The book is not a physical object, but a digital file. Other digital products include podcasts, online classes, videos, downloadable templates, and a wide variety of software.
Essentially, if all you need to create, market, sell, and deliver the product is a computer (and appropriate hardware and software), it can be considered a digital product.
The Benefits of Creating Digital Products
Although the costs of creating a digital product can vary, they tend to have an extremely-low production price compared to physical products. Suppose you are going to start selling bikes. You would need a factory and assembly area, you would likely need to pay employees, and every bike would require raw materials. The costs could be tremendous, making entry into the market tough and leaving little room for profit.
But suppose you are creating podcasts. In this case, all you need is recording equipment and the appropriate software. It’s basically a one-time purchase; the remaining income can be considered profit.
A digital product is also scalable; it’s easy, fast, and simple to duplicate the product and sell it again. If you were making bikes (or pies or sweaters or chairs or whatever), you have to make a new item for each customer. A single podcast can be sold to (potentially) millions of customers, while a single bicycle can only be sold to one.
There are, of course, significant challenges to creating digital products. The biggest of all is the simple fact of competition. Digital products are (relatively) easy to create, so millions of people are creating them. In such a saturated environment, it can be tough to stand out from the crowd, gain a consumer’s attention, and convince them to purchase your digital product, not someone else’s!
So…Should You Create a Digital Product?
The answer comes down to many personal considerations. Your passion for the product or topic, as well as your comfort level with online sales and marketing, should all be considered before making a choice.
Personal factors aside, there are legitimate financial reasons to create a digital product, as numerous product types are racking in significant revenue…
E-Books: Almost $20 million in global revenue by 2025
E-books, for example, continue to remain a strong part of the publishing and writing industry. According to Statista, worldwide eBook revenue is expected to be around $16.6 million by the end of 2020. The segment as a whole is showing steady growth and should reach almost $20 million by 2025. In the United States, at the time of this article, 2020 revenue was expected to be roughly $6.5 million by the end of the year.
Online Learning: $375 million by 2026
Online learning is also showing significant and sustained growth. Global Market Insights says that the “e-learning” market surpassed $200 million in 2019 and will have an average growth rate (GAGR) of 8% between 2020 and 2026. They project that revenue for online learning will reach $375 million by 2026.
Podcasts: $1 Billion in advertising revenue by 2021
Millions of people are listening to podcasts, and while there are millions of episodes to choose from, there is also a large pile of cash waiting for successful podcasters. According to the Interactive Advertising Bureau, advertisers will pump a grand total of $1 billion into podcasts by 2021.
An article from Shopify highlights the potentially massive income you could earn with a digital product. This article profiles a husband-and-wife team that operates an online marketplace for doll clothing patterns. That seems like a fairly narrow niche, yet this couple apparently brought in roughly $600,000 in revenue! Admittedly, this is a single example that only discusses revenue (money coming into the business) and not profit (money left after expenses). But it still highlights the potentially high gains from a digital product.
Clearly, there is a large amount of cash waiting for someone who can create a popular digital product. Whether you should or not depends on how much time you have available, your personal passion, and your current work situation, among countless other factors.
While it’s hard to break through the crowd, if you have the talent, knowledge, and dedication, you could create a profitable digital product!