SPA members take orders online

SAN JOSE--Drawn by the appeal of selling over the Internet, a sizable chunk of software publishers are embracing electronic software distribution (ESD), but so far they're not convinced it's cheaper than going through physical distribution channels.

In a survey of Software Publishers Association members, the trade group found that 60 percent of its members take orders online. But nearly half report their costs of selling online are now higher than what it costs to sell in other ways.

"Business models are pressed by the low margin and the high up-front costs of electronic commerce," the SPA report states. Other issues include: Users haven't embraced ESD, the technology for selling online changes rapidly, and no standards have emerged.

Online sales costs may drop after the first year, the SPA suggested, as start-up costs are amortized over more transactions.

"Some publishers are not yet convinced that ESD will be their economic salvation," concluded the SPA, which hedged its findings on the cost of online sales because of low response rates.

Consumer software publishers are the most likely to sell online, SPA found, because of shrinking shelf space in physical stores for consumer titles. Of consumer software firms, 82 percent sell online as opposed to 55 percent of business publishers and 47 percent in the education market.

Some 40 percent of responding software publishers sell from their own Web sites, but not all of those allow downloads from their sites. Almost half, 46 percent, of publishers surveyed said they allow online downloads through their own sites or resellers.

The popularity of "try before you buy" demos is growing rapidly, the survey found, with 52 percent boasting such offerings. Most of those run for a limited time or limit uses.

Using the Net to update products is catching on fast. Although only 23 percent reported they have titles that call for Internet updates, 30 percent said they plan to ship one in the next six months.