What is a Digital Economy?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 08 November 2019
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A digital economy is one that is primarily concerned with the production and sale of electronic goods and services by businesses that function in a virtual environment and deliver those goods and services via electronic commerce. This concept is widely applied to companies that offer electronic or digital products online, with the purchase, processing, and delivery of those goods and services accomplished by means of a download or the granting of access to services that are housed on a remote server. The idea of a digital economy began to emerge during the last years of the 20th century, as technology paved the way for more and more electronic commerce to take place on line, including the delivery of software and ebooks via download upon remitting an online payment for those products.


One of the main focal points of a digital economy is on the quick and easy delivery of services via the Internet. In recent years, electronic delivery has become increasingly popular in a number of fields. One common example has to do with reading material. In response to the increasing number of people who utilize internet-ready devices to read the text of different novels or textbooks, a growing number of suppliers have launched virtual bookstores that allow consumers to browse the offered selections and purchase electronic copies of those texts. Payment is rendered by a secured process at the web site, and the consumer is allowed to download the text to the device of his or her choice.

One of the benefits of the digital economy is that consumers are often able to obtain products at lower prices than their hard copy counterparts. For example, an electronic version of a new novel may be 25-50% less expensive than purchasing a hard copy of the book. In like manner, music aficionados may purchase the latest releases from their favorite artists for less than the cost of purchasing a CD in a local brick and mortar music store, or even buying the hard copy CD online and having it delivered by post. Some sites participating in this digital economy setting even allow consumers to purchase individual tracks by their favorite artists and download them for nominal fees per song.

In recent years, the concept of a digital economy has begun to branch outside the commerce aspect of buying and selling electronic products online. Today, the idea also includes the use of virtual processes as part of the ongoing operation of companies, the internal workings of governments, and the fast and efficient execution of transactions between businesses. As technology continues to advance, the digital economy is likely to continue expanding as a greater range of goods and services are offered electronically, allowing consumers to fulfill their needs and wants at an accelerated rate.


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