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OPA: Paid Web Content Becoming Viable Revenue Source

While still something of a taboo for most Web publishers, paid online content is coming of age, posting sizable growth in revenue, according to a report fielded by an industry group.

The New York-based Online Publishers Association, a consortium of publishers including the New York Times Co's online unit, Dow Jones & Co.'s WSJ.com, and MarketWatch.com , said that the market for paid online content grew to $300 million during the first quarter of 2002, referring to data from researcher comScore Networks.

The $300 million figure represents a 155 percent growth from a year earlier. During all of 2001, consumers paid $675 million for online content, a 92 percent increase from 2000, the OPA said.

Chiefly, most of that content is paid for via subscriptions, with the model accounting for 85 percent of sales.

Big winners included RealNetworks , WSJ.com and Ticketmaster-CitySearch's Match.com, which comprised the top-three moneymakers. Yahoo! and ConsumerReports.org rounded out the top five.

Overall, the categories of entertainment, business content and personals/dating together accounted for 59 percent of all online content spending. Of the roughly 1,700 sites charging for content, the top 50 players accounted for 85 percent of U.S. consumers' spending.

More consumers also are paying for content, and paying more. From the first quarter of 2001, the number of U.S. online content purchasers grew 175 percent, to 12.4 million, while the average amount spent grew 46 percent during the same period.

Consumers that purchase online content also grew as a percentage of the total Internet population, nearly doubling from 5.3 percent to 9.2 percent quarter-to-quarter.

Additionally, 72 percent to 74 percent of consumers on average were renewing their subscriptions.

The news is good for Web publishers, an increasing number of which are hoping to supplement shortcomings in advertising spending with paid products and services. Sunnyvale, Calif.-based Yahoo!, for instance, has emerged as a major force in online content -- launching new paid services to decrease its reliance on advertising, which just over a year ago had comprised almost 100 percent of its revenue. The company last month posted its first profitable quarter in more than a year based in part on the strength of its paid offerings.

"The OPA/comScore study reveals that consumers will indeed pay for quality digital goods and services delivered where and when they choose," said comScore Vice President Dan Hess. "We've clearly established that there's a world of opportunity for publishers who deliver premium content online."

Added OPA Executive Director Michael Zimbalist, "These data clearly show a market undergoing rapid growth. As content providers get smarter about creating valuable for-pay offerings, an increasing number of consumers are responding with their wallets."

The OPA said it plans to release regular updates of the research.