Paid Content Paying Off

Whether Internet users like it or not, the paid content market is growing, and so is the amount of revenue being generated. In a study conducted by comScore Networks, the Online Publishers Association (OPA) found that U.S. consumers spent $748 million on online content during the first half of 2003, representing a 23 percent increase over the same period in 2002.

Impressive as the growth may be, the figures can’t match 2002’s meteoric 131 percent rise over 2001 — $264 million were spent on online content during the first half of 2001, compared to $609 million in the first half of 2002.

The OPA credits younger broadband-using Internet surfers with the majority of online content spending. In the first quarter of 2003, nearly 50 percent of online content buyers came from households headed by someone between the ages of 25 and 44; nearly 25 percent had annual household incomes above $100,000; and 59 percent had broadband access.

Broadband will continue to be a key driver of paid content, particularly for paid streaming content. With more than 30 million households already surfing at high-speed — and more than 130 million expected by the end of 2007 — Internet users are viewing high-quality streaming video content and In-Stat/MDR predicts that many will be willing to pay for it.

Forecasts from the research firm put the market for consumer online subscription video streaming services at roughly $991 million during 2003, growing to more than $4.5 billion during 2007. Asia is predicted to be the largest market in 2007, accounting for $1.2 billion.

Of the 525 U.S. households with broadband Internet service that Strategy Analytics surveyed in May 2003, 46 percent said they would be interested in using a premium broadband service that allowed them to download music legally. Of these interested consumers, 16 percent said they would be willing to pay a monthly fee of $5 to $15 for the service.

Additionally, while the number of respondents interested in using a premium broadband service to connect video game consoles was only 20 percent, 17 percent of these interested consumers said they would pay the same monthly fee.

According to the OPA, paid content purchasers apparently liked to get their money’s worth, spending more than 13,000 minutes online during Q1 2003, and viewing more than 11,000 pages. The average Internet user was online for less than half of that time — just over 6,000 minutes and roughly 5,100 pages.

Where were the paid content buyers spending all that time and money? The OPA report found the personals and dating category to be the biggest paid content revenue generator — registering a 76 percent growth rate in the first half of 2003 over 2002 — followed by the business content and investment category. Paid personal growth content soared 99 percent over the year, while entertainment/lifestyle dropped 7 percent.

Online Content Spending by Category of Content,
Q1 & Q2 Totals (in millions)
Category 2002 2003 Change
Personals/Dating $121.5 $214.3 +$92.8
Business/Investment $139.0 $168.9 +$29.9
Entertainment/Lifestyle $110.2 $102.5 +$7.7
Research $50.3 $47.3 -$3.0
Community-made Directories $44.2 $46.3 +$2.1
Personal Growth $20.8 $41.4 +$20.6
General News $34.5 $39.2 +$4.7
Games $35.9 $34.8 -$1.1
Credit Help $20.6 $20.4 -$0.2
Greeting Cards $18.3 $18.8 +$0.5
Sports $13.9 $14.4 +$0.5
Source: comScore/OPA

This article courtesy of sister publication, CyberAtlas.

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