Consumer Spending on Online Content Totals $1.3 Billion
- by March 5, 2003
From Q3 to Q4 2002, paid content revenue fell from $361 million to $338 million, suggesting that seasonality and overall economic factors may be increasingly affecting the category as it grows larger. However, while some potential online content buyers no doubt directed their Q4 2002 spending to more traditional holiday purchases, the 49% year-over-year growth rate for paid content in that quarter still outpaced the overall e-commerce growth rate of 23% over the same period.
The Personals/Dating category surpassed both Business/Investment and Entertainment/Lifestyles to become the largest paid content category in 2002 with $302 million in revenues, up nearly threefold from $72 million in 2001. Those top three categories - Personals/Dating, Business/Investment Content and Entertainment/Lifestyles – accounted for 63% of online content spending in 2002, up from 59% in 2001.
"The year 2002 will go down as the year in which the conventional wisdom about paid online content changed," said Michael Zimbalist, executive director of the Online Publishers Association. "Whether or not consumers will pay for content is no longer a matter of debate. Clearly, they will."
According to the report, the average spending per consumer increased only 4% from Q4 2001 to Q4 2002, indicating that the growth rates in paid content revenue are attributable to additional consumers, rather than additional spending per consumer. The number of U.S. consumers paying for online content in Q4 2002 grew to 14.3 million from 10 million in Q4 2001.
Annual subscriptions continue to be the dominant pricing model, accounting for 41% of online content sales in 2002, vs. 42% in 2001. However, in some categories - notably Games and General News – the monthly model remains strong. Micropayments of less than $5 grew 707% year-over-year, but still represented less than 1% of sales, generating only 9.6 million in revenue in 2002, primarily in the General News category.
