• by Jack Loechner , Staff Writer @mp_research, March 10, 2003

Content Spending Online Almost Doubles in 2002

According to the Online Publishers Association, in conjunction with comScore Networks U.S. Market Spending Report for paid online content covering Q4 and the Full Year 2002, consumer spending for online content in the U.S. totaled $1.3 billion in 2002, an increase of 95% over 2001.

Michael Zimbalist, Executive Director, Online Publishers Association introduces the report by saying, …”as we move into 2003, the question looming for content providers is this: What types of content or services will fuel continued growth in consumer spending? We believe that two developments in the past year are certain to factor into the ultimate answer to this question. First is the continued penetration of broadband, which now reaches a preponderance of users at work and approximately 16 million U.S. households. The second development in 2002 was the dominance of sites that aggregate large amounts of content among the top revenue generators.”

Highlights of the study include:

- While Q4 2002 showed the first quarter-over-quarter decline in online paid content revenue, there is no clear indication that the adoption cycle is necessarily coming to an end

- The 48.5% year-over-year growth rate for Q4 2002 still outpaces the overall eCommerce growth rate of 23%1 for the same time period

- The top three categories – Personals/Dating, Business/Investment Content and Entertainment/Lifestyles – account for 63% of online content spending in 2002, slightly higher than the 59% spent on those categories in 2001

- The Personals/Dating category surpassed Business/Investment Content and Entertainment/Lifestyles to become the largest paid content category in 2002

- Consistent with behavior of a maturing market, individual category growth rates have attenuated, with only two categories – Greeting Cards and Personals/Dating – showing over 100% year-over-year growth

- Annual subscriptions continue to be the dominant pricing model, accounting for 41% of online content sales this year, compared to 42% of last year’s content sales

- Retention sales remain high, with 72% of those who subscribed for monthly payments still visiting fee-restricted content areas 12 months later

- The average conversion rate for those who signed up for free trial offers becoming paid subscribers was 17.8%, up only slightly from the 2001 free trial conversion rate of 17.4%

- 14.3 million U.S. consumers paid for online content in Q4 2002, up by 4.3 million from the number who paid for content in Q4 2001

- The year-over-year growth in consumer acceptance of online paid content is 42.8%, from 7.6% of the U.S. Internet population in Q4 2001 to 10.3% of the U.S. Internet population in Q4 2002

- Growth rates in paid content revenue are attributable to additional consumers and not additional dollars per consumer

- The average spending per customer increased only 4% from Q4 2001 to Q4 2002

- The average price for annual subscriptions online was $48.94 in 2002

- The average price for monthly subscriptions online was $10.32 in 2002

- The average price for single content items purchased online was $22.64 in 2002

The full report is available at the Online Publishers Association web site