Bumpy Road From Free To Fee

by Mar 18, 2002, 12:00 AM

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Jupiter Media Metrix today reports that revenues from paid online content will only grow to $5.8 billion by 2006 - up from $1.4 billion in 2002. According to Jupiter's new market forecast for paid content presented today at the ninth annual Jupiter Media Forum, revenues for general content will reach $2.3 billion in 2006 (up from $700 million in 2001), while revenues from online games and digital music will equate to $1.8 billion and $1.7 billion by 2006, respectively (up from $260 million and $30 million in 2001). Jupiter also unveiled findings from a March 2002 Consumer Survey, revealing that almost three quarters of online adults (70%) cannot understand why anyone would pay for content online.

"While there is money to be made in the online content business, Jupiter's latest survey and market forecast numbers indicate that the mass market still largely shuns anything that smells like a subscription online," said David Card, Jupiter vice president and senior analyst at today's Jupiter Media Forum in New York City. "However, in the near term, media companies will create subscription services via packaging, exclusivity and added interactive features. Over time, they must use the gradual U.S. broadband transition to re-set industry ground rules and re-condition consumer expectations.”

Consumers Resigned to Paying in Future

According to the March 2002 Jupiter Consumer Survey, 42% of online adults expect over time that people will have to pay for content on the Internet. Consumer attitudes toward paying for content have, if anything, worsened from August 2000, when 45% of respondents answered the question the same way. Despite consumer reluctance, Jupiter analysts believe that major media properties are in a better position than they were four or five years ago because they no longer face well-financed start-ups giving away quality programming in an effort to lure new users.

"The online future is beginning to look a lot like cable TV. Established portals will emerge as networks that aggregate premium content and services in packages - both those that portals determine and those that users customize. This will pave the way for content providers to resell premium content through numerous partners," Card said.

General Content Opportunity Fragmented

Although Jupiter forecasts that general content revenues will hit $2.3 billion by 2006, the market will stay relatively fragmented. Within the general content category, the highest revenue generating genres in 2006 will be audio/video entertainment ($600 million), adult entertainment ($400 million) and financial and business news content ($350 million). Genres expected to generate the least revenue in 2006 include: consumer/shopping aids ($85 million), kids content ($95 million) and sports content ($95 million). According to the survey, fewer than six percent of online consumers would be willing to pay for kids, sports, video or shopping aid content.

ISPs Could See Early Returns

The survey indicates that, among those online users who would pay for content, nearly one third (29%) would likely pay their ISP. However, digging deeper into the survey responses shows a good sign for mainstream media companies. Jupiter analysts have found that experienced online users - those who have been online for five years or more - are more likely to pay publishers than ISPs or portals. Time and again, Jupiter has seen online tenure to be the surest predictor of online behavior. Jupiter analysts contend that online cross-genre, cross-brand packages will lead the way into a cable TV-like tiered services future.

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