Commentary

Just an Online Minute... Paying for Content

Who said people would never pay for something they could get for free? The Online Publishers Association yesterday announced the results of its first U.S. Market Spending Report for paid online content, and as it turns out, U.S. consumers spent $675 million for online content in 2001, a 92% increase over 2000 spending levels. Further, industry growth accelerated into the current year, as U.S. consumers spent $300 million for online content in the first quarter of 2002, a 155% increase over the same quarter last year.

The study, conducted by comScore Networks, found that spending in nearly all content categories grew more than 100% in the first quarter of 2002 versus the same quarter last year. In the first quarter of 2002, the top three categories - Business Content, Entertainment and Personals/Dating - accounted for 59% of all online content spending.

A sharp increase in the number of online content buyers was a primary driver of sales growth, the study indicated. 12.4 million U.S. consumers paid for online content in the first quarter of 2002, up 5.3 million from the same period last year. As a percent of the total Internet population, consumers of paid content increased from 5.3% in the first quarter of 2001 to 9.2% in the first quarter of 2002.

"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," said Michael Zimbalist, executive director of the Online Publishers Association.

Ironically, the majority of spending is occurring on minority-oriented sites. According to the research, 1,700 sites are estimated to be to charging for content online, with 85% of money spent by U.S. consumers for online content going to the top 50 of those sites.

OPA also says that subscriptions are the dominant pricing model, accounting for 85% of paid content sales in 2001. Single purchases accounted for only 15% of sales. And, renewal rates for annual subscriptions averaged 72%, with 74% of those who subscribed for monthly payments still visiting fee-restricted content areas 12 months later.

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