Jupiter Examines Paid-For Net Content

A bumpy journey lies ahead in the move from free online content to paid-for, with net content revenues only reaching some USD6 billion by 2006. Such is the gist of new research released at the recent ninth annual Jupiter Media Forum in NYC.

Findings from Jupiter's March 2002 consumer survey, looking at consumer attitudes and opinions on online content, were officially launched at the forum. Analysts also gave their latest revised market forecasts for paid content online.

The research shows that total global revenues from paid online content are likely to only grow to $5.8 billion by 2006 - up from $1.4 billion in 2002. 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). At the same time, the study indicates that almost three quarters of online adults (70 percent) 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. '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.'

In terms of willingness to pay at some time in the future, Jupiter has found that 42 percent of online adults do expect to at some point. However, consumer attitudes toward paying for content have, if anything, worsened from August 2000, when 45 percent 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 customise. This will pave the way for content providers to resell premium content through numerous partners,' Card added.

Although Jupiter forecasts that general content revenues will hit $2.3 billion by 2006, the market is likely to 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.

Among those online users who would pay for content, nearly one third (29 percent) would be most likely to pay their ISP. However, digging deeper into the survey, responses appear positive for mainstream media companies too. Experienced online users (those who have been online for five years or more) were found to be more likely to pay publishers than ISPs or portals.

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.