Consumers open wallets for paid content

U.S. consumer spending for paid Internet content is spiraling upward, due partly to more people looking for a mate online, according to a new study.

Matt Hines Staff Writer, CNET News.com
Matt Hines
covers business software, with a particular focus on enterprise applications.
Matt Hines
3 min read
U.S. consumer spending for paid Internet content jumped during the first half of 2003, due partly to more people looking for a mate online, according to a new study.

The Online Publishers Association reported that spending on paid content grew to $748 million in the first half of 2003, an increase of 23 percent over the same period last year. The study, conducted by ComScore Networks for OPA, showed 25 percent growth in the first quarter of 2003 with spending reaching $368 million, compared with $294 million for the first quarter of 2002.

OPA said the top three paid content categories--personals and dating, business and investment, and entertainment and lifestyles--accounted for 65 percent of spending in the first half of 2003, up from 61 percent in 2002. U.S. consumers spent $214.3 million on personals content in the first half of 2003, a 76 percent increase for the segment over the first half of 2002, according to the report.

"This shows us that as the Internet matures, more people are becoming familiar and comfortable with paying for content," said Michael Zimbalist, executive director of OPA. "We know that the more time people spend online, the more open they become to making transactions."

Zimbalist said the results for the first half of the year serve to prove that the market has gotten back on track after a disappointing fourth quarter in 2002, when sales for paid content dipped to $359 million, a 7 percent drop compared with the third quarter of 2002. Zimbalist said it is too early to determine if the fourth-quarter shortfall was related to seasonal consumer spending habits, but he indicated that 2003 performance should help give OPA more clues.

According to Zimbalist, OPA is expecting at least 20 percent growth for the paid content market for 2003.

The OPA study indicated that the overall number of Internet users who paid for content in the second quarter of 2003 grew to 10.9 percent, representing a 15 percent rise compared with the same period last year.

"What you see here is that younger users respond to paid content more favorably," Zimbalist said. "We think this is because many of these users have grown up with the Internet and therefore see paid content as a more reasonable proposition."

Subscriptions continue to be the dominant price model, accounting for 88.5 percent of paid content revenue in the first half of 2003. Web sites that charge users $5 or less have held steady over the past three quarters, comprising roughly 8 percent of all spending, according to the report.

In a related study, OPA found that consumers of paid content tend to be younger and more affluent, and they spend more time online than most Internet users.

Roughly 25 percent of paid content consumers have household incomes of $100,000 or more, compared with only 20.5 percent of the total Internet population, according to OPA. Paid content consumers also tend to visit more than twice the number of Web pages than the average Internet user does, and they spend more than twice as much time online. They are also 14 percent more likely than the average user to have broadband access, according to OPA.