Bumpy Road From Free To Fee: Paid Online Content.

Jupiter Media Metrix reports that revenues from paid online content will grow to only $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, respectively, in 2001). Jupiter also unveiled findings of a March 2002 Consumer Survey, revealing 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, 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, the companies must use the gradual US broadband transition to reset industry ground rules and recondition consumers’ expectations.”

Consumers Resigned to Paying in Future

According to the March 2002 Jupiter Consumer Survey, 42 percent of online adults expect over time that people will have to pay for content on the Internet. Consumers’ attitudes toward paying for content have, if anything, worsened since August 2000, when 45 percent of respondents answered the question in the same way. Despite consumers’ 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), content for kids ($95 million) and sports content ($95 million). According to the recent survey, fewer than six percent of online consumers would be willing to pay for content for kids, sports, video or shopping aids.

ISPs Could See Early Returns

The survey indicates that, among those online users who would pay for content, nearly one third (29 percent) said they would likely pay their ISP. Digging deeper into survey responses, however, shows a good sign for mainstream media companies. Jupiter analysts have found that experienced online users – those who have an online tenure of five years or more – are more likely to pay publishers than they are to pay 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 to a tiered-services future much like that of cable TV.

For more information at http://www.jmm.com