Consumers Spend More for Online Content

By: Ann M. Mack (Adweek IQ) Consumer spending for online content in the U.S. reached $748 million in the first half, up 23% versus the year-ago period, according to a new report.

The study, commissioned by the Online Publishers Association and conducted by comScore Networks, revealed that three categories dominate the online paid content arena. Personals/dating, business/investment, and entertainment/lifestyle represented 65% of the dollars spent for content on the Web in the first half. Personals and dating services continue to drive overall growth, reeling in $214.3 million or about 30% of all online content spending in the first six months of 2003.

Some categories recording year-over-year declines in the first half included entertainment/lifestyles, down 7% to $102.5 million; research, which dropped 6% to $47.3 million; and games, which dipped 3% to $34.8 million.

After experiencing a quarter-to-quarter decline of 7% in Q4 2002 to $336 million, online paid content quickly rebounded, rising 10% to $368 million in Q1 2003 and another 3% to $380 million in Q2.

The figures, however, do not resemble last year's triple-digit growth rate. "While slowing growth may be indicative of a maturing market, we may also be in the midst of a quiet period during which content providers are readying new premium paid services for an increasingly receptive public," commented Michael Zimbalist, executive director of the OPA, a 2-year-old trade organization whose members include CondeNet, Internet Broadcasting Systems, and Wall Street Journal Online, among other Web publishers.

Indeed, Internet companies such as America Online and Yahoo! are continuing to introduce more premium services and exclusive content to lure consumers to pay additional fees.

Also a promising sign, said Zimbalist, is the growth in the number of paid content consumers relative to that of the overall Internet population. According to the report, the number of paid content purchasers rose 24.6% in the second quarter, nearly three times the 8.3% increase in the total online audience. In other words, the boost in paid content penetration was generated by customer conversion, as opposed to the growth in overall Internet users.