Report: Consumer Spending for Online Content Rose 15.7% in First Half of 2005

By: Miki Johnson Online consumers spent more money in the first half of 2005 on "entertainment/lifestyle" than on "personals/dating," while low-end, single purchases soared, according to a market report released this week by the Online Publishers Association.

The Paid Content U.S. Market Spending Report, which studied observed, not self-reported, purchases from the first two quarters of this year, also charted a 15.7% increase in online consumer spending over the same period last year. This spending now constitutes $987 million, with 2005's second quarter sales topping half a billion dollars for the first time.

Although entertainment/lifestyle spending, at $264.8 million, overtook personals/dating, the latter still rose 7.6% to $245.2 million. Spending on business/investment retained its third-place standing at $159.1 million, finally reversing a downward trend with second-quarter gains of 5.5%.

Driven largely by online music sales, the entertainment/lifestyles category jumped 44.8% over the same period last year, easily making it the fastest-growing spending category. Online Publishers Association President Michael Zimbalist said in a press release that he expects this growth trend to continue, prodded on by new digital, mobile devices such as Apple's Video iPod. "Research" sales made the second largest push forward, with a 33.8% increase since last year.

Paid music downloads also accounted for a spike in single-purchase sales at the lowest price point (0 - $4.99). Mid-range ($5 - $50) and high-range (+$50) made up a slightly smaller share of single-purchase revenue compared to last year.

Subscription revenue still far overtakes single-purchase sales, however, constituting 79.9% of total revenue and bringing in more than one-time purchases in every category except for "credit help." Monthly subscriptions continue to bring in the most revenue, providing more than 50% of subscription revenue for seven of 11 categories.

The report further concludes that, although more Internet users are paying for content, 19.4% versus 12.4% last year, the percentage of U.S. Internet users buying online content actually fell 11.4%. Individual spending also remained level, with shoppers continuing to spend only about $100 per year online.

The full report covering the first half of 2005 can be found at the Online Publishers Association Web site at www.online-publishers.org.