StatsAudiencePaid Content Grows, Driven by Music Sales

Paid Content Grows, Driven by Music Sales

An OPA study finds more consumers, more spending, and more subscriptions -- mostly for the fun of it.

More consumers bought online content, mostly for entertainment purposes, and mostly via subscriptions, according to the latest Online Publishers Association (OPA) report.

U.S. consumers spent $853 million on online content in the first half of 2004, led by growth in entertainment content — a 14 percent increase in spending over the same period last year, according to the Paid Content U.S. Market Spending Report, conducted by comScore Networks.

“Consumers’ use of the Internet is evolving far beyond functional activities. Indeed, the Internet is becoming a primary source of entertainment and fun,” said Michael Zimbalist, OPA president. “People are beginning to recognize the Internet as both a productivity tool and a source of enjoyment.”

Entertainment/lifestyles — the fastest growing category — overtook business/investment content as the second largest paid content category, driven largely by growth in online music spending. Spending in the entertainment category grew to $182.8 million in the first half of 2004, a 78.3 percent increase over the same period last year. Sports, which includes fantasy games, grew by 68.7 percent, and games gained 27.4 percent.

“Traditionally, we’ve known that people pay for things they’re passionate about,” Zimbalist said. “The quality of the online experience continues to improve as a result of broadband, and as a result of content creators making more compelling products that are more entertaining. Those two things speak to a strong outlook for continued growth of spending on entertainment-related activities online.”

Only a fraction of online music spending had been counted in previous OPA reports, since the methodology of the study prevented comScore from counting sales of content made through applications other than a Web browser, such as Apple iTunes, Real Rhapsody, and Yahoo Musicmatch Jukebox. That limitation has now been resolved, and music sales will be included in all future reports.

Personals/dating held its position as the leading paid content category, with U.S. consumers spending $227.9 million in the first half of 2004. Spending in the business/investment category dropped 8 percent to third place, with $154.9 million this year from $168.5 million in the first half of 2003. Both of these categories have seen slight declines in each of the last three quarters since peaking in Q3 2003.

The declines in personals/dating reverse a two and a half year period of rapid category growth, signaling a maturing of the market and a normalizing after a period of intense publicity, according to the report.

Approximately 16.8 million U.S. consumers paid for content in the second quarter, up from 16.0 million in the year-ago period. The report found that the growth in paid content revenue is based on the addition of new content buyers rather than any change in dollars spent per consumer.

“That means there’s significant headroom for growth,” Zimbalist said. “There are many more people engaged in buying physical goods online than buying content. As people become more used to thinking of content as something they can buy online, converting some of those online shoppers to people who would pay for something delivered digitally is a significant opportunity.”

Earlier this month, the OPA released figures from its latest Internet Activity Index, which showed that time spent online viewing content surpassed time spent on communications in September for the first time.

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