Study: Consumer Spending on Online Content Fell in Q4

The market for paid content nearly doubled in 2002, but data from the fourth quarter showed signs that the growth might be slowing, according to a study released by the Online Publishers Association (OPA).

For the first time in the two years the OPA has been measuring, spending on online content in the fourth quarter declined from the previous quarter, falling 6 percent. In the third quarter, spending rose 14 percent to $361 million.

The OPA said the fourth-quarter spending retreat was related more to macroeconomic factors, particularly sluggish consumer spending overall, and seasonal factors that did not show up during an unusually strong 2001 holiday season. The trade group said it did not signal a tapering off of consumer willingness to pay for content.

“The year 2002 will go down as the year in which the conventional wisdom about paid online content changed,” said Michael Zimbalist, the OPA’s executive director. “Whether or not consumers will pay for content is no longer a matter of debate. Clearly, they will.”

Online content spending topped $1.3 billion in 2003, as consumers shelled out money for Internet personals, business and finance sites, and entertainment destinations, according to the report, which was compiled by comScore Networks.

The OPA found that the rise in spending was mostly attributable to these services, which made up 63 percent of all online content spending last year, when sites increased their customer bases, not their prices. In fact, average spending per consumer in the fourth quarter was just 4 percent higher than a year earlier. The study found that 14.2 million U.S. consumers paid for online content last year, up 43 percent

By far, 2002 was the year of personals sites. The study said spending on personals and dating sites more than quadrupled to $302.1 million. Business and investment sites, despite a gloomy year on Wall Street, saw spending increase 36 percent to $292 million. Spending for content in the entertainment and lifestyle category more than doubled to $227.5 million.

Two high-growth areas were sports content and greeting cards, although total spending in both categories remains fairly modest at $30.3 million for sports and $36.2 million for greeting cards.

Yahoo, which has rolled out a number of paid content areas under CEO Terry Semel, was the leading destination for consumer content revenue. Match.com, Real Networks, Classmates.com, and the Wall Street Journal Online follow

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