Subscriptions Out for Paid Content

Consumer subscriptions accounted for 76 percent of all revenues generated from online paid content in 1998, according to a report by Datamonitor, but that may soon change.

The report “Revenues from Consumer Online Content Publishing” predicts that pay-on-demand services will surpass subscription services to become the dominant model, and by 2004, pay-on-demand revenues will surpass revenue subscriptions. According to Datamonitor, pay-on-demand is set to grow by 49 percent annually, and by 2003, it will account for 47 percent of paid content revenues in Europe and the US. During the same time period, subscriptions’ share of revenue will fall to 53 percent.

Outside of adult and news entertainment, pay-for-view content has not yet made significant revenues, according to the Datamonitor report. Pay-for-play gaming is another revenue-generating area where Datamonitor sees a market developing in the future.

“Pay on demand appeals to consumers because it does not tie them in to a particular brand or site. They are able to go from site to site and pick and choose whatever content they require,” said Datamonitor analyst Shilpi Oodit. “Content is not bought online by subscription where the consumer has paid in advance. Instead, consumers pick and choose as the need arises. It is this freedom of purchase that will drive the uptake of pay-on-demand business model.”

Almost 80 percent of all spending on paid content came out of US homes, with Europe accounting for the remainder, according to Datamonitor. In Europe, Germany leads the way in spending on online content, the UK is second. In five years, the US will still dominate the market, Datamonitor found.

In 1998, each US household spent $47 on online content, according to Datamonitor. In the UK, it was $38 and in Germany, $28. By 2003, Datamonitor predicts US households will spend as much as $79, with the UK slightly behind at $66. Spending on online content will also increase across the rest of Europe by 2003.

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