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Jupiter Study: Bumpy Road From Free To Fee

19 Mar, 2002 By: Hive News

Revenues from paid online content will grow to "only" $5.8 billion by 2006 – up from $1.4 billion in 2002, says a new study from Internet and new technology analyst firm Jupiter Media Metrix.

Revenues for general content will reach $2.3 billion in 2006 (up from $700 million in 2001), while revenues from online games and digital music will equate to $1.8 billion and $1.7 billion by 2006, respectively (up from $260 million and $30 million, respectively, in 2001), the study says.

In a separate March 2002 Consumer Survey Jupiter also unveiled findings that almost three quarters of adults who use the Internet (70 percent) cannot understand why anyone would pay for content online.

"While there is money to be made in the online content business, Jupiter's latest survey and market forecast numbers indicate that the mass market still largely shuns anything that smells like a subscription online," said David Card, Jupiter VP and senior analyst. "However, in the near term, media companies will create subscription services via packaging, exclusivity and added interactive features. Over time, the companies must use the gradual US broadband transition to reset industry ground rules and recondition consumers' expectations."

But among respondents in the consumer survey, 42 percent of adult Web users expect over time that people will have to pay for content. Consumers' attitudes toward paying for content have, if anything, worsened since August 2000, when 45 percent of respondents answered the question the same way.

Despite consumers' reluctance, Jupiter analysts believe major media properties are in a better position than they were four or five years ago because they no longer face well financed startups giving away quality programming to lure new users.

"The online future is beginning to look a lot like cable TV," Card said. "Established portals will emerge as networks that aggregate premium content and services in packages – both those portals determine and those users customize. This will pave the way for content providers to resell premium content through numerous partners."

Although Jupiter forecasts general content revenues will hit $2.3 billion by 2006, the market will stay relatively fragmented Within the general content category, the highest revenue generating genres in 2006 will be audio/video entertainment ($600 million), adult entertainment ($400 million) and financial and business news content ($350 million). Genres expected to generate the least revenue in 2006 include consumer/shopping aids ($85 million), content for kids ($95 million) and sports content ($95 million). Fewer than 6 percent of online consumers would be willing to pay for content for kids, sports, video or shopping aids, the survey indicated.

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