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U.S. Consumer Spending for Online Content Totals $748

6/2/2004

U.S. Consumer Spending for Online Content Totals $748 Million in First Half of 2003, According to Online Publishers Association Report
Personals/Dating Remains Leading Paid Content Category; Personal Growth Category Experiences Greatest Year-over-Year Growth
NEW YORK,– The Online Publishers Association (OPA) today released its paid online content U.S. Market Spending Report covering Q1 and Q2 of 2003. The study, conducted by comScore Networks, determined that consumer spending for online content in the U.S. grew to $748 million in the first half of 2003, an increase of 23 percent over the same period last year.

While online paid content experienced its first-ever quarter-to-quarter decline in Q4 of 2002, expenditures rebounded by 10 percent in Q1 2003 to $368 million, a trend that continued in Q2, with content sales reaching $380 million in that quarter.

The top three paid content categories - Personals/Dating, Business/Investment and Entertainment/Lifestyles - accounted for 65 percent of online content spending in the first half of 2003, up from 61 percent in 2002. Online Personals/Dating remained the leading paid content category, accounting for nearly 30 percent of all paid content spending. U.S. consumers spent $214.3 million on Personals/Dating content in the first half of 2003, up a robust 76 percent from the first two quarters of 2002. However, this percentage increase was eclipsed by the Personal Growth category, in which spending nearly doubled from $20.8 million in the first half of 2002 to $41.4 million in the same period this year.

“Though down from the stratospheric rates recorded during 2002, online paid content resumed its growth trajectory in Q1 and Q2,” said Michael Zimbalist, executive director of the Online Publishers Association. “While slowing growth may be indicative of a maturing market, we may also be in the midst of a quiet period during which content providers are readying new premium paid services for an increasingly receptive public.”

According to the report, the share of online users who paid for content in Q2 2003 grew to 10.9 percent of the total online universe, representing year-over-year growth of 15 percent. The growth in paid content penetration was overwhelmingly generated by customer conversion, as opposed to the growth of the overall online population. While the total Internet audience grew by 8.3 percent year-over-year in Q2, the number of paid content purchasers increased 24.6 percent – nearly three times the growth rate of the total audience – to 16 million.

“The growth in the number of paid content consumers relative to the growth of overall Internet users is a promising sign for the purveyors of digital content,” said Mr. Zimbalist. “There is unquestionable opportunity for content providers to convert additional Internet users to paying customers.”

Subscriptions continue to be the dominant online content pricing model, accounting for 88.5 percent of paid content revenues in the first half of 2003. Within the single payment model, micro-payments of under $5 have held steady over the past three quarters at roughly 8% of all spending.
The information contained in the OPA's Paid Online Content U.S. Market Spending Report is based not on self-reported consumer surveys, but on actual observed purchases of content. comScore Networks calculated the results of the study by passively and electronically monitoring the actual purchase and usage transactions that took place during the analysis period within its representative panel of more than 1 million U.S. online consumers.
The Online Publishers Association also released its first-ever Paid Online Content Demographic and Usage Report today, featuring a detailed demographic analysis of paid content consumers and their overall online buying habits. Both reports and their accompanying press releases can be found at the Online Publishers Association Web site at online-publishers.org.