Michael Wong

Online Paid Content U.S. Market Spending White Paper

This white paper provides some interesting statistics on how to price your online content--U.S. consumers spent $1.3 billion for online content in 2002, an increase of 95% over 2001. Proportion of spending on top three categories - personals/dating, business/investment content and entertainment/lifestyles – is higher in 2002 and account for 63% of online content spending in 2002, which is slightly higher than the 59% spent on those categories in 2001. The personals/dating category surpassed business/investment content and entertainment/lifestyles to become the largest paid content category in 2002. Consistent with behavior of a maturing market, individual category growth rates have attenuated, with only two categories – greeting cards and personals/dating – showing over 100% year-over-year growth. Subscriptions, as opposed to single purchase sales, continue to be dominant pricing model for online content sales. Annual subscriptions continue to be the dominant pricing model, accounting for 41% of online content sales this year, compared to 42% of last year’s content sales. Annual retention sales remain high at 72%. The average conversion rate for those who signed up for free trial offers becoming paid subscribers was 17.8%, up only slightly from the 2001 free trial conversion rate of 17.4%. The number of U.S. consumers paying for online content continues to grow with 14.3 million U.S. consumers paying for online content in Q4 2002, up by 4.3 million from the number who paid for content in Q4 2001. The year-over-year growth in consumer acceptance of online paid content is 42.8%, from 7.6% of the U.S. Internet population in Q4 2001 to 10.3% of the U.S. Internet population in Q4 2002. Growth rates in paid content revenue are attributable to additional consumers and not additional dollars per consumer. The average spending per customer increased only 4% from Q4 2001 to Q4 2002. In 2002, the average price for annual subscriptions online was $48.94, $10.32 for monthly subscriptions, and $22.64 for single content items purchased online. [White Paper: Online Paid Content U.S. Market Spending Report (PDF - 23 pages) - Online Publishers Association]