Online Content Revenues To Surge But Advertising Holds Sway
Initial doubts over the wisdom of charging for online content seem to have been misplaced and a new report from Jupiter Research claims that consumer spending in this area will grow by 30% this year.
It is estimated that US consumer expenditure on paid content will rise from $1.6 billion last year to $2 billion in 2003. Revenues will grow at an annual rate of 20% until 2007 by which time they will total $5.4 billion. At the same time, online advertising spending will reach nearly $14.0 billion, up from $6.2 billion in 2003.
“Consumers are slowly opening their pocketbooks for paid content,” said Jupiter Research Vice-President and Research Director David Card. “However, for at least the next 18 to 24 months, most online media companies should generate 60% to 70% of their revenues from advertising.”
The main problem for the paid content industry is its diversity in that spending is directed at various categories including news, sport, health and adult material and of the multitude of companies involved in the business, no major player has yet emerged to drive activity still further.
“Third-party syndication is immature, there are too many companies launching their own paid services and ISPs have only just begun to bundle content with access,” said Card. “Those factors conspire to inhibit paid content and syndication revenues, forcing most online media businesses to concentrate on advertising.”
