Personals and dating lead in revenue, but other categories are growing faster.
Despite a generally weak economy, consumer content spending in 2003 grew to nearly $1.6 billion, a healthy 18.8 percent increase over 2002. Three categories -- personals/dating, business/investment and entertainment/lifestyles -- accounted for 64 percent of total spending for the year, with the personals/dating category generated the most revenue.
Michael Zimbalist, president of the Online Publishers Association (the OPA) -- which conducted the Online Paid Content U.S. Market Spending Report in conjunction with comScore Networks -- says that although the entertainment/lifestyles category remained among the top categories, it actually declined in 2003, compared to 2002.
"We suspect this is a result of our current data collection approach, which by design does not include transactions taking place in non-browser Internet applications (i.e. iTunes)," says Ziimbalist. "We believe application-based paid content delivery is likely to have grown significantly in the past year and will become an increasingly important trend. As such, we are currently exploring approaches to capture this important data so that it may be included in future reports."
The personal growth and sports categories experienced the most rapid year-over-year growth in Q4 2003, according to the report. In fact, the personal growth category jumped more than 100 percent.
The OPA and comScore also found that the growth rate in paid content revenue is attributable to the growth in the number of consumers buying content and not additional dollars per consumer. The average spending per paid content customer increased only 4.5 percent from Q4 2002 to Q4 2003, while the number of U.S. consumers paying for online content grew from 2.1 million who paid for content in Q4 2002 to 16.4 million in Q4 2003.
Accordingly, the year-over-year growth in consumer acceptance of online paid content is 7.7 percent, from 10.3 percent of the U.S. Internet population in Q4 2002 to 11.1 percent of the U.S. Internet population in Q4 2003.
Subscriptions, as opposed to single purchase sales, continue to be the dominant pricing model for online content sales. Retention rates remain high, with 71 percent of those who subscribed for monthly payments still visiting fee-restricted content areas 12 months later. In addition, the average conversion rate for those who signed up for free trial offers becoming paid subscribers was 18 percent, up only slightly from the 2002 free trial conversion rate of 17.8 percent.