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Study: Paid Internet content to reach $5.8B in 2006

Sun, 03/17/2002 - 7:00pm
Jeff Baumgartner

Though not on par with cable revenues, content offered via the Internet apparently is starting to take on cable-like business models.

Revenues from paid Internet content will grow to $5.8 billion by 2006, up from $1.4 billion in 2002, according to a new market forecast from Jupiter Media Metrix.

Broken down, Jupiter forecasted that revenue from "general content" (audio/video entertainment, adult entertainment, financial and business news, etc.) will reach $2.6 billion in 2006, followed by $1.8 billion from online games and digital music.

Although paid Internet content revenues are expected to rise, Jupiter, in a March 2002 consumer survey, found that about 70 percent of adult Internet users "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 "indicates that the mass market still largely shuns anything that smells like a subscription online," said David Card, Jupiter's vice president and senior analyst, in a statement.

In the near term, he added, media companies will create subscription services via packaging, exclusivity and added interactive features. "Over time, they must use the gradual U.S. broadband transition to re-set industry ground rules and re-condition consumer expectations," Card said.

While Jupiter noted that consumers largely reject paid-for Internet content, some subscription-based services are gaining an audience. RealNetworks' RealOne service, for instance, has signed up more than 500,000 subs. Intertainer, a company that offers movies and other content to broadband customers to supplement its content pacts with service operators, recently told CED that it has 50,000 registered customers, and those that do subscribe to the Intertainer.tv service spend between $14 and $15 per month.

Among other findings in the survey, Jupiter found that 42 percent of adult Internet users expect over time that consumers will have to pay for Internet content. Jupiter conducted the survey in March, randomly selecting a total of 2,097 individuals.

Jupiter analysts added that major media properties are better positioned now than they were three years ago, because start-ups that offered free, quality programming via the Internet continue to exit the marketplace.

"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 that portals determine and those that users customize. This will pave the way for content providers to resell premium content through numerous partners."

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