Net users still hesitant to pay for content

Summary:Jupiter Media Metrix study shows the number of adults willing to pay for content on the Internet is decreasing because users still expect to find news, music, games and video clips for free on the Web.

Even though consumers are growing more comfortable with buying stuff on the Web, people are hesitant about paying for online content, according to a study released Tuesday.

The percentage of online adults willing to pay for content on the Internet decreased to 42 percent from 45 percent in August 2000, according to a study conducted by market researcher Jupiter Media Metrix. That means people still expect to find news, music, games and video clips for free on the Web despite industry trends to the contrary.

"We've seen a lot of consumer reluctance to pay for content online," Jupiter Media Metrix analyst Andrew Peach said. "It's difficult to find a mass audience."

In this era of tightening advertising budgets and economic malaise, media giants, entertainment companies and others have turned to charging people to access their content. Companies such as Yahoo and AOL Time Warner in particular have begun exploring alternatives to giving away information and services. For example, Yahoo is mulling a for-pay streaming video service while AOL Time Warner's CNN.com is planning to charge for its news videos.

But content providers are unlikely to find people spending as much on Internet subscriptions as they do offline. Revenue for online "general content," which includes audio, video and adult content, will reach just under $1 billion for 2002 and grow to $2.3 billion in 2006, according to Jupiter Media Metrix. In contrast, newspaper circulation revenue reached more than $11 billion last year, while magazine circulation reached $10 billion, the researcher said.

Still, not all hope is lost. The increase in adoption of broadband into people's homes could jump-start other types of online content, such as music, games, video on demand and subscriptions.

In total, paid online content will grow to $5.8 billion by 2006, up from $1.4 billion in 2002, the study said. This growth could help content providers and online aggregators to create new businesses, Jupiter Media Metrix said.

"Broadband allows the Internet to look more like the cable TV format," Peach said.

Topics: Broadband

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