That paid content in Germany finds more and more acceptance with users is demonstrated by numbers taken from the recent study conducted by the VDZ in cooperation with Sapient (Berlin, January 2003). Altogether more than 50% of the users would pay for content (both, which is so far for free and which is already charged). 38% of the users would be prepared to pay for content which is currently still free of charge. However, the readiness to pay for content differs hugely between groups of users. Users of economic, brokerage- and news-content are much more prepared to pay for content than others. So it comes as little surprise that users are mostly prepared to pay for online banking/brokerage (services), databases/archives (content formats), economic and financial information and software downloads (content topics). Bottom of the league of sellable content is culture, newsletter and gossip.

The overall quality of the paid content on offer convinces customers: around 74% of users would pay for the content again. However, to get paid content right is a tricky task. It is not simply about charging for content which has been free before. According to the VDZ study there are three key factors for a successful introduction of paid content: First of all the value: the quality of the information has to be recognisable. One needs to have the feeling that the content is in fact worth its price. Second, it has to be exclusive. If users can get it anywhere for free then they are not convinced they need to pay for it. Both of these points are more or less evident. More interesting is the issue “usability”. Content providers need to make sure that their content is easy to access, easy to pay, that there are no download crashes, that PDFs are printable, etc.. It simply has to work. This is what many providers have trouble with right now. Currently it is often difficult to find the offers, they are hard to use, paying procedures are not transparent enough, contact details are rarely given, etc. Users as well as content providers need more clarity. This problem can be tackled relatively easy by testing the paid content offers and improve them accordingly. 

A look into the future reveals many economic potentials: For content providers paid content has an increase in turnover of more than 30% in the first three quarter of the year 2002 in Germany. According to the VDZ study by 2005 online offer will bring a turnover of €127 million. According to this, it comes as no surprise that content providers in Germany think about widening their offers liable to pay costs, in particular those offers on which the specificity of the Internet can best perform its advantages.

The above information have been taken from the study “Paid Content – The market for online content”. The study was published in January 2003 by the VDZ (“Verband Deutscher Zeitschriftenverleger”, an umbrella organisation of German Magazine Publishers) and Sapient, a leading business and technology consultancy. It is one of the first studies of its kind because it takes into account content providers as well as the actual user of paid content. The study is based on surveying 15 content providers with 38 websites and 11.240 users. In addition, an extensive analyses of market potentials was conducted and micro-payment systems, marketing and technical as well as legal issues were taken into account. It can be ordered via www.vdz.de.

Europe

Paid online content is still a nascent industry in Europe but is forecast to grow rapidly over the next four years and will be worth €3.2 billion by 2007, according to a new report from Jupiter research published in April 2003. For 2003, the report predicts only 9% of Europeans purchase online content and services, resulting in revenues of €693 million. 23% of Europeans are predicted to make online purchases in 2007, however, with an average yearly spending of 70 € per buyer. According to Jupiter Research, the breakdown of consumer spending on paid online content and services remains diverse. In 2003, 21% of consumer spending will be for services such as premium e-mail, e-cards, SMS composer, web hosting and anti-virus software, with a further 13% spent on text and picture-based forms of content such as financial and business news, news archives and sporting information. The largest category of paid online content and services in 2003 will remain adult-related content, says the report, which is responsible for 43% of all consumer spending, although multimedia content (music, gaming, video and audio) is finally sparking consumer interest, resulting in 23% of consumer spending. Jupiter Research predicts that by 2007 this pattern will change, withmultimedia related content - driven by high broadband usage - taking the lead. Jupiter Research forecasts that multimedia content will represent 50% of total paid online content and services spending, ahead of paid text and picture-based services, which will count for just 25% of consumer spending. For the first time, adult content will not be the primary generator of revenues accounting for just 25% of consumer spending. 

A report published in April 2003  by IRN Research, a market research consultancy focusing on the information industry, gives further reasons why the European online information market will show growth: much of an increase is the result of a surge in online sales of scientific, technical, and medical (STM) information. STM suppliers, notably Elsevier and Thomson, have released a number of new Web-based services that have attracted revenue away from hard copy and boosted online sales by 40%. Online revenues still account for less than half of all European STM information revenues leaving substantial room for further switching from hard copy. While industry talk continues to centre on ways to add value to the information service through integrated and customized packages, IRN's report sees a more problematic road to growth. While some free information services have switched to a fee-based business model, those that remain free are posing a greater threat to fee-based services in the business information sector, according to IRN's survey. Over 60% of business information professionals claim to be using some free information to replace information that they previously paid for, a much higher percentage than in previous surveys. The report sees little likelihood of an improvement in European online information budgets in the next 12  months. IRN expects most budgets to remain unchanged or decrease.

U.S.

According to a report on the online content market published by eMarketer end of 2002, 15.7 million US consumers purchase online content - excluding porn and gambling - by the end of 2002. They predict that this number will rise to 21 million in 2003. This constitutes 10% of all US internet users in 2002, which will rise to 13% by 2003. eMarketer analysed reports on the sector by Online Publishers Association / comScore, Jupiter, IDC, Forrester, Gartner and others. The report predicts that the following categories of sites show strong revenue growth potential: 

• Short term (12 months): Consumer Information/Directory; Personals/Dating; Games and Portals.
• On a longer term (3-5years): Consumer niche sites; Education; Games; and ITV/VoD, Intranet markets, corporate portals.

According to Paid Content Report released by Online Publishers Association and comScore  (March 2003) in the fourth quarter of 2002 content sales drop to $338 million, but yearly sales break the billion dollar mark. The sales of online content has dropped for the first time in the last two years in fourth quarter in 2002. For the full year of 2002, paid content sales came in at $1.3 billion, which is a 95% increase compared to full year 2001. Among the categories, Personals and Dating sector was the biggest for 2002 followed by Business/Finances and Entertainment. These top three categories account for about 65 % of total content sales online. Interestingly, the sports category - which primarily includes fantasy sports and not sports programming - came in at $30.3 million (2,4%) for the year 2002.

Subscriptionsare still the predominant form of online content sales, with 86% of revenues coming through recurring sales and 14% coming through single purchases. For the first time, monthly subscriptions overtook the annual subscriptions. The monthly subscription prices have also seen a rise year over year: the average monthly subscription price has risen to about $10 in 2002, while the annual subscription is holding steady at about $49 a year. Micropayments still constitute less than 1% of the content sales in 2002, even though it had a ten-fold growth over 2001.