November 19, 2008

paidContent UK has info from a new Jupiterresearch study that predicts a large increase in pay-for online content.

"While free content will continue to dominate, as overall online audiences for all content categories continue to grow, so the number of European users willing to pay for content online will grow at an even greater rate."

That will mean paid content could pull in €5 billion in 2013, from €1.4 billion last year.

That sounds like salvation for formerly premium publishers who had come out from behind their pay walls just in time for an advertising recession. But what’s driving it? A seismic shift in the number of people who will begin paying for music, Jupiter says. Though freeloaders outnumbered paying listeners by 53 million to 6.9 million last year, by 2013, it’s reckoned European efforts to drive consumers to legal downloads will see payers in the majority - 63.7 million against just 55 million.

So Jupiter figures a 823% increase in the number of consumers who pay for media will result in a 257% increase in revenues? That means many new customers will be good for very little revenue. And music will be driving this? Jupiter puts music's share of European pay-for media right now at 29%, or €714 million, and says it will grow to 51%, or €1.45 billion, in 2013. That's a revenue increase of 103% over five years, equal to a 15.2% compounded annual growth rate.

The revenue estimate looks to be fair. But where are the new customers going to come from? (And how many will be lost to ad-supported services?) Traditional MP3 stores still have plenty of growth in them. Mobile subscriptions and ISP-based subscriptions should experience strong growth -- more in number of subscribers than revenue per subscriber. ISP-based subscriptions and similar MP3-based subscriptions are the wild card and it's too early to tell which want those will go.

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Posted by Glenn at 10:27 AM |

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