LONDON - JupiterResearch has warned that non-paying content and services audiences will dwarf paying audiences by 2011. According to the consultancy's report " European Content, Services, and Activity Forecast 2006 to 2011: Understanding the Impact of Free," only 14 percent of the European audience will continue to pay for online content and services by that date, and most of their purchases will be music and games.
Despite significant improvements in the availability and quality of content and services, success stories are relatively thin, and European consumer demand actually is declining, the report notes. The trend is influenced by greater consumer awareness of the realities and limitations of digital paid content offerings, and issues surrounding limited catalogs, file quality, and DRM interoperability are having enormous impact. Adoption by a relatively small number of enthusiasts rather than broader, mainstream audiences will be key to future revenue growth.
Jupiter analysts predict the music and games categories will consolidate their current market-leading positions and generate the largest paid content revenues in 2011: 1.4 billion euros and 1 billion euros, respectively, accounting for 60 percent of total revenues when combined. Security and safety will be the largest paid services sector with revenues of 1.3 billion euros.
"With a few notable exceptions, such as music, the European online paid content and services market has failed to make significant headway," said JupiterResearch Vice President Mark Mulligan, the lead author of the report. "The Internet remains a predominately free, advertising-supported medium. Although premium revenues will reach 6.8 billion euros in 2011, the vast majority of online content and services [users] will not pay. There is a clear need for content owners to explore ways in which they can explicitly share in advertising revenues to offset modest direct revenues online and to reach elusive, typically young, non-paying online audiences."
