Fast Company

Internet Users Still Cheap, Spend Only $1 to $10 on Digital Content

Who is willing to purchase content online? What types of content are they interested in buying? These are the questions that have haunted businesses as they shift to the digital age, a transition that has dealt a harsh hand to most sectors from the music to publishing industries. But the market is growing, bolstered by an increasing willingness to download, a seemingly infinite audience reach, and new opportunities--apps, games, ringtones, MP3s--on a wide range of devices.

The digital marketplace is the likely savior of most industries. That is, if consumers are willing to spend money on the web. Do we expect too much for free online?

According to a Pew Research Center report, released Thursday, the amount of users spending money on digital content has grown, but the amount they're willing to spend is still remarkably low. While almost 65% of Internet users have paid to access or download content online, the typical user pays only between $1 to $10 per month for the content.

What's more, nearly half of Internet users have purchased just one or two types of content. Paid music downloads and software purchases are most popular (33%) followed by smartphone apps (21%). About 18% had paid for digital newspaper, magazine, or journal reports, but just 11% have paid for premium content when a website offers other free material. On the lower end of the totem pole, surprisingly, were e-books, which earned only 10% of paid downloads--a figure not too much greater than those who paid for adult content (2%).

Still, there are signs that some consumers are willing to spend more money online. Though the average user paid just $10 per month for digital content, high-end downloaders pulled the average overall expense for paid content up to around $47, including subscription services (an average of $12/month) and individual file downloads (an average of $22/month). Internet users are more likely to pay for subscriptions (23%) such as Netflix, versus downloading files (16%) or streaming content (8%).

Though figures are still low and users too frugal, the rate of consumer purchases is growing remarkably fast. It's been nine years since the iPod's release, and already music downloads have shot up to the most popular user purchase. In just three years since the Kindle came out, e-books have stretched to 10% of users and ballooned to a billion-dollar market. And in only two years since Apple's app store went live, smartphone and tablet apps are now purchased by a fifth of all Internet users.

That's a significant leap for a market where, a decade ago, most of these percentages hovered around, well, zero.

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3 Comments

  • EO

    hmmm - frugal. Cheap.

    Author is defining both from the author's perspective, who'd I guess downloads tons of content, apps, etc ... unlike the rest of the US population who ...er, don't. When I look at this number, $120 / year in music, or books, on average, strikes me like a healthy biz model as compared with the equivalent, pre-digital era. I state this having no clue how many cd's or books were sold per year on average, but the numbers don't strike me as out of whack ... just an xfer in how the content is being purchased.

  • Federico Gasquet

    I think this is great news for any multimedia company. Consumers are still cheap, but the proportion of users grew as well, meaning the adoption rate accelerated in comparison to those that were online already years ago but didn't spend money at all.

    As the digital shift speeds up for every industry, dependability on this channel, either for lack of options or ease of use, will force adoption rates to skyrocket and consumption to increase.

    It's like any successful social startup. If you see Pandora's case, they had (and still do) a hard time to convert users from the freemium model and get them to pay for the annual subscription - Though it's easier after these have spent time with the service, and value the added options of a paid subscription.

  • Jorge Montoya

    We still ask the wrong questions when trying to figure out how to monetize Internet content. A good cable TV package may cost $80-120 per month and for that you get a couple of hundred channels and the cable company shares that revenue with content providers. Between my cell phone's data plan and my Internet connection I pay $94 per month and that only gets me the pipeline--no content. When analysts look at the low rates of monetization on the Internet they too often fail to consider that most of us have already paid a considerable fee just to get there and the pipeline providers are simply getting too big a slice of the pie. The price point for people is determined not by the cost of content alone. The equation is cost of access PLUS cost of content. From that perspective most of us already pat a considerable amount per month.