Category: Research

I got a thoughtful and irritable reply from Rick Bruner of MarketingFix on my analysis of the Online Publishers’ Association study of the size of the content market. Rick has gotten me to refine my thinking (but not to change my mind).

Defining content is really hard. I’m leaning toward dumping the term entirely because it’s so vague as to be meaningless. I think the OPA has exploited this vagueness to overstate the size of the market that online publishers can address.

I would include the following in my definition of content:

• News & Information: General news, magazines (consumer reports, salon), horoscopes. Excludes Business & Investing. Includes archive database revenue from a single site. Excludes aggregated content databases, such as Northern Light.
• Business & Investing: Wall Street Journal, TheStreet.com, Smartmoney. Does not include stock prices.
• Databases: Hoovers, Northern Light, Ancestry.com, stock prices. Includes database that aggregates information from multiple sources for flexible searching.

I would exclude the following from my definition of content:

• Services: Includes greeting cards, online games, fantasy sports, email, and personals. Personals aren’t content, they’re a service. You can browse the listings on Match.com for free. You pay to add your name to the database and to get contact information on people you want to meet. It’s not clear how much of Yahoo’s and MSN’s “content” revenue comes from services.
• Music: This seems like a different thing altogether. It’s produced, delivered, and consumed differently, using different media. It’s more like software than it is like published content. This includes streaming and downloadable music.
• Electronic documents: Credit reports, people trackers, and vehicle histories feel more like ebooks–single, indivisible lumps of content sold and delivered electronically. Aside from the fact that they’re delivered electronically, this business is a lot like selling books.
• Pornography (hard & soft core): Includes webcams, amateur sites, Playboy.com, etc. No one is buying Playboy.com for the articles.

What’s my objection to the OPA’s definition of content? Rick says on MarketingFix:

For those who maintain “users won’t pay for content,” I reply “neener, neener, neener.” Paid content would appear to now amount to roughly 20% of all revenue for online publishers, and spending for content roughly doubled in 2002 over 2001.

Rick seems to be saying that “online publishers” are getting all $1.3 billion–about 20% of the $6 billion in online advertising in emarketer’s 2002 estimate. He’s making the mistake the OPA wants everyone to make: inferring that there’s $1.3 billion dollars out there for online publishers to get their hands on.

But (a) Two thirds of this revenue will go to companies that cannot be described as “publishers”, (b) ten percent of the remainder is going to one property, the Wall Street Journal [NOTE: this used to read 1/3, but I overestimated the revenue of the WSJ], and (c) the growth rate of the revenue available to publishers is a lot less than 100%.

My conclusion from the OPA study:

Paid content is less than 10% of all revenue for online publishers, and that share will not grow in 2003. However, there does appear to be an opportunity for online publishers to increase non-advertising revenue by using their sites to sell services to their readers. The market for online services is twice as large and growing five times as fast as the content market.

Emarketer has an interesting description of how they arrived at their broadband forecast.

I’ve done a lot of forecasts, and taught forecasting at IDC, and I think this is a good description of one way to approach the problem. This is worth reading. Emarketer is very smart, their forecasts are reasonable, and I really admire their presentation.

The Online Publishers Association is promoting a study [PDF] that says online content sales in the U.S. totaled $1.3 billion in 2002, an increase of 95% over 2001.

However, a closer examination of the data makes this billion-dollar figure suspicious. Here are some of my observations from their top 25, which I have classified into Content, Service, Entertainment, and Database:

• The single biggest category is more properly described as “services”. It includes Yahoo, MSN, and personals.
• Yahoo is seeing results from its efforts to increase revenues from fees, and MSN is falling behind.
• Financial information is the biggest contributor to true content sale, with sales of $292 million.
• The OPA describes financial content as “maturing”, with a growth rate of 18%.
• Sales of “General News” rose from $52 million to $70 million. No “General News” site was in the top 25.
• Consumer Reports and Encyclopedia Britannica are the two true consumer content brands on the list.
• Consumer Reports has fallen from #5 to #11.
• The IEEE.org site sells conferences, so it’s not clear how much of their revenue is really for content.
• Pressplay, the much-maligned music service, is on the list at #22.
• ESPN’s revenues are apparently mostly from fantasy sports games.
• It’s not clear why Playboy is on the list, since “pornography” is excluded from the survey.

Here are the top 25 content sites, according to the OPA:

		Content	Service	Entertainment	Database
1	yahoo.com		up from #4
2	match.com		personals
3	real.com			down from #1
4	classmates.com		friend finder
5	wsj.com	down from #2
6	weightwatchers.com		x
7	ancestry.com				x
8	consumerinfo.com				credit reports
9	matchmaker.com		personals
10	1800ussearch.com				people tracker
11	consumerreports.org	down from #5
12	espn.go.com		fantasy games
13	carfax.com				vehicle history
14	thestreet.com	no change
15	bluemountain.com		greeting cards
16	playboy.com			OPA says it excludes “pornography”
17	kiss.com		personals
18	msn.com		down from #15
19	egreetings.com		greeting cards
20	ieee.org	Does this include conference sales from web site?
21	arttoday.com		ugly clipart
22	pressplay.com			Music service
23	britannica.com	x
24	astrology.com			x
25	smartmoney.com	no change

The share of Americans who use Internet audio monthly has tracked closely the share who have broadband access, but the share using Internet video has not.

Here’s a chart I created from the data in the report. The blue line is broadband adoption, the red line is audio and the green line is broadband. Click the chart for a larger view.

This extraordinarily clear message can be found in the Arbitron/Edison survey released last week. It puts the lie to the idea coming from Los Angeles that potential broadband users are waiting around for copy-protected video content before they sign up.

Despite its intimidating name, the National Technology Readiness Survey isn’t very impressive. It has a small sample size and the questions seem either generic or poorly thought-out. I’m including this one mainly in the interest of completeness.

But it’s worth checking out. I used some of their data to calculate that the share of Internet users with personal Web sites hasn’t changed in the last five years.

This report came out a month ago, but I’ve been making an effort to note free Internet research reports on MediaSavvy. This is probably the best free report on the state of the Net. The previous two reports are available from this site as well.

Jupiter Research says “more than 60 percent of companies that have deployed Web content management solutions still find themselves manually updating their sites.”

This research confirms a study by the Asilomar Institute for Information Architecture that found most users’ experience with content management software was unhappy.

Other findings:

• “Overcomplicated, end-to-end packages can as much as quintuple site operational costs over human labor alternatives.”
• Most companies felt they overspent on content management platforms.
• Two thirds said they still rely on manual processes to update their Web sites.
• Nearly half felt their deployment “barely scratched the surface of the functionality they originally licensed.”
• Only a quarter planned to continue using their Web content management systems as they do now.
• One quarter (27 percent) said they had so many problems they would build another system from scratch.

One media company spent over a year and $250,000 working its content management package into its site production process. “The company recently realized that its content had little structure to speak of, and that because it had not made a strict separation between content and presentation, the company’s broader needs for reusing content elsewhere were effectively blocked.”

One surprising conclusion: “(o)rganizations should not look to content management systems to publish pages.”

The Washington Post and Nielsen//NetRatings have posted a study of affluent online users [PDF]. Not surprisingly, they found virtually all affluent adult shoppers use the Web to make or research their purchases.

They made less play of the fact that the affluent also spend a lot less time with newspapers (19% spend more than 1 hour/weekday) than the Internet (68% spend more than 1 hour/weekday).

While their numbers are growing, Neilsen//NetRatings says African-American Internet use still trails other ethnic groups by a significant degree. Meanwhile, Arbitron and Edison say African-Americans have achieved virtual parity with white Americans when you include school and library use.

Since N//NR’s ratings methodology measures at-home (and guesses at-work) use, they are almost certainly undercounting African- and Hispanic-American use of the Internet.

Steve Outing notes that the bottom has dropped out of newspapers’ employment classified business. Every category of advertising, including other classified categories, are up. But employment classifieds are down 23% — a sickening drop that goes right to the bottom line.

It may already be too late to save this business. When employment recovers, employment classifieds will not.