Internet users are unlikely to pay for content according to a
report from Forrester Research. The company says that only 23% of
commercial US content-based sites are profitable. Of 5,600
consumers surveyed, only 10% plan to pay for any sort of content.
Fewer than half of the 26% who have paid for content said they
would pay again.
The report came just before the New York Times announced that it
would cut 69 jobs, or 17% of staff, from its loss-making on-line
edition, blaming the slow growth in advertising revenue. Last
Thursday, Rupert Murdoch’s News Corporation announced the merger of
its US digital media unit with Fox TV to cut costs. Reports suggest
that 200 workers at News Digital Media will be made redundant.
Most content sites are dependent on advertising revenue.
However, Forrester says that only a very few top sites make money
from banner advertising. Its report also observes that making money
from e-commerce is difficult unless the site is offering unique
products because there are so many sites offering the same
things.
The report concludes that on-line advertising will grow from
today’s value of $7 billion to $40 billion by 2005, making it the
main source of revenue for profitable content sites.
