People Actually Do Pay for Online Content

Jim JansenSenior Fellow

Pew Internet & American Life Project

Thanks!

Great to be here!

Who is Jim Jansen?

• Senior Fellow at the Pew Research Center (Pew Internet & American Life Project) - http://www.pewinternet.org

• Associate professor at College of Information Sciences and Technology, The Pennsylvania State University, USA

• Active research and teaching efforts in the web area - http://ist.psu.edu/faculty_pages/jjansen/

• Forthcoming book, Understanding Sponsored Search (Cambridge) … theory of keyword advertising

• Recent Pew Internet reports focusing on ecommerce, income effect on internet usage, and online product research

What is Pew Internet?• Part of the Pew Research Center • A nonpartisan “fact tank” based in

Washington, DC • Provide quality and objective data

to thought leaders and policy makers

• Pew Internet is one project of the Center

• All findings are based on nationally representative telephone surveys …

– U.S. adults age 18+ or U.S. teens ages 12-17

– Drawn from dual-frame (landline/cell phone) samples

– English or English and Spanish

Do people actually pay for online content?

• Yes, they do …

In fact, ….

• 65% of internet users have paid for online content

• … and they spend about $10 per month for this content

Before we look at the details, …

• Let’s examine the context in which this occurring.

• There are three on-going revolutions in technology and access …

8

#1 Internet and Broadband Revolution

Has stabilized

Probably slow growth for years ahead

70% 66%

Broadband access at home transformational, internet becomes a central hub for: • information• communication• entertainment

More importantly, content creators!

Changed the media landscape!

11

#2 Wireless Connectivity Revolution

Cell phone owners: 85% of adults

96% 90% 85%

58%

Cell phone ownership has outpaced or is on par with internet access for all age groups!

Mobile internet connectors: 57% of adults

62% 59% 55%

Mobile internet connectivity with:• Cell phone – 39%• Laptop, etc. – 87%

Always on - access anytime

and anywhere!

14

#3 Social Networking Revolution

48% of American adults use social networking sites. The fastest growing is the 50+ age cohort!

And, folks aren’t using just one SNS!

If trends continue, the majority of American adult internet users will have profiles on multiple social network sites.

Currently, a majority of social networking site users already do (52%).

Changing social roles, workforce,

culture, politics, news sources,

community, commerce, participation,

etc.

The impact on information …Industrial Age

Info was:

Scarce

Expensive

Institutionally oriented

Designed for consumption

Information Age

Info is:

Abundant

Cheap

Personally oriented

Designed for participation

Dramatic effects on people’s relationship

to information, media, and electronic

content

So, what does this mean for purchasing online content?

• This is what we are seeing … • 65% of internet users have purchase

some type of online content!, and are spending about $10 per month

What do we mean by online content?

• Online content in this case refers to intangible digital products (i.e., software, articles, music, etc.). This is in contrast to …

• tangible products (e.g., hard-copy books, clothes, computers, etc.) that one can touch or

• tangible services (i.e., hotel reservations, airline ticket, rental cars, etc.) that one engages after purchase.

Quick Methodological Note• Rather than just ask if a person had

purchased online content or not …• We asked participants whether or not

they had purchase 16 different types of digital content

Breakdown by type of content• 33% of internet users have paid for digital music online • 33% have paid for software • 21% have paid for apps for their cell phones or tablet computers • 19% have paid for digital games • 18% have paid for digital newspaper, magazine, or journal articles or reports • 16% have paid for videos, movies, or TV shows • 15% have paid for ringtones • 12% have paid for digital photos • 11% have paid for members-only premium content from a website that has

other free material on it • 10% have paid for e-books • 7% have paid for podcasts • 5% have paid for virtual items to use in video or computer games • 5% have paid for “cheats or codes” to help them in video games • 5% have paid to access particular websites such as online dating sites or

services • 2% have paid for adult content

Low of 2%

High of 33%

Let’s take a quick look at these

percentages and content types

Music and Software Lead the Way• 33% of internet users have paid for digital music online • 33% have paid for software • 21% have paid for apps for their cell phones or tablet computers • 19% have paid for digital games • 18% have paid for digital newspaper, magazine, or journal articles or reports • 16% have paid for videos, movies, or TV shows • 15% have paid for ringtones • 12% have paid for digital photos • 11% have paid for members-only premium content from a website that has other

free material on it • 10% have paid for e-books • 7% have paid for podcasts • 5% have paid for tools or materials to use in video or computer games • 5% have paid for “cheats or codes” to help them in video games • 5% have paid to access particular websites such as online dating sites or services • 2% have paid for adult content

Entertainment and commerce have

always been big drivers of internet usage.

Apps, games, and information are next• 33% of internet users have paid for digital music online • 33% have paid for software • 21% have paid for apps for their cell phones or tablet computers • 19% have paid for digital games • 18% have paid for digital newspaper, magazine, or journal articles or reports • 16% have paid for videos, movies, or TV shows • 15% have paid for ringtones • 12% have paid for digital photos • 11% have paid for members-only premium content from a website that has other

free material on it • 10% have paid for e-books • 7% have paid for podcasts • 5% have paid for tools or materials to use in video or computer games • 5% have paid for “cheats or codes” to help them in video games • 5% have paid to access particular websites such as online dating sites or services • 2% have paid for adult content

The increasingly high penetration of smart

phones and tablets drivers of apps usages.

Multimedia, Premium content, and books, follow

• 33% of internet users have paid for digital music online • 33% have paid for software • 21% have paid for apps for their cell phones or tablet computers • 19% have paid for digital games • 18% have paid for digital newspaper, magazine, or journal articles or reports • 16% have paid for videos, movies, or TV shows • 15% have paid for ringtones • 12% have paid for digital photos • 11% have paid for members-only premium content from a website that has other

free material on it • 10% have paid for e-books • 7% have paid for podcasts • 5% have paid for tools or materials to use in video or computer games • 5% have paid for “cheats or codes” to help them in video games • 5% have paid to access particular websites such as online dating sites or services • 2% have paid for adult content

Entertainment and leisure pursuits are

motivators across several types of online

content.

Podcasts, stuff for games, and access come next

• 33% of internet users have paid for digital music online • 33% have paid for software • 21% have paid for apps for their cell phones or tablet computers • 19% have paid for digital games • 18% have paid for digital newspaper, magazine, or journal articles or reports • 16% have paid for videos, movies, or TV shows • 15% have paid for ringtones • 12% have paid for digital photos • 11% have paid for members-only premium content from a website that has other

free material on it • 10% have paid for e-books • 7% have paid for podcasts • 5% have paid for tools or materials to use in video or computer games • 5% have paid for “cheats or codes” to help them in video games • 5% have paid to access particular websites such as online dating sites or services • 2% have paid for adult content

Again, entertainment and leisure pursuits.

And, finally, adult content • 33% of internet users have paid for digital music online • 33% have paid for software • 21% have paid for apps for their cell phones or tablet computers • 19% have paid for digital games • 18% have paid for digital newspaper, magazine, or journal articles or reports • 16% have paid for videos, movies, or TV shows • 15% have paid for ringtones • 12% have paid for digital photos • 11% have paid for members-only premium content from a website that has other

free material on it • 10% have paid for e-books • 7% have paid for podcasts • 5% have paid for tools or materials to use in video or computer games • 5% have paid for “cheats or codes” to help them in video games • 5% have paid to access particular websites such as online dating sites or services • 2% have paid for adult content

At least some people tell the truth!

Misc.• 33% of internet users have paid for digital music online • 33% have paid for software • 21% have paid for apps for their cell phones or tablet computers • 19% have paid for digital games • 18% have paid for digital newspaper, magazine, or journal articles or reports • 16% have paid for videos, movies, or TV shows • 15% have paid for ringtones • 12% have paid for digital photos • 11% have paid for members-only premium content from a website that has other

free material on it • 10% have paid for e-books • 7% have paid for podcasts • 5% have paid for tools or materials to use in video or computer games • 5% have paid for “cheats or codes” to help them in video games • 5% have paid to access particular websites such as online dating sites or services • 2% have paid for adult content • 6% have paid for some other type of content

Purchasing online content

That’s where the 65% of internet users having purchased online content came from.

Number of online content types purchased by internet users

75% have purchased multiple types of online content

Much do they spend?

• Average monthly spend was $47

• High end users skewed the average

• Most purchasers spend approximately $10 per month

Number of types of payment methods

• 23% of internet users pay for subscription services

• 16% pay for downloading an individual file

• 8% pay for accessing streaming content

Demographic factorsSimilar percentages of men and women internet users pay for online content (except software, which significantly more men purchase).

Demographic factorsThere does not appear to be a racial divide associated with accessing online content.

Demographic factorsInternet users between the ages of 30-49 are the most likely to have purchased most kinds of content.

Demographic factorsThose with college degrees or some college generally are more likely to purchase online content.

Demographic factorsThere is a correlation between income levels and paying for online content, with those in higher-income bracket households more likely to pay for online content.

Take Aways

• Technology and access is changing (has changed) the value, dissemination, and relationship attributes of information

• Percentage of internet consumers similar for products, services, and digital content (all about 65%)

• Also about the same as the households with broadband access (66%)

Related Thoughts

• Didn’t look at B2B purchases (e.g., search engines purchasing AP newsfeeds and Twitter feeds, etc.)

• Power law distribution (i.e., Netflix for movies, iTunes for music, etc.)

• Line between bits and atoms blurry (i.e., can get content both digitally and hard copy)

Related ThoughtsAlso, attitude shifts of purchasing online … perhaps based on context, use, and age

Sign that I am officially getting old. I had the option today to pay for or pirate software – I decided to pay.

Follow-on Discussion

• Happy to chat (either today or contact me) • Email jjansen@acm.org• LinkedIn http://www.linkedin.com/in/jjansen• Twitter jimjansen• Complete research in:

Jansen, B.J. (2010) 65% of internet users have paid for online content. Pew Internet Report. http://www.pewinternet.org/Reports/2010/Paying-for-Content.aspx

• Use of the internet in higher-income households http://www.pewinternet.org/Reports/2010/Better-off-households.aspx

• Online Product Research http://www.pewinternet.org/Reports/2010/Online-Product-Research.aspx

• Generations and their gadgets http://www.pewinternet.org/Reports/2011/Generations-and-gadgets.aspx

• Wikipedia, past and present http://www.pewinternet.org/Reports/2011/Wikipedia.aspx

• Generations 2010 http://www.pewinternet.org/Reports/2010/Generations-2010.aspx

Related Reports Available at Pew Internet

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Thanks!(welcome questions!)

People Actually Do Pay for Online Content

Jim JansenSenior Fellow

Pew Internet & American Life Project