People Actually Do Pay for Online Content Jim Jansen Senior Fellow

1. People Actually Do Pay for Online Content Jim JansenSenior Fellow Pew Internet & American Life Project

2. Thanks! Great to be here!

3. 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

4. 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

5. Do people actually pay for online content? Yes, they do …

6. In fact, …. 65% of internet users have paid for online content … and they spend about $10 per month for this content

7. 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 8

9. Probably slow growth for years ahead Has stabilized

10. 70% 66% • Broadband access at home transformational, internet becomes a central hub for: • information • communication • entertainment Changed the media landscape! More importantly, content creators!

11. #2 Wireless Connectivity Revolution 11

12. Cell phone owners: 85% of adults 96% Cell phone ownership has outpaced or is on par with internet access for all age groups! 90% 85% 58%

13. Mobile internet connectors: 57% of adults 62% • Mobile internet connectivity with: • Cell phone – 39% • Laptop, etc. – 87% 59% 55% Always on - access anytime and anywhere!

14. #3 Social Networking Revolution 14

15. 48% of American adults use social networking sites. The fastest growing is the 50+ age cohort!

16. 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.

17. The impact on information … Dramatic effects on people’s relationship to information, media, and electronic content

18. 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

19. 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.

20. 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

21. 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 “cheatsor 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 High of 33% Let’s take a quick look at these percentages and content types Low of 2%

22. 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.

23. 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.

24. 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.

25. 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.

26. 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!

27. 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

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

29. Number of online content types purchased by internet users 75% have purchased multiple types of online content

30. Much do they spend? Average monthly spend was $47 High end users skewed the average Most purchasers spend approximately $10 per month

31. 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

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

33. Demographic factors There does not appear to be a racial divide associated with accessing online content.

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

35. Demographic factors Those with college degrees or some college generally are more likely to purchase online content.

36. Demographic factors There 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.

37. 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 sameas the households with broadband access (66%)

38. 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)

39. Related Thoughts Also, attitude shifts of purchasing online … perhaps based on context, use, and age

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

41. 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

42. 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 Pew Research uses a freeimum model. All reports, surveys, and data are available and free. Material from 2000 to the present!

43. Thanks! (welcome questions!) People Actually Do Pay for Online Content Jim JansenSenior Fellow Pew Internet & American Life Project