Study: Online Users Willing To Pay for Digital Video Content

Study: Online Users Willing To Pay for Digital Video Content

There's a new study out from Pew Internet & American Life Project, and the overall theme seems to be that digital content purchases are on the rise.  In fact, they've pulled even with traditional e-commerce purchases.  66% of Internet users purchase traditional goods and services through e-commerce, and a whopping 65% purchase digital goods.  These digital goods include things like mp3's, e-books, games, and... drumroll, please... video.

Respondents were asked about a wide variety of digital content--not just video--and the results are definitely an indication that consumers see little difference between digital and physical goods.  There is true value in digital goods.  That's great news for producers of digital content, because they typically have much lower production costs.

Percentage Of Users Purchasing Digital Content

Let's take a look at the specific kinds of digital content consumers are going after:

  • 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 also has free material
  • 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

I'm not sure how much we can trust this study, since the 2% number for adult content is so laughably low as to virtually prove that respondents were fibbing.  But I'm willing to bet that's probably the only one that's off.  And what do I know?  Maybe pornography isn't as popular as I've been led to believe it is.

Regardless, it's important to remember that these numbers are only dealing with paid content.  Free content is another ballgame altogether--and one that video is probably winning handily.  But there's reason for optimism and excitement when it comes to video--16% of web users have paid for videos, movies, or television shows.  That's a higher number than I would have thought--considering all the ways that exist for people to get most of that content for free (legal or otherwise).

Consider this as well:  Video places higher in the pecking order than e-books or podcasts--heck it's even higher than ringtones for Pete's sake.  Everyone I know has paid for a ringtone; can't say the same for video.

How Much Is Spent On Digital Content?

Pew says the study showed an average expense of $47 per month on digital content, but then the immediately contradict themselves and say that a handful of power-uses skew the average.  So $10 is closer to the real average, so they say.  In terms of the method of delivery--subscription versus the one-time purchase of a single digital good--it seems like subscriptions are getting a smaller portion of the pie.  The average respondent spends $12 a month on subscription-based digital goods, while spending as much as $22 per month on single file purchases.

In terms of percentages, however, subscriptions come out ahead, grabbing 23% of users compared to the 16% that pay for individual files.  So this, in conjunction with the previous stats on spend, means that subscription digital content is cheaper over the long haul than purchasing individual digital goods--makes total sense, actually.  It's the same with traditional news--subscriptions to the paper or your favorite magazine will save you money over buying each issue individually.

Conclusions

People remain willing to pay for goods and services--digital or otherwise--so long as they are perceived to have value.  That's not a surprise.  What's surprising, I think, is how much value these digital goods are perceived to have by the general public.  I've been pretty critical of Hulu Plus, assuming that most users will always prefer "free" to the alternative.  But maybe Hulu Plus knew something I did not?  I was equally critical of Xtranormal last week after they announced a move from a free service to a paid one.  Perhaps there is more willingness to pay for digital content on the part of the consumer than I previously believed?

This kind of data bodes well for video in general, and for web tv series, film, and television episodes in specific.  When the content is of good quality, people don't really care anymore whether it's digital or physical (this is also part of why I believe Blu-Ray has a pretty short lifespan ahead of it, as the next "format" is likely to be completely digital).  If Pew reprises this study next year, expect to see video's percentage skyrocketing.

About the Author -
Jeremy Scott is the founder of The Viral Orchard, an Internet marketing firm offering content writing and development services, viral marketing consulting, and SEO services. Jeremy writes constantly, loves online video, and enjoys helping small businesses succeed in any way he can. View All Posts By -

What do you think? ▼
  • Escondidoman

    I think people are becoming more willing to pay for digital content because 1) They're spending more of their time online and 2) Individual sites are differentiating themselves and becoming unique.

    Faster internet connection speeds and other developments have allowed content providers to differentiate their content through a wide range of interactive features, including many that were impossible in the days of dial-up and even DSL. Internet users can no longer drift away to a different site that has *exactly* the same content and presentation.

    Online video sites have a long way to go in differentiation, however. Two years ago, NetFlix was the only major company doing more than dabbling in highly produced videos online. Now there are a half dozen serious contenders. But other than Hulu and NetFlix, none of them seem to offer significant numbers of exclusive movies or episodes. In absence of that, they need to at least differentiate themselves through unique interactive formats. My own employer, a smaller site called FargoTube, wouldn't have entered the online VOD space if connection speeds didn't allow it and if we didn't have the social-networking features to differentiate ourselves from other VOD sites.

  • http://www.googlingsocial.com/ Chris Lang

    I pay for Netfilx and stream to my TV, I paid for Google TV and was the first public user the day it was released by Sony. I paid for many other services on that TV as well that are offered by the box. Worth ever penny. Now it Hulu would just let me PAY for their service on my Sony GTV box, we would all be happy.

    So yes, we are willing to pay for services, especially when it come to the living room....

  • http://www.reelseo.com/about/mark/ Mark R Robertson

    Me too and despite all the negative banter - I really love the Google TV - it is certainly a beta product, but it will revolutionize our TV/video experience if you ask me - Plus, it is the coolest universal remote on earth :) Thanks for your comment.