Blog - Written by on Tuesday, August 4, 2009 7:45

Ad Supported Content, Out; Paid Content, In?


According to a new survey published by private equity company Veronis Suhler Stevenson, consumers are getting wise to advertising and are choosing to avoid it. In 2008, for the first time, people used more paid content than ad-supported stuff.

Though this sounds like good news for Rupert Murdoch and his crazy-ass plan to charge people for lots of online content in the future, it’s not quite as simple as that. VSS’s survey showed that people are being a bit particular about paying for content. Last year the changeover between ad-supported and paid content came from people reading books (including ebooks) and watching cable TV rather than reading newspapers or magazines.

VSS notes that the trend isn’t surprising–and it’s not, once you remember how many newspapers and magazines have closed recently–and John Suhler himself comments that “this development is a culmination of two decades of this secular shift towards consumer controlled media,” and it’s one that shows “no signs of slowing.” But VSS does see ad revenues recovering by five years time, though they’ll apparently peak at $9.8 million, and while that’s still lower than 2008’s $12.9 billion it means it’s not all bad news for the magazine business.

Other interesting stats pop up too: by 2013, the video game industry will be as big as the declining newspaper business. Until 2013 the communications industry will rise by 20% over the GDP, assuming a role as the country’s third fastest growing economic sector. Business information services will gain greater importance, resulting in the business user becoming an even more significant player, backed by institutional spending. DVD sales, on the other hand, declined 5.8% last year, and the industry will see another $5 billion of revenue loss in five years time.

VSS is, effectively, holding its finger to the breeze of current economic data to create these speculative communications industry forecasts, but they’re grounded in some pretty solid facts: It’s all being driven by technology, and an increasingly tech-savvy public. Consumers are getting more used to driving their own content choices–evidenced by on-demand TV and over the net solutions like Hulu. Advancing tech has pushed the iPod and Kindle into the limelight, and everyone’s heard of the Nintendo Wii for gaming. All these offer a much more diverse entertainment option than a simple magazine, just as online news responds to events more swiftly than a printed-media newspaper. The consumer only has so much spare time to devote to actually consuming stuff anyway.

The one possible surprising fact, given the economic downturn, is that people prefer to pay to use material rather than deal with free (or cheaper) ad-supported stuff. But perhaps this isn’t actually all that surprising–maybe one can see this as an indication that when money is tight, consumers prefer to feel they’re getting value for money from a purchase. And that’s something a book or downloaded iTunes movie can deliver better than an ad-laden magazine. Perhaps that’s exactly why Biz Stone is avoiding an ad-centric model for generating money from Twitter.


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