As Paid Sites Proliferate, Online Audience Still Dislikes Paying for Streaming Content, New Survey from RampRate Technology Advisors Says.

Business Editors

NAB2003

SANTA MONICA, Calif.--(BUSINESS WIRE)--April 9, 2003

Despite Recent Reports of Premium Content Sites Raking In Revenue,

Poll Shows That Consumers Prefer a Free Internet

Even as consumers continue to fuel the market for paid online video and audio content, the majority are doing so grudgingly, according to a new nationwide survey conducted by Synovate of Chicago for RampRate, a trusted technology advisor and purchasing index for IT sourcing services.

Fielded in March, the RampRate/Synovate eNation survey polled 1,383 online Americans to determine attitudes about paying for streaming Internet audio and video content. The new study reveals that 68 percent of respondents dislike paying for streaming audio and video, with 47.5 percent holding to the principle that the Internet should be free and 20 percent agreeing with the statement that paying is "cumbersome and a turn-off."

A scant 2.5 percent of those surveyed said they paid for premium streaming content willingly, with the percentage increasing marginally to 4 percent among those amenable to paying if the content were better. If compelled to pay, 11 percent would prefer pay-per-view to a monthly subscription.

Despite their apparent distaste for paying for online streaming content, consumers haven't been shy about opening their wallets, according to recent reports. In the Online Publishers Association's latest U.S. Market Spending Report, consumer spending for online content in the U.S. totaled $1.3 billion in 2002, an increase of 95 percent over 2001. Affirming that trend, Jupiter Research reported that the paid online market is expected to grow 20 percent annually until 2007, when it will reach approximately $5.4 billion.

Indeed, in recent weeks, the momentum toward premium streaming content appears to have accelerated, with Yahoo's new Platinum subscription-based audio and video service leading the charge. Priced at $9.95 per month, the service includes clips of news, entertainment and sports content.

Paid or free, more than 3.9 billion video streams were served during 2002, a 52 percent increase over the number recorded the previous year, according to AccuStream iMedia Research.

"While paying for online streaming video and audio content appears to be an unstoppable trend, our survey clearly shows that if consumers had their druthers, they wouldn't buy it," said Tony Greenberg, CEO, RampRate. "That said, it's clear from consumer behavior that they are buying, perhaps because content providers are giving them a choice - some streaming content for free, and even better content for a small fee. That will likely prove to be an intelligent way to grow the market, incentivize content providers and educate consumers."

Other key findings of the RampRate/Synovate survey:

-- Income doesn't matter: High earners are only marginally less

averse to paying for content than the less affluent: 46.1

percent of those making more than $75,000 annually disliked

paying for streaming content on principle, versus 48.2 percent

who make between $25,000 and $50,000 per year.

-- Being self-employed does matter: Perhaps identifying more

strongly with content providers, just 35 percent of the

self-employed dislike paying for content on principle; 10.5

percent would pay for content if it were better, compared to

only 4 percent of the overall sample. Additionally, 5 percent

of self-employed respondents were fine with paying for premium

Internet content, versus 3 percent of the unemployed and 2

percent each of the full time employed, part-timers and

retirees.

-- A racial divide: 49.5 percent of whites do not believe in

paying for streaming content on principle, against 32 percent

of nonwhites.

-- More education, less patience: 26 percent of respondents with

college degrees or a post-graduate education regarded paying

for online content as cumbersome, while just 15 percent of

high school graduates agreed.

-- Seniors want to ride free: 57 percent of those over 65 dislike

paying for streaming audio and video on principle and believe

the Net should be free - a stark contrast with 18-24

year-olds, 43.5 percent of whom hold that view.

-- Bi-coastal reluctance: 71 percent of residents living in the

West and Northeast dislike paying for content, versus 68

percent of the Midwest and 63 percent of the South.

ABOUT RAMPRATE

Based in Santa Monica, Calif. and with offices in San Francisco and New York, RampRate (www.ramprate.com) is a trusted technology advisor and purchasing index for IT sourcing services, managing negotiations for hosting and co-location, content delivery, streaming media, managed and professional services, content asset management, peer-to-peer, bandwidth and quality of service (QoS) tools. More than 125 best-of-breed service providers (companies like IBM, Speedera, Sungard and AT&T) embrace RampRate's methodology to help clients (like Microsoft, Miramax, iFilm, Sony Music, the NHL, CBSnews.com and Virgin) make intelligent, data-driven sourcing decisions.