The Content Matrix

:
Tracking subscription-based online content

The Intermarket Group L.P.
www.intermarketgroup.com

The Content Matrix – April 2004 Ed.

This document is intended for electronic delivery
Copyright  2004 by The Intermarket Group, L.P. All rights reserved. The entire contents of this publication are copyrighted by The Intermarket Group, L.P. and may not be translated, reproduced, stored in another retrieval system, posted on a website, or transmitted in any form or by any means, beyond that permitted by your Customer License Agreement where applicable, and by Sections 107 and 108 of the 1976 United States Copyright Act, without prior written consent from the copyright owner. Requests for further information or for reprint permissions should be addressed to: The Intermarket Group, L.P., P.O. Box 500126, San Diego, California 92150-0126, USA. The following uses of this document are strictly prohibited unless otherwise provided for in your Customer License Agreement: • Transmittal via the Internet or any other network • Reproduction for sale or for further distribution • Posting on a website or intranet All information contained in this publication is believed to be obtained from reliable sources. The publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that neither the authors nor the publisher is engaged in offering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought

Published April 2004 ISBN No. 1-882113-06-3

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

Table of Contents
How big are selected subscription services and how have they grown since mid-year 2003?....................................................................................3 How do subscriber numbers compare to registered/opt-in users?...................................4 What types of content do they publish?...........................................................................5 How is online subscription content delivered? .................................................................6 How frequently is subscription content updated?.............................................................7 What formats are used to deliver subscription content? ..................................................8 How many publishers bundle archives or databases with subscriptions? ........................9 How many publishers employ personalization? .............................................................10 What options are offered for term of subscription?........................................................11 How many publishers offer free trial subscriptions?.......................................................12 What is the length of free trials?....................................................................................13 What is the average subscription price by target audience?..........................................14 What is the median subscription price by target audience?...........................................14 What is the average subscription price by publication frequency?.................................15 What is the median subscription price by publication frequency?..................................15 What is the average subscription price by content format? ...........................................16 What is the median subscription price by content format? ............................................16 How do subscription prices differ between monthly and annual terms?.........................17 What is the average subscription price by content category?........................................18 What is the median subscription price by content category? .........................................19 How have subscription prices changed in the last six months? .....................................20 How many publishers by target audience employ auto-billing?......................................21 How many publishers by content category employ auto-billing?....................................22 What are the Tier 1 revenue sources (digital content) employed by publishers? ...........23 What are the Tier 2 revenue sources (advertising) employed by publishers?................24 How many publishers include advertising in their subscription properties/services?......25 What are the Tier 3 revenue sources (product sales) employed by publishers?............26 How many publishers offer free content? ......................................................................27 How many publishers require registration to access free content?................................28 What types of content do publishers provide free?........................................................29 How many free opt-in email newsletters do publishers offer?........................................30 What is the failure rate of subscription properties/services?..........................................31 About The Content Matrix..............................................................................................32

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Big Are Selected Subscription Services And How Have They Grown Since Mid-year 2003?
Premium Service Subscribers December 2003 June 2003 2,100,000 2,100,000 1,500,000 1,200,000 1,350,000 1,100,000 1,300,000 1,000,000 1,250,000 850,000 1,100,000 240,000 939,000 857,500 696,000 671,000 311,000 254,000 260,000 240,000 250,000 75,000 230,000 130,000 224,000 162,000 189,000 190,000 170,000 150,000 168,000 150,000 163,000 160,300 140,000 115,000 116,000 104,000 101,000 32,000 90,000 78,000 82,000 80,000 78,000 62,400 75,000 57,000 68,400 63,000 20,000 18,300 Pct. Change N/M 25% 23% 30% 47% 358% 10% 4% 22% 8% 233% 77% 38% N/M 13% 9% 2% 22% 12% 216% 15% 3% 25% 32% 9% 9%

Property AmericanGreetings.com (1) Ancestry.com/Genealogy.com ConsumerReports.org RealOne.com (2) getAbstract (3) CBS Sportsline.com (4) Match.com (5) WSJ.com Audible.com Economist.com MusicNet @ AOL (6) ESPN.com Insider NASCAR.com Track Pass eDiets.com MusicMATCH MX Britannica.com (6) Playboy.com (7) WeatherBug Pro Morningstar.com VersionTracker.com (8) Rivals.com IGNinsider (9) Salon.com/Table Talk/TheWell.com FT.com TheStreet.com South China Morning Post (SCMP.com)

Notes: N/M = Not meaningful; (1) Company reports subscriber numbers have “not changed materially;” includes BlueMountain.com and eGreetings.com; (2) Includes RealArcade subscribers plus 350,000 music subscribers from RealRhapsody and RadioPass; (3) Includes individual subscribers plus enterprise/site license seats; (4) Reflects number of individual paid fantasy sports teams created year-to-date at mid-year – principally MLB-related activity – and for all of 2003 – including NFL-, NBA- and NHL-related activity in Q3 and Q4; (5) Includes uDate.com and Kiss.com; (6) Total subscribers as of March/April 2004 and June 2003; (7) Includes CyberClub, Playboy TV Club and PlayboyNet services; (8) Includes 34,500 individual subscribers at year-end 2003 plus 66,500 site license seats; (9) IGNinsider service only; reports 197,000 subscribers across all IGN/GameSpy premium services combined at year-end 2003

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Do Subscriber Numbers Compare To Registered/Opt-in Users?
Premium Service Subs. 1,300,000 4,900,000 170,000 1,500,000 140,000 197,000 939,000 758,000 189,000 170,514 70,000 1,100,000 97,700 116,000 260,000 620,000 10,000 90,000 20,000 40,000 1,350,000 101,000 12,843 36,389 Registered Users/Opt-Ins 345,000,000 133,000,000 45,000,000 33,000,000 30,000,000 26,000,000 20,000,000 13,000,000 13,000,000 12,300,000 11,000,000 10,000,000 3,300,000 2,700,000 1,850,000 1,800,000 1,300,000 1,000,000 733,383 700,000 400,000 285,000 52,431 50,000

Property RealOne.com Yahoo.com MusicMATCH MX Ancestry.com WeatherBug Pro IGN/GameSpy Match.com Sony Station.com eDiets.com MatchNet NYTimes.com CBS Sportsline.com PlanetOut.com Morningstar.com Economist.com EA Games.com MovieFlix Rivals.com So. China Morning Post MyComicsPage.com ConsumerReports.org VersionTracker.com StockCharts.com Variety.com

Audience Mixed Mixed B-to-C B-to-C B-to-C B-to-C B-to-C B-to-C B-to-C B-to-C Mixed B-to-C B-to-C Mixed Mixed B-to-C B-to-C B-to-C Mixed B-to-C B-to-C Mixed Mixed B-to-B

Sector (1) (2) Music/Videos (3) Reference (4) Weather Games (5) Entertainment (6) Games (7) Health Entertainment (8) News; Games (9) Sports (10) Entertainment (11) Financial Business Games (12) Music/Videos Sports News Entertainment (13) Reference Computers (14) Financial (15) Business (16)

Notes: (1) Total unique registered users for free RealPlayer software; estimated 50 million active users; (2) Active registered users for Yahoo.com and total subscribers across all premium services, including non-content services; (3) Total unique registered users of free MusicMATCH Jukebox software; (4) Includes Genealogy.com; (5) Total subscribers and registered users across all IGN.com and GameSpy.com properties combined; (6) Total subscribers and member profiles for Match.com, uDate.com and Kiss.com combined; (7) Total subscribers for Station Pass, Everquest, Star Wars Galaxies and PlanetSide combined; 13+ million station.sony.com registered users; (8) Total subscribers and member profiles for AmericanSingles.com, CollegeLuv, Glimpse.com and JDate.com combined; (9) Total subscribers for News Tracker and Premium Crosswords services combined; (10) Subscriber count based on individual paid fantasy sports teams created during 2003; (11) Total subscribers and active registered users for PlanetOut.com and Gay.com combined; 1.8+ million member profiles across both properties; (12) Total subscribers for Club Pogo, Sims Online and Ultima Online combined; 1.8+ million registered users for EA Games and EA Sports combined; (13) Total subscribers for MyComicsPage.com and Puzzle Society combined; (14) Total subscribers include 34,500 individuals and 66,500 site license seats; (15) Total subscribers for StockCharts.com and MurphyMorris.com combined; (16) Includes 17,900 print edition subscribers with access to variety.com premium website

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Types Of Content Do They Publish?
Percent of all properties/services tracked

Sports Financial Entertainment Political / Current Events / News Games Reference Music / Video Business Computers / Technology Health Weather Other 0% 2% 2% 1% 5% 10% 15% 4% 8% 8% 7% 7% 11% 16% 15%

19%

20%

25%

Source: Intermarket Group, Content Matrix Service, April 2004

Sports and financial content remain the most popular categories among publishers; although the number of properties/services in each category has declined in relative terms by 15% since year-end 2002, they still account for more than one-third of all properties/services tracked The content categories which have expanded the most include entertainment, which now accounts for 15% of properties/services tracked (vs. 10% at year-end 2002), political/current events/news content which has increased to 11% from 9% and online games/game-related content which has increased to 8% from 4%

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Is Online Subscription Content Delivered?
Percent of all active properties/services tracked within each target audience grouping

Website or App. Software 100% 98% 80% 93%

Email

Wireless Device or PDA

91% 72% 54%

60% 46% 40% 16% 8% 0% B-to-C B-to-B

20%

13%

Mixed Audience

Source: Intermarket Group, Content Matrix Service, April 2004

• •

The Web remains, not surprisingly, the most widely-used means of delivering subscription-based online content, especially to consumers Email continues to increase in popularity among consumer-oriented properties / services with 46% now delivering at least some premium content via email, up from 37% at year-end 2002; B-to-B properties/services, however, appear to have pulled back from email somewhat as 72% currently use that delivery method compared to 82% the previous year Support for mobile content has changed little since year-end 2002, with only slightly more than one-in-ten properties/services now offering premium content formatted specifically for PDAs and other mobile or wireless devices; during 2002 the proportion of properties/services offering such content had expanded by more than 60%

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Frequently Is Subscription Content Updated?
Percent of all active properties/services tracked within each target audience grouping

B-to-C 60% 50% 32% 38% 40% 30% 20% 4% 10% 0% Intraday Daily 50%

B-to-B

Mixed Audience

28%

21%

25%

16%

10%

34% 9%

4% 3%

Weekly

Periodically

EventDriven

4%

Source: Intermarket Group, Content Matrix Service, April 2004

• •

User expectations concerning the immediacy of the Internet generally requires that premium services be updated frequently; the majority of properties/services tracked continue to be updated at least daily The proportion of consumer-oriented properties/services that update their content on an intraday basis has increased steadily since we began our tracking in mid-2002; thirty-two percent now add or update content more than once daily compared to 24% at mid-year 2003 and 15% at year-end 2002 The most-frequently updated properties/services continue to be among those that target a mixed audience of both consumers and businesses, due primarily to the large number of news and financial/investment-oriented offerings among that target audience grouping

5% 6%

5%

Other

6%

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Formats Are Used To Deliver Subscription Content?
Percent of all active properties/services tracked within each target audience grouping

Text 100% 100% 93% 80%

Audio

Video 96%

60%

40%

32%

27% 12%

20% 2% 0% B-to-C B-to-B 5% 8%

Mixed Audience

Source: Intermarket Group, Content Matrix Service, April 2004

• •

Text remains overwhelmingly the principal delivery format for premium content targeted toward each of the individual audience groupings The proportion of properties/services that deliver either audio or video content has declined for the first time since our tracking began in mid-2002; among B-to-C properties/services, 14% fewer offer streaming/downloadable audio and 13% fewer offer video or animated 3D content compared to mid-year 2003; similar declines have occurred among mixed-audience properties/services and for video content targeted towards B-to-B audiences The relative decline in audio/video content results primarily from the increased number of text-only offerings rather than the failure of previously-tracked multimedia properties/services

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Many Publishers Bundle Archives Or Databases With Subscriptions?
Percent of all active properties/services tracked within each target audience grouping

100% 86% 80% 72% 60% 60%

40%

20%

0% B-to-C B-to-B Mixed Audience

Source: Intermarket Group, Content Matrix Service, April 2004

• •

The majority of all properties/services overall include access to either an archive or library of previously-published content or to a collection of relevant data Bundling of an archive or one or more databases with premium content offerings continues to increase; among consumer-oriented properties/services the proportion that do so has increased to 72% (versus 66% at year-end 2002) and to 60% from 50% among properties/services targeting a mixed audience B-to-B properties/services remain the most likely to include an archive or database with 86% doing so now compared to 82% at year-end 2002

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Many Publishers Employ Personalization?
Percent of all active properties/services tracked within each target audience grouping

80%

60%

52%

40% 28% 20%

34%

0% B-to-C B-to-B Mixed Audience

Source: Intermarket Group, Content Matrix Service, April 2004

• • •

Among all of the properties/services tracked, the proportion that provide at least some level of personalization in delivering their premium content continues to increase steadily with 45% doing so now compared to 37% at year-end 2002 Personalization technology is most common among properties/services that target consumers, either exclusively (52% employ personalization) or as part of a mixed audience that also includes businesses (34% employ personalization) Although B-to-B properties/services lag behind their consumer-oriented counterparts in offering personalization features, the proportion that employ these technologies has increased significantly to 28% compared to 18% at year-end 2002

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Options Are Offered For Term Of Subscription?
Percent of all active properties/services tracked within each target audience grouping

B-to-C

B-to-B

Mixed Audience 74%

12 Months 62% 7% 6 Months 16% 13% 11% 3 Months 7% 23%

71%

68% 1 Month 59% 56% 0% 20% 40% 60% 80% 100%

Source: Intermarket Group, Content Matrix Service, April 2004

• •

• •

The most common subscription terms are, predictably, one month and 12 months The most notable change in subscription terms since year-end 2002 is a 20% increase in the proportion of consumer-oriented properties/services that offer a 12month term and a 15% increase among properties/services that target a mixed audience The proportion of B-to-B properties/services that offer six month subscription terms has doubled to16% from 8% during the same period Among sports content properties/services, 61% offer alternative subscription terms keyed to a season or a specific event (e.g., NCAA “March Madness” tournament, Wimbledon tennis tournament, etc.)

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Many Publishers Offer Free Trial Subscriptions?
Percent of all active properties/services tracked within each target audience grouping

Free Trial w/ CC Details Req'd.

Free Trial w/o CC Details

No Free Trial Offered

80% 70% 64% 60% 58%

40% 24% 20% 6% 0% B-to-C B-to-B 19% 17%

38%

5%

Mixed Audience

Source: Intermarket Group, Content Matrix Service, April 2004

• • • •

Few changes have occurred since mid-year 2003 with regard to properties/services offering free trial subscriptions Among all of the properties/services tracked, approximately one-third offer free trials, which represents a slight decline compared to mid-year 2003 Publishers that target a mixed audience remain the most likely to offer free trial subscriptions (43%) Among publishers that offer free trials, the proportion that do not request credit card details from these new subscribers has declined slowly (but steadily) with less than 7% of properties/services employing this approach now compared to 11% at midyear 2003 and 12% at year-end 2002

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Is The Length Of Free Trials?
Percent of all active properties/services which offer free trials within each target audience grouping

B-to-C 80% 57%

B-to-B

Mixed Audience

60%

25%

24%

28%

40%

52%

20%

22%

11%

20% 5%

18%

23% Other 8%

5%

0% 7 Days 14/15 Days

10 Days

0%

2% 30 Days

Source: Intermarket Group, Content Matrix Service, April 2004

• • •

Shorter trial periods are the most common among the properties/services tracked, with more than one-half offering free trials of two weeks or less Two weeks remains the most common length for free trials offered by publishers, regardless of target audience Among B-to-B and mixed audience properties/services 5% and 11% respectively now offer 7-day free trials while none did so at mid-year 2003; the proportion of publishers offering three-day trials has also increased, to 5% among consumeroriented properties/services and to 2% among those that target a mixed audience Some B-to-B publishers are migrating back towards longer trial periods, with 20% now offering 30 days free compared to only 6% at mid-year 2003 (which was down from 29% at year-end 2002)

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What is the Average Subscription Price By Target Audience?
Average price among all active properties/services tracked for each term within each target audience grouping
1-month Subscription 12-month Subscription

$400 The pricing differential between B-to-B and consumer-oriented properties/ $334.78 $350 services has narrowed somewhat $300 since mid-year 2003, driven by an increase of approximately 10% in the $250 $223.28 overall mean price of B-to-C $200 properties/services and a 12% decline in the overall mean price of properties/ $150 services targeting businesses $100 The overall mean price of B-to-B $68.50 $41.03 properties/services drops to $243 per $29.58 $50 $12.21 year from $325 when two $0 disproportionately costly offerings are B-to-C B-to-B Mixed Audience factored out: Delphion Unlimited ($2,040.00) and Street Insight Source: Intermarket Group, Content Matrix Service, April 2004 ($2,200.00) What is the Median Subscription Price By Target Audience? The relatively high cost of properties/ services that target a mixed audience Median price among all active properties/services tracked for each term within each target audience grouping is driven primarily by several offerings 1-month Subscription 12-month Subscription in the financial content category $200 Almost one-in-five (17%) properties/ services have made adjustments to $188.00 their pricing since mid-year 2003, with $160 prices increasing at 12% and decreasing at 5% $120
$109.00 $80 $54.95 $9.95 $0 B-to-C B-to-B Mixed Audience

$40

$24.95

$14.95

Source: Intermarket Group, Content Matrix Service, April 2004

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What is the Average Subscription Price By Publication Frequency?
Average price among all active properties/services tracked for each term for each publication frequency
1-month Subscription 12-month Subscription

$350 There generally appears to be little correlation between frequency of $300 $263.76 publication and price; the pricing differential across the various $250 publication/update cycles has, $200 however, narrowed somewhat since $169.35 mid-year 2003 $138.91 $150 As a group, properties/services which are updated weekly are also the most $100 $72.52 expensive, followed by those updated $41.33 $50 $24.46 on an intraday and then daily basis $21.29 $11.07 The higher prices of weekly properties/ $0 services generally reflects their Intraday Daily Weekly Periodically tendency to focus on higher valueSource: Intermarket Group, Content Matrix Service, April 2004 added information and analysis compared to many intraday offerings What is the Median Subscription Price By Publication Frequency? which focus more on increasingly Median price among all active properties/services tracked for each term for each publication frequency commoditized (and competitive) news 1-month Subscription 12-month Subscription and raw financial markets data $150 The high cost of several financial properties/services and the Delphion $125 patent/IP offerings once again make a disproportionate impact on mean price $99.95 $99.00 $100 levels, particularly for the intraday and weekly categories
$75 $55.00 $50 $25 $0 Intraday Daily Weekly Periodically $15.00 $8.95 $24.95 $9.95 $59.68

Source: Intermarket Group, Content Matrix Service, April 2004

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What is the Average Subscription Price By Content Format?
Average price among all active properties/services tracked for each term for each content format
1-month Subscription 12-month Subscription

$200 Subscription properties/services that include audio or video content do not generally command higher prices than $160 $147.86 their purely text-based counterparts The pricing gap, however, has steadily $120 narrowed since year-end 2002 with a further decline in the overall mean $80.47 price of text-based properties/services $68.04 $80 as a group since mid-year 2003 and a comparable increase in price among $40 audio/video content offerings $21.41 $13.01 $10.86 The price differential between properties/services that include audio $0 or video and those that don’t remains Text / Graphics Audio Video attributable to the overwhelming Source: Intermarket Group, Content Matrix Service, April 2004 consumer orientation of existing audio/video content What is the Median Subscription Price By Content Format?

Median price among all active properties/services tracked for each term for each content format
1-month Subscription $100 $79.95 $80 $64.97 $60 $59.95 12-month Subscription

$40

$20

$12.48

$9.95

$9.95

$0 Text / Graphics
Copyright © 2004 by The Intermarket Group L.P.

Audio

Video

Source: Intermarket Group, Content Matrix Service, April 2004

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The Content Matrix – April 2004 Ed.

How Do Subscription Prices Differ Between Monthly And Annual Terms?
Average multiple of monthly cost for annual cost of active properties/services within each target audience grouping

11.00 10.00 9.00 8.00 7.00 6.00 5.00 B-to-C B-to-B Mixed Audience 7.76 9.61

6.43

Source: Intermarket Group, Content Matrix Service, April 2004

• •

The average differential between annual subscription prices and annualized monthly prices has declined significantly since mid-year 2003, which means that the cost of monthly subscriptions have moved closer to the cost of their annual counterparts; this differential had previously increased steadily since our tracking began in 2002 Among properties/services that target consumers, the average annual subscription price is now 6.43 times the single-month rate, down from 7.22 at mid-year 2003 and 6.71 at mid-year 2002 Properties/services that target businesses generally offer the lowest discount for annual subscriptions, charging an average 9.61 times their single-month rate – down from 9.06 at mid-year 2003 and 8.92 at mid-year 2002

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Is The Average Subscription Price By Content Category?
Average price among all active properties/services in each category for each subscription term

1-Month Subscription

12-month Subscription $340.68

• •

The most costly properties/services on average continue to publish financialand business-oriented content The overall mean 12-month subscription prices for sports and for online games and game-related properties/services declined by more than 10% since mid-year 2003; weather-related properties/services declined by 8% during the same period Music/video, entertainment and computers/technology properties/ services each increased by more than 10% in their overall mean prices since mid-year 2003 The least expensive content categories are sports, weather news/ information, political/current events/ news and games/game-related content

Financial Sports Reference Music / Video Political / Current Events / News Business Entertainment Computers / Technology Health Games Weather $0

$42.77 $63.72 $8.15 $154.11 $23.51 $89.30 $11.23 $71.06 $7.73 $190.50 $21.83 $80.57 $16.93 $114.77 $34.32 $85.63 $17.21 $61.24 $10.83 $55.67 $8.63 $100 $200 $300 $400

Source: Intermarket Group, Content Matrix Service, April 2004

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Is The Median Subscription Price By Content Category?
Median price among all active properties/services in each category for each subscription term

1-Month Subscription

12-month Subscription $198.23

A comparison of mean and median prices demonstrates the disproportionate impact that higherpriced properties/services have on several content categories The overall median 12-month subscription prices in the computers/technology and reference content categories are less than onehalf of their respective mean prices and several other categories are 4050% lower As with mean prices, the overall median prices for sports, weather, games and game-related properties/ services have declined since mid-year 2003; similarly, the overall median prices for music/video and entertainment content have both increased as have their respective mean prices The overall median prices for both reference and financial properties/ services have increased since midyear 2003 despite a decline in the overall mean price for each content category

Financial Sports Reference Music / Video Political / Current Events / News Business Entertainment Computers / Technology Health Games Weather $0

$24.95 $49.95 $6.95 $75.00 $12.95 $49.95 $9.95 $54.95 $6.25 $150.00 $17.98 $69.99 $17.92 $49.95 $22.50 $94.48 $14.95 $45.90 $9.95 $39.99 $8.47 $50 $100 $150 $200 $250

Source: Intermarket Group, Content Matrix Service, April 2004

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Have Subscription Prices Changed In The Last Six Months?
Percent of all active properties/services tracked in mid-year 2003 Content Matrix

No Change In Pricing (83%)

Increased Pricing (12%) Decreased Pricing (5%)

Source: Intermarket Group. Content Matrix Service, April 2004

• • •

Among 417 active properties/services tracked in the previous Content Matrix (July 2003 ed.), 83% of those still available today continue to charge the same prices as they did at mid-year 2003 Twelve percent of those same 417 properties/services have increased their prices by an average of 43% since mid-year 2003; this translates in dollar-terms to about $7.30 per month Five percent – including several sports-related properties/services – reduced their prices by an average of 22%, or the equivalent of approximately $3.32 per month; pricing for sports-related content remains under pressure more so than most other sectors

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Many Publishers By Target Audience Employ Auto-billing?
Percent of all active properties/services tracked within each target audience grouping

100% 85% 80% 74% 66% 60%

40%

20%

0% B-to-C B-to-B Mixed Audience

Source: Intermarket Group, Content Matrix Service, April 2004

• • •

Approximately three-quarters (76%) of all properties/services tracked employ autobilling, which means they renew expiring subscriptions and charge the subscriber’s credit card automatically; this is up slightly compared to mid-year 2003 and up from approximately two-thirds at year-end 2002 Among the properties/services that employ auto-billing, 5% do so for monthly subscriptions only…the overwhelming majority that auto-bill expiring subscriptions do so across all subscription terms Three percent of these auto-billing properties/services allow subscribers to opt-out and renew their subscriptions manually Properties/services that target consumers -- either exclusively or together with businesses -- are still more likely to use auto-billing than B-to-B properties/services

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Many Publishers By Content Category Employ Auto-billing?
Percent of all active properties/services tracked within each content category

Weather Entertainment Music / Video Health Games Financial Political / Current Events / News Reference Computers / Technology Business Sports 0% 20% 38% 40% 60% 80%

100% 98% 93% 92% 90% 85% 83% 78% 75% 68%

100%

Source: Intermarket Group, Content Matrix Service, April 2004

• • •

Among seven out of the 11 principal content categories tracked, more than 80% of properties/services employ auto-billing, the same as at mid-year 2003 The specific categories, however, have shifted somewhat with the proportion of computers/technology and sports properties/services that auto-bill decreasing while websites in most other categories have increased their use of auto-billing Sports content properties/service remain the least-likely to employ auto-billing, primarily because of auto-billing’s incompatibility with subscription offerings designed around sports seasons where play takes place only part of the year

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Are The Tier 1 Revenue Sources (Digital Content) Employed By Publishers?
Percent of all active properties/services tracked within each target audience grouping

B-to-C

B-to-B 27%

Mixed Audience

• •

In addition to subscription sales, we have defined “Tier 1” revenue sources as those relating to the sale of digital content Licensing and syndication remain the most common content-related revenue source after subscription sales The proportion of consumer-oriented properties/services that offer one-off sales of digital content is slightly higher now compared to year-end 2002, but has declined since mid-year 2003 to 34% from 44%; A similar decline has occurred among properties/services that target a mixed audience, to 27% from 34% at midyear 2003 Revenue from pay-per-use audio and video has changed little since year-end 2002 and continues to barely register among many publishers; PPU offerings remain most common on music/video and sports properties/ services

Single Purchase Content 11% Archives 4% 2% PPU Video 0% 5% 1% 0% 2% 12%

43% 34%

PPU Audio

Licensing / Syndication

59% 47% 50% 0% 10% 20% 30% 40% 50% 60% 70%

Source: Intermarket Group, Content Matrix Service, April 2004

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Are The Tier 2 Revenue Sources (Advertising) Employed By Publishers?
Percent of all active properties/services tracked within each target audience grouping

B-to-C

B-to-B

Mixed Audience 82%

Website Advertising 67% 60% Email Newsletter Advertising 43% 13% Classified Advertising 6% 0% 20% 40% 60% 31% 60%

79%

80%

100%

Source: Intermarket Group, Content Matrix Service, April 2004

• • •

“Tier 2” revenue sources are those related to the sale of online advertising Website advertising is, not surprisingly, the most widely embraced Tier 2 revenue source, with more than three-quarters (77%) of properties/services deriving at least some income from it Properties/services in the financial, sports, news, computers/technology, business and online game/game-related content categories are the most likely to generate advertising-related revenue (more than 75% of the properties/services in each category do so) The proportion of properties/services that generate revenue from the sale of advertising in their email newsletters has declined since mid-year 2003 to 43% from 48% among B-to-B sites and among sites targeting a mixed audience to 60% from 69%

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Many Publishers Include Advertising In Their Subscription Properties/Services?
Percent of all active properties/services tracked within each target audience grouping

Site-wide (Including Subscriber Areas) No Advertising 80% 77% 60% 57% 40%

Free Content Areas Only

66%

33% 21% 18%

20% 10% 2% 0% B-to-C B-to-B

16%

Mixed Audience

Source: Intermarket Group, Content Matrix Service, April 2004

• •

Properties/services that target consumers are the most likely to carry no advertising, with one-third of them ad-free Advertising is found most frequently on properties/services targeting a mixed audience, where more than four-in-five (82%) carry advertising in either free areas or in both free and subscriber-only areas; the proportion that limit advertising exclusively to their free content areas has tripled to 16% now from 5% at mid-year 2003 Ad-free subscriber areas continue to have limited popularity among publishers overall, with only 10% of consumer-oriented properties/services inserting ads exclusively in free areas – compared to 6% one year ago – and 2% of B-to-B properties/services doing so now versus 3% at year-end 2002

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Are The Tier 3 Revenue Sources (Product Sales) Employed By Publishers?
Percent of all active properties/services tracked within each target audience grouping

B-to-C

B-to-B 34%

Mixed Audience

Merchandise Sales

22% 55% 42%

Books / Videos / DVDs

40% 46% 14%

Online/Offline Events

22% 15% 0% 20% 40% 60% 80% 100%

Source: Intermarket Group, Content Matrix Service, April 2004

• • • •

“Tier 3” revenue sources are those related to the sale of physical products/services in addition to online events -- such as “webinars” and online courses – or offline events The sale of books and other types of hardcopy content such as DVDs and video tapes are the most common source of Tier 3 revenues Sales of merchandise is most common among properties/services in the sports, weather, health, reference and online game/game-related content categories (more than one-half of the properties/services in each category) Publishers in the sports, entertainment, computers/technology, business and financial content categories are the most likely to derive revenue from online and/or offline events (more than 10% of the properties/services in each category)

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Many Publishers Offer Free Content?
Percent of all active properties/services tracked within each target audience grouping

100% 92% 80% 88%

87%

60%

40%

20%

0% B-to-C B-to-B Mixed Audience

Source: Intermarket Group, Content Matrix Service, April 2004

• • •

A substantial majority of the properties/services tracked offer at least some free content, either on their websites or via opt-in email newsletters The overall proportion of properties/services that offer free content has increased somewhat since mid-year 2003, most notably among B-to-B properties/services where 88% now provide at least some content at no cost, up from 76% Consumer-oriented properties/services are the most likely to offer free content, 92% do so now compared to 84% at mid-year 2003

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Many Publishers Require Registration To Access Free Content?
Percent of all active properties/services offering free content within each target audience grouping

B-to-C 100% 80%

B-to-B

Mixed Audience

63% 60% 40% 22% 20% 0% Required For All Free Content/Services Required For Select Free Content/Services No Registration Required 15% 10% 6% 55% 57% 37%

35%

Source: Intermarket Group, Content Matrix Service, April 2004

• •

The majority of properties/services that offer free content also require visitors to register before they can access at least some portion of that content Properties/services that target consumers remain the most likely to employ at least limited registration requirements; among B-to-C properties/services, only 22% require no registration compared to 19% at mid-year 2003 and 28% at year-end 2002 Opt-in email newsletters are the website service that requires registration most frequently among those properties/services that wall-off only select content and services; registration, in this instance, is defined as requiring any details beyond an email address The overall proportion of properties/services that place a registration wall around all of their free content has changed little since year-end 2002

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Types Of Content Do Publishers Provide Free?
Percent of all active properties/services offering free content within each target audience grouping

B-to-C 100% 98% 92% 80% 88%

B-to-B 86% 79% 61%

Mixed Audience

60%

40% 21% 20% 24%

33%

0% Website Content Email Newsletter(s) Wireless/PDA Content

Source: Intermarket Group, Content Matrix Service, April 2004

• •

Among the properties/services that offer free content, more than 90% provide at least some website content at no cost; those targeting consumers are more likely to do so than those targeting businesses (98% vs. 92%) Free opt-in email newsletters are widely available among the properties/services tracked, with approximately three-in-four producing at least one such publication, however, the proportion of B-to-C properties/services who do so has declined to 61% from 72% at mid-year 2003 and 70% at year-end 2002 Content formatted specifically for PDAs and other mobile or wireless devices has declined across all target audience groupings, but most noticeably among B-to-B properties/services where support has dropped to 24% from 31% at mid-year 2003 and 33% at year-end 2002

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

How Many Free Opt-in Email Newsletters Do Publishers Offer?
Percent of all active properties/services tracked within each target audience grouping

B-to-C

B-to-B 25% 26% 20%

Mixed Audience

Among properties/services that target consumers – either exclusively or along with businesses – the proportion that offer at least one free opt-in email newsletter has declined for the first time since our tracking began in mid2002; forty-five percent of B-to-C and 32% of mixed audience properties/ services offer no email newsletter, up from 38% and 29% respectively at mid-year 2003 Approximately 76% of the B-to-B properties/services tracked now offer one or more opt-in email newsletters compared to 64% at year-end 2002; the proportion that offer four or more different email newsletters has also increased slightly since mid-year 2003, but is still significantly lower than the 31% who did so at year-end 2002 Among the 61% of all properties/ services tracked that produce opt-in email newsletters and alerts, the average number offered is five; onehalf of those properties/services, however, offer just one or two different email newsletters

4+ Newsletters

3 Newsletters

4% 3% 3% 13%

2 Newsletters

9% 6% 26%

1 Newsletter 26% 32% No Newsletter 24%

38%

45% 0% 10% 20% 30% 40% 50% 60%

Source: Intermarket Group, Content Matrix Service, April 2004

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

What Is The Failure Rate Of Subscription Properties/Services?
Percent of all properties/services tracked in year-end 2002 Content Matrix

Merged / Superceded / Restructured (9%) Discontinued or Shut Down (11%)

Substantially Unchanged (79%)

Source: Intermarket Group, Content Matrix Service, April 2004

• •

Seventy-nine percent of the properties/services tracked since the year-end 2002 Content Matrix are still available in a substantially unchanged configuration The failure rate among properties/services since the mid-year 2003 track has increased to 20%, with almost one-in-ten (9%) either replaced by a new – but similar – offering from the same publisher or merged with one of its publisher’s other existing properties/services; five properties have actually been converted back to adsupported free sites (compared to three in the previous track) Eleven percent of the 351 properties/services tracked since the year-end 2002 Content Matrix have been discontinued entirely or their publishers have shut down, which is almost twice the level of 6% in the previous track at mid-year 2003

Copyright © 2004 by The Intermarket Group L.P.

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The Content Matrix – April 2004 Ed.

Pure-Play vs. Hardcopy 19%
Online-only Supplement Alternative

About The Content Matrix This edition of The Content Matrix covers 635 different properties/services -- including 81 that have been discontinued, superceded or changed significantly since 2002 -produced by 267 publishers. Where a property/service is offered by the publisher in different configurations, each version is most often covered individually. A majority of the properties/services (73%) are available exclusively via the Internet, 8% are designed to supplement a hardcopy publication or other offline property and 19% can serve as an alternative to an offline counterpart. Publishers that provide online counterparts for their hardcopy publications, but do not produce exclusive online content – such as many B-to-B newsletter publishers – are not covered. Sixty-four percent of the properties/services tracked are targeted to consumers, 10% to business users and 26% are designed for both consumers and business users. All data presented in The Content Matrix is based on surveys of each publisher’s website(s) and on data gathered directly from many of the publishers during January through early April 2004. Data on the number of subscribers and registered users, when available, is obtained directly from each publisher. Subscriber numbers are generally based on individual paid subscriptions plus specific seats licensed under site licensing programs; licensing arrangements that do not specifically identify the number of seats covered are each counted as one subscriber.
B2C 64%

8% 73%

Target Audiences Both 26%

B2B 10%

In compiling The Content Matrix, we’ve generally defined “content” as any one of the following: (i) news and analysis; (ii) entertainment, such as music, video, games and egreeting cards; (iii) information-based services, such as online dating or personal credit file monitoring services; and (iv) reference material, such as directories, encyclopedias, or historical databases. The Content Matrix is published semi-annually, at the new year and at mid-year. For additional information, visit http://matrix.intermarketgroup.com.

Copyright © 2004 by The Intermarket Group L.P.

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