Downloadable music and video purchases helped propel U.S. consumer spending on content to $2 billion in 2005, a 15 percent increase from 2004, writes MediaPost, citing new research by the Online Publishers Association. In 4Q05, spending reached $534 million – a record, and 13 percent more than the $472 million in 3Q04.
I’ve heard discussion recently about investors liking advertising-based business models more than subscription-based models. That cuts me to the core. It’s hard not to take it personally because I’ve been a content subscription marketer since 1997 and I still personally like that business model more than advertising.
But I’m certainly not opposed to advertising revenue, especially with Google, Yahoo and Microsoft competing aggressively for dominance in this space with demographic targeting and generous revenue-sharing with their publisher partners.
I think both ad-based and subscription-based business models work and will grow. The key issue for online businesses is creating or acquiring good content and building community around that content.
That is our main focus right now at Provo Labs.