Content A Tough Sell In Europe
23 January 2002

When it comes to paying for content online, Europeans are proving to be tough customers. Aside from the lucrative world of online porn, Euro consumers simply won't give up the notion of the Web as the biggest free lunch of all time.

According to a new study of Internet payment habits, 47 percent of European Web users would not even consider paying for Internet content.

Which probably explains why almost all European Web content is free. Businesses have yet to find an acceptable way of charging for it.

But the content providers are not giving up. Consumers might not be willing to pay for downloading songs or obtaining stock quotes, but they seem happy to pay extra for a whole range of services on their cell phones.

Analysts at Jupiter Media Metrix, the Internet research company behind this latest study, said that in 2001 Europeans spent ¸590 million on content for their cell phones, almost twice the ¸252 million spent on desktops. The analysts estimate that by 2006, European consumers will spend ¸3.3 billion on cell-phone content, compared to ¸1.7 billion on home computers.

Currently, people willingly pay for such services as downloading ring-tones, logos, games and icons to their cell phones. Companies such as Kiwee, a leading French provider of mobile ring-tones and logos, attracted 1.6 million paying clients within a year of launching and projected revenues of ¸15 million for the end of 2001.

European consumers also currently pay for SMS (short-message service) alerts, such as sports scores and news. At Eurosport, a multi-platform sports company spanning several European countries, consumers can sign up for instant news updates by buying credits online for the equivalent of 15 cents a pop.

By 2006, Jupiter predicts that the content available through mobiles might be richer, including enhanced ring tones and logos, multimedia news and sports alerts and electronic greeting cards.

"Electronic greeting cards will remain a popular, mostly free service on the Web, but consumers will actually pay for them on their mobile phones, as they have been paying for ring-tones and logo downloads over the last 18 months," said Olivier Beauvillain, who authored the Jupiter report.

Why should European consumers be more willing to pay for e-greetings on their mobile phones than from their home computers?

Unlike in the United States, where Internet service providers typically charge a flat monthly fee for unlimited use, in Europe, high Internet-connection costs have kept Web usage down and, as a result, helped accelerate the huge uptake of wireless communications services.

The growing popularity of SMS in Europe ¿- a cheap mobile alternative to e-mail -¿ is also helping to drive consumer interest in paying for content. According to Beauvillain, mobile-phone networks such as Orange and Vodaphone generate 10 percent of their revenues through SMS.

"The increasing usage of short-messaging service on mobile phones is good news for the media industry," Beauvillain said. "Newspapers and magazines struggling to generate direct consumer revenues from their websites have more opportunity to charge for content on mobile phones.

" The third major factor in the growth of the European mobile-content market is the streamlining of payment mechanisms. Credit card payments often pose a problem for content providers, because many purchases need to be amassed in order to keep processing fees down. Now, content providers are exploring ways of aggregating payments through a phone bill, ISP or third-party payment facilitator.

Despite the current European preference for content delivered to cell phones, desktop computers continue to play a complementary role to mobile devices.

"Our findings do not mean that content providers need to stop their PC activity," says Beauvillain. "Mobile and PC revenues will be strongly linked through subscription services and in marketing mobile services." .

Copyright Wired Digital Inc.