SAN FRANCISCO, March 30, 2010 – The worldwide online market for digital goods will grow amid a state of continuous disruption across all forms of content markets, according to a new report from GigaOM Pro. Fueled by an ever-growing user base, migration from physical formats to digital distribution, and a proliferation of new connected devices, the overall market for digital goods will grow to $36 billion by 2014, up from $16.7 billion in 2009.
While demand for digital goods is fueled by the transition toward a connected-device, broadband-enabled society, the underlying business dynamics across many markets are forcing intellectual property owners to experiment with new payment and business models to survive. Advertising-supported media continues to suffer, as news and information services have witnessed rapid consolidation of their markets.
“As large news organizations look to diversify from ad-supported business models, the last decade has produced no evidence that a significant percentage of their consumers will pay for content that is free elsewhere,” said Paul Zagaeski, author of the report. “Still, there continues to be significant enthusiasm for subscriptions, micropayments and other payment models as more devices such as the iPad come to market.”
In other sectors, such as music, video, or gaming, long-term success will require an embrace of multiple business and payment models. Micropayments for music and games will grow significantly as the enormous user-bases of social media sites such as Facebook begin to transact, while application marketplaces will continue to experience significant growth in both mobile and elsewhere.
“Payment models will continue to evolve and even established players in digital goods will need to continue adapt,” said Zagaeski. “Early success stories such as iTunes, in-game payments in World of Warcraft, Facebook’s gaming apps and Netflix are only the beginning, as new, socially-enabled digital markets continue to grow in importance.”
The report, “Paid Content”, available now from the GigaOM Pro research service, examines the state of paid content and the various monetization and payment models across each of the various digital goods markets. The report examines key players and market dynamics in the film and video, newspaper, online game, music and social networks space relative to their paid content strategies, and includes a revenue forecast of each of these segments relative to the overall paid content market.
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