Consumers unwilling to shell out for online services, says Jupiter

A new study by Jupiter Media Metrix, the Internet and new technology analysis and measurement agency, reports that more than two-thirds of US consumers would not pay for any services on the Internet, including enhanced e-mail, instant messaging or file-sharing capabilities.

The JMM report, entitled, 'Paid Consumer Services: Assessing Market Opportunities', consumers voiced greater resistance about paying for online services (69 per cent) than they did about paying for content (63 per cent). A study which preceded the report, found that although about one-third of online adults in the US use a free service as their primary personal e-mail account and over 60 per cent use an ISP, only 12 per cent expressed their willingness to pay for enhanced e-mail.

Jupiter senior analyst David Card says the research indicates that there is no obvious killer-application online service that consumers would pay for. "Companies should bundle online services and price them at less than thirty dollars per year. When transitioning from free to fee, service aggregators must solicit early consumer feedback and promote packages with e-mail aggressively," he adds.

A March 2002 Jupiter Consumer Survey, he says, found that only eight per cent of online adults would pay to access recruitment and job sites; six per cent would pay for enhanced instant messaging and file-sharing capabilities. Respondents said they are least likely to pay for personals and dating services (two per cent). The study randomly surveyed over 2000 individuals for the purpose.

"With high consumer resistance in the air, companies that want to profit from online services should consider a menu approach, offering several courses or choices. To date, no portal or ISP has experimented with it - those that do will have a jump start on the market," Card says. The survey indicates that consumers are less confused about where they might purchase online services than where they would purchase content. Consumers would feel most comfortable with paying their ISPs (47 per cent) or portals (16 per cent) for online services. According to Jupiter analysts, ISPs that have an existing billing relationship with their customers should have the easiest time selling services, with portals becoming other logical aggregators.

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