They earn most of their revenue from subscription, advertising and transaction fees related to the content they keep on their servers. Their core business is effective content management. The phenomenal success of America Online proves that content can be a major selling point for ISPs. AOL still receives more than 80 percent of its revenue from access charges, with the rest coming from advertising, marketing and commissions on e-commerce sales. By that time, analysts predict it will also have lots more competition.
Analysts say the biggest opportunity in content lies in serving a local market.
These high-profile media companies get enough traffic on their own sites, which means they charge premium rates to have their content distributed through other sources. But there is almost unlimited opportunity in the local content business, says Stevenson. The Ovum report predicts there will be less competition for local and national entertainment, sports or news in local languages. While U.S. media companies are now supplying some content of this type, there is not enough to meet what will be almost insatiable demand, Stevenson says. And regional and local ISPs can offer insight into local tastes that international ISPs like AOL cannot match.