Has the death of ad-driven content been prematurely declared?

iTunes and other paid video download services will be going the way of the dodo sooner than later, according to a new report by Forrester Research. As more programming becomes available through free outlets, users will begin to move away from paid TV and movie downloads, even if the free content is supported by advertising, says the report. Forrester analyst James McQuivey called paid downloads a “dead end.”

The dead end, according to Forrester, will be hit as soon as 2008. The paid download market will continue to grow throughout 2007—from $98 million to $279 million at the end of the year—but growth will slow significantly at that point. The research firm says that only geeky early-adopters and “media addicts” have bought into the paid downloads market thus far, with the average consumer still being confused about different video formats and DRM rights, getting downloaded video onto the TV, and premium content being slow to arrive to the digital market. The research firm says that only 9 percent of adults have paid for any type of video content online, and estimates that growth will not even double in 2008 as the tail end of the early-adopting crowd finishes catching on. “Free TV streams will steal eyeshare back from paid downloads,” says the report.

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