Net Grows; Free Music Still Rules

All available statistics demonstrate that the Internet is still a growing phenomenon, one destined to play an increasingly important role in the distribution of information and entertainment. Recently published studies by Jupiter Media Metrix, Inc., a division of Jupiter Research, show that Internet usage has achieved greater than 50% penetration among US households, giving it what researchers call "mass-market status." Jupiter describes "online consumers" as people who have computers and Internet service provision in their homes, as opposed to having Internet access through a computer at work. "Online users," for the sake of the studies, were defined as people who use the Internet at least once per month.

The proportion of online consumers has risen from 44% of the general population (56.8 million households, 124.7 million individuals) in 2000, and should grow to 76%, or 86.3 million households comprising 210.8 million individuals, by the end of 2006, Jupiter predicts. It is anticipated that 35 million of those households will have broadband service. Approximately 16 million new users will go online this year; Jupiter expects no fewer than 10 million to do so annually for the next five years.

"Media Metrix traffic data show steady growth in monthly usage intensity," the researchers noted, adding that the predicted level of usage in 2006 will make the Internet the equal of subscription television services. The report's authors recommend that forward-thinking websites and Internet services design their offerings to accommodate both "newbies" and advanced users. They do not predict an immediately rosy future for interactive television ("iTV") services because most of the initial forays will be experimental, or what they describe as "fragmented."

The Internet is rapidly maturing into an integrated, necessary part of normal life—especially economic life. Although consumer spending has fallen off elsewhere, for Internet-based businesses, and for online outlets of traditional retailers, it has dropped only slightly. Online retailer Amazon.com enjoyed its highest-ever number of unique visitors in September 2001, a month in which bricks-and-mortar retailing suffered.

Music continues to be a major attraction for Internet users. Music clubs BMG and Columbia House also enjoyed peak traffic in September, as did the website for Eden Prairie, MN–based Best Buy, Inc., one of North America's largest electronics and recorded entertainment chains. One of the most successful music sites in the last quarter of 2001 was AudioGalaxy.com, where visitors can find and download music. "Users spent more than double the amount of online time there than they did on other music sites," Jupiter stated. Music sites sponsored by major record labels—such as MusicNet and pressplay—failed to attract even 2% of online music fans.

Other interesting factoids and predictions: The online population is equally divided between males and females, with women signing on at a slightly faster rate than men. In the next five years, the most rapid adoption of computer technology will be by "middle-aged adults and older adults," although only 37% of those over the age of 65 will be using the Internet five years from now. Asian-Americans are considered "the most Internet-savvy" ethnic group, with a predicted usage rate of 80% by 2006.

A divide will persist between the rich and the poor. Jupiter defined the "rich" as households with incomes over $75,000 annually and said that 76% of this category were connected to the Internet in 2002, with 91% predicted to be on the Net by 2006. The gap between rich and poor should narrow, thanks to continually declining prices for hardware and the increasing use of computers by inner city students.

Jupiter Media Metrix published its most recent analysis of Internet usage in January 2002.

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