C o n t e n t s

Size and Growth / Demographics / Income Level / Gender Distribution / Age Range / Education / Home and Office Households / How do people find webpages? / International Users / What are people doing on the Net? / The Business of the Business / The Business Models

Prepared 1/96

S i z e   a n d   G r o w t h

It is estimated that about 30 million US Households have computers. Ten to fifteen million homes have modems which enable them to go online. According to various forecasts, between 40 and 70 million households will have home computers by the end of the year 2000. The number of households with access to Internet services like the World Wide Web is estimated to grow to somewhere between 20 and 45 million by the end of this decade (Cyberstats, John Pike, Federation of American Scientists).

By the turn of the century, there will be 120 million host computers connected to the Net. The Internet Society maintains a set of charts, tables and current metric graphs. These include a timeline of the overall growth of the Internet .

Matthew Gray documented the rapid growth of the WWW from June 1993 through December 1994.

Matrix Information and Directory Services (MIDS) published the Second MIDS Internet Demographic Survey and updated these figures in a July, 1995 press release. Their survey says that there are 22.6 million users of the consumer Internet who have access to content generated by the WWW. This includes 25% of the entire user population of commercial systems such as America Online, Compuserve, Prodigy and Delphi.

MIDS also notes that there are 35 million people who currently use AOL, Compuserve, Prodigy and other (specifically email) services that have some access to the services of the net. From our perspective, they are poised to begin using the rest of the Internet.

D e m o g r a p h i c s

I n c o m e   L e v e l

• The Graphic, Visualization and Usability (GVU) Center at Georgia Tech ran their fourth WWW survey from October 19th, 1995 through November 10th, 1995. The survey reported median user income between $50,000 and $60,000, with an estimated average income across all users of $63,000. Over 13% reported income of over $100,000. The Hermes project conducted additional analysis which indicated generally high income Internet users.

G e n d e r   D i s t r i b u t i o n

• Right now there is a 2:1 ratio of male to female Internet users, and the GVU WWW User Survey suggests that there will be equal numbers of men and women on the Internet by early 1997.

A g e   R a n g e

• The dominant age range on the Internet is 18 to 35 years old (MIDS). The average age is around 31 (GVU WWW Survey).

E d u c a t i o n

• An Angus Reid Poll quoted by Insight New Media found that almost half of users have a university degree and 20% a post grad degree.

H o m e / O f f i c e   H o u s e h o l d s

• Among households that have Internet access, the majority have some sort of home office activity. There is strong business or home-working element to Internet use. At this point, use of the Internet is less a leisure activity (Response Analysis Corp. of Princeton, New Jersey as quoted by Interactive Age Daily).

H o w   d o   p e o p l e   f i n d   w e b p a g e s ?

• GVU found that most users find web pages through friends and other pages (96%) along with magazines (64.3%) and Usenet (59%).

I n t e r n a t i o n a l   U s e r s

• Network Wizards notes that there are 6.64 million host computers on the Internet. Of these, 2.37 million are international hosts representing 150 countries.

W h a t   a r e   P e o p l e   D o i n g   o n   t h e   N e t ?

• Gathering purchase information is one of the preferred activities on the Net (Hermes).

• The Commercenet/ Neilsen Internet Demographics Survey Executive Summary notes that approximately 14% (2.5 million) of WWW users have purchased products and/or services over the Internet.

T h e   B u s i n e s s   o f   t h e   B u s i n e s s

• The Commercenet/ Neilsen Internet Demographics Survey Executive Summary states that "total internet usage in the US and Canada is equivalent to the total playback of rented videotapes."

• Barron's December 25,1995 issue states that by the year 2000, cable companies are expected to become the leading online access providers (p. 30).

• Barron's also projected that retail sales on the Net will total $7 billion annually by the year 2000 and that "business-to business" trade on the Net could add up to 22 billion dollars a year (p. 30).

T h e   B u s i n e s s   M o d e l s

• Donna Hoffman and Thomas Novak note in their paper, Commercial Scenarios for the Web, that the Internet is creating a revolution away from the typical model of "one-to-many" marketing communications. Individuals are able to customize their information needs from companies. Hoffman and Novak believe that this will increase brand loyalty because the WWW will build stronger interactive relationships between firm and customer.

  
  

• In a paper entitled, "Marketing in Hypermedia Computer-mediated environments: Conceptual Foundations," Novak and Hoffman quote Neece saying that "Sunsolve Online saved Sun Microsystems over 4 million dollars in FAQs (Frequently Asked Questions) alone since they re-enginneered information processes around the WWW." They also note that a recent study by IBM (1995) suggests that "online catalogs on the Internet can save firms up to 25% in processing costs and reduce cycle time by up to 62%."

  
  

• Hoffman and Novak note in Hotwired's "Intelligent Agent" that "net marketing may be more effective than marketing through traditional media. For example, one source (Potter, 1994) suggests that marketing on the WWW results in "Ten times as many units sold as one-tenth the advertising budget.'" (9/11/95)

  
  

• David Kline reports in his series of articles, Market Watch, in Hotwired on the Cyberspace and the American Dream II conference in Aspen, sponsored by Newt Gingrich's think tank, The Progress and Freedom Foundation (you may have to join Hotwired, which is free, to view Kline's article). Kline says that "the most worthwhile discussion at the conference involved an economic concept called "friction-free capitalism." The basic and solid idea here is that the spread of computer networks is lowering the transactional costs necessary for buyers and sellers to find each other, thus making markets more efficient..."

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Alexander Binder / alexander.binder@kfunigraz.ac.at