Internet Commerce Briefing: Internet Population & Online Activities Report

The Internet
Commerce Briefing
Internet population
& online activities report
The Intermarket Group L.P.

www.intermarketgroup.com
Internet Population & Online Activities Report
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Published December 2001

ISBN No. 1-882113-14-4
The Internet Commerce Briefing | 1

Table Of Contents
Table of Contents .......................................................................2

List of Charts and Tables ...........................................................3
Section I. The Internet Population ........................................5
Section II. Internet User Demographics ...............................19
Section III. Internet Usage ....................................................32
Section IV. Broadband Internet Access.................................40
Section V. Online Activities of Internet Users.......................49
Section VI. Online Communication Activities ........................63
Section VII. Downloading and Streaming Media Activity........72
Appendix Data Sources and Contact Information...............93
Other reports in the Internet Commerce Briefing series:

Business-to-Consumer E-commerce
Online Advertising & Digital Marketing

Charts and tables in this report

1.01 U.S. Internet Population (2001) 3.08 Total Internet User Pageviews And Time Online Per Month
1.02 Growth Of U.S. Internet Users (1999-2005) (10/2000-10/2001)
1.03 Leading Countries By Penetration Of Internet Use 3.09 Internet User Pageviews At Home vs. At Work (1/2000-
1.04 Leading Countries By Number Of Internet Users 10/2001)
1.05 Share Of Internet Users By Region (2000/2003) 3.10 Time Spent Online By Internet Users At Home vs. At Work
1.06 Internet Plans Of Individuals Who Are Not Online (1/2000-10/2001)
1.07 Why Individuals Stop Using The Internet 3.11 Where U.S. Internet Users Access The Internet
1.08 Native Languages Of Internet Users Worldwide 3.12 Where U.S. Teens Access The Internet
1.09 Secondary Languages Used Online By U.S. Internet Users 3.13 Types Of Connections Among U.S. Internet Users At
1.10 Growth Of Internet Devices In The U.S. (2001-2006) Home
1.11 Devices Accessing The Internet Worldwide (2001/2005) 3.14 Speed Of U.S. Internet Users’ Dial-Up Connections At
1.12 Mobile Wireless Internet Users By Region (2000/2005) Home
1.13 Mobile Wireless Internet Users By Region (2000-2005)
1.14 Leading Countries By Computers In Use 4.01 U.S. Broadband Households (1999-2005)
1.15 Home Computer Ownership By State 4.02 U.S. Cable Modem Subscriber Growth By Quarter (1999-
1.16 U.S. Internet Users Online During The Last 30 Days (Oct. 2001)
2001) 4.03 Growth Of Broadband vs. Dial-up Access At Work In The
1.17 U.S. Internet Penetration (Oct. 2001) U.S. (2001/2005)
1.18 U.S. Internet Penetration At Home And At Work (1995- 4.04 U.S. Broadband vs. Dial-up Marketshare At Home (2000-
2001) 2005)
1.19 U.S. Internet Population Growth (Oct. 2000-Oct. 2001) 4.05 U.S. Broadband Subscribers At Home (2000-2005)
1.19a U.S. Internet Penetration Rate (2000/2001) 4.06 U.S. Cable Modem vs. DSL Marketshare At Home (2000-
1.20 U.S. Internet Population Growth At Work (Oct. 2000-Oct. 2001)
2001) 4.07 U.S. Broadband Users At Home By Age
1.21 U.S. Internet Users By Occupational Group 4.08 U.S. Broadband Penetration At Home By Age
1.22 Growth Among U.S. Internet Users By Occupational Group 4.09 U.S. Broadband Users At Home By Income
1.23 Top 10 U.S. Markets By Internet Penetration (2000/2001) 4.10 U.S. Broadband Users By Local Market Area
4.11 U.S. Broadband Penetration By Local Market Area
2.01 U.S. Internet Users By Gender 4.12 U.S. Internet Use By Broadband Users
2.02 U.S. Internet Users By Age Group 4.13 Time Spent Online By Activity For Broadband vs. Dial-up
2.03 U.S. Internet Penetration By Age Group Users
2.04 Marital Status Of U.S. Internet Users 4.14 User Satisfaction With Broadband Service In The U.S.
2.05 Tenure Of U.S. Internet Users By Age Group 4.15 User Satisfaction With Broadband Speed In The U.S.
2.06 Individual Income Of U.S. Internet Users At Home 4.16 Why Internet Users Do Not Subscribe To Broadband
2.07 Ethnic Background Of U.S. Internet Users Service
2.08 Ethnic Background Of U.S. Population
2.09 Education Of U.S. Internet Users 5.01 Top Website Categories Among U.S. Internet Users (May
2.10 Education Of U.S. Internet Users 2001)
2.11 Internet Penetration Among U.S. Seniors 5.02 Leading Websites By Traffic (October 2001)
2.12 Online Seniors In The U.S. By Gender 5.03 Leading E-commerce Websites By Traffic (October 2001)
2.13 Online Seniors In The U.S. By Income 5.04 Leading Portals By Traffic (October 2001)
2.14 Online Seniors In The U.S. By Marital Status 5.05 Online Activities Among U.S. Internet Users
2.15 Online Seniors In The U.S. By Education 5.06 Online Activities Among New And Veteran U.S. Internet
2.16 Grade Level Of U.S. Teenage Internet Users Users
2.17 Internet Experience Of U.S. Teenage Users 5.07 Online Community Activities Among U.S. Internet Users
2.18 Internet Experience Of Parents To U.S. Teenage Users 5.08 Online Activities Among Seniors In The U.S.
2.19 Internet Penetration By Ethnicity 5.09 Most Common Online Activities Among U.S. Adult And
2.20 U.S. African-American And Hispanic-American Internet Teen Internet Users
Users By Age 5.10 Online Activities Among U.S. Teen Internet Users By
2.21 U.S. African-American And Hispanic-American Internet Gender
Users By Income 5.11 Online Activities Among Younger vs. Older Teen Internet
2.22 U.S. African-American And Hispanic-American Internet Users
Users By Education 5.12 Online Activities Among New vs. Veteran Teen Internet
2.23 Tenure Of U.S. African-American And Hispanic-American Users In The U.S.
Internet Users 5.13 Online Activities Among U.S. African-American Internet
2.24 Where U.S. African-American And Hispanic-American Users
Users Access The Internet 5.14 Online Activities Among U.S. Hispanic-American Internet
Users
3.01 Time Of Day Users Access The Internet 5.15 Online Activities Of Dial-up vs. Broadband U.S. Internet
3.02 Time Spent Online Per Week By U.S. Internet Users Users
3.03 Time Spent Online Per Week By U.S. Internet Users At 5.16 Common Activities Among U.S. Wireless Internet Users
Home
3.04 Time Spent Online By Tenure
3.05 U.S. Internet Use By Gender At Home (2000/2001)
3.06 Aggregate Time Spent Online By U.S. Internet Users At
Home (2000-2005)
3.07 Change In Time Spent Online During Last Six Months

Charts and tables in this report (con’t.)
6.01 U.S. E-mail Boxes At Home And At Work (1999-2001) 7.10 U.S. Markets With The Largest Penetration Of Streaming
6.02 How Frequently Do U.S. Internet Users Check Their E-mail Media Use
6.03 Instant Messaging Use Among U.S. Adults 7.11 Types Of Streaming Video Accessed By U.S. Broadband
6.04 How Instant Messaging Is Used In The U.S. And Dial-up Internet Users
6.05 Instant Messaging Users Worldwide (1999-2001) 7.12 Types Of Streaming Audio Accessed By U.S. Internet
6.06 Time Spent On Instant Messaging At Home And At Work Users
By U.S. Internet Users (2000/2001) 7.13 Streaming Media Users At Work
6.07 U.S. Penetration Of Instant Messaging Services At Home 7.14 Interest In Work-Related Streaming Media Content By U.S.
6.08 U.S. Penetration Of Instant Messaging Services At Home Broadband Internet Users
(2000/2001) 7.15 Streaming Audio Programming Preferences Among U.S.
6.09 U.S. Instant Messaging Users By Service At Home Broadband Users
(2000/2001) 7.16 Household Income Of Streaming Media Users
6.10 Aggregate U.S. Instant Messaging Use At Home 7.17 Age of U.S. Broadband Streaming Audio Users
(2000/2001) 7.18 RealNetworks Users Worldwide (1999-2001)
6.11 U.S. Penetration Of Instant Messaging Services At Work 7.19 U.S. Media Player Market Share At Home
(2000/2001) 7.20 U.S. Media Player Market Share At Work
6.12 U.S. Instant Messaging Users By Service At Work 7.21 Aggregate Usage Of Napster Application At Home
(2000/2001) 7.22 Unique Users Of Napster Application At Home
6.13 Aggregate U.S. Instant Messaging Use At Work 7.23 Unique Users Of File Sharing Applications At Home
(2000/2001) 7.24 Teen Use Of Leading File Sharing Applications At Home
6.14 U.S. Instant Messaging Users By Gender 7.25 Penetration Of Downloading Activity By Gender And
6.15 IM Penetration Among U.S. Teens By Age And Gender Ethnicity
6.16 IM Penetration Among U.S. Teens By Family Income 7.26 Age of U.S. Broadband Audio Downloaders
6.17 IM Penetration Among U.S. Teens By Internet Experience 7.27 Penetration Of Downloading Activity By Age
7.28 Penetration Of Downloading Activity By Household Income
7.01 Streaming Media Use Among U.S. Internet Users 7.29 What Web Content Is Most Important To U.S. Internet
7.02 Streaming Media Use Among U.S. Broadband vs. Dial-up Users
Internet Users 7.30 Content Downloaded By U.S. Internet Users
7.03 Streaming Media Use Among U.S. Broadband Internet 7.31 U.S. Internet Users' Willingness To Pay For Online Content
Users 7.32 Internet User Response When Free Sites Charge For
7.04 Streaming Video Use Among U.S. Broadband vs. Dial-up Access
Internet Users 7.33 Types Of Streaming Content Users Might Purchase On
7.05 Streaming Audio Use Among U.S. Broadband vs. Dial-up Subscription Basis
Internet Users 7.34 Representative Subscription-Based Online Content
7.06 Streaming Content vs. Broadcast Media Among U.S. Services
Broadband Internet Users 7.35 Top 10 Features Consumers Would Pay For In Digital
7.07 Streaming Video Quality Assessment Among U.S. Music Subscription Service
Broadband Internet Users 7.36 Consumers “Most Wanted” Digital Music Subscription
7.08 What Would Motivate Internet Users To Access Streaming Service Features
Audio More Frequently 7.37 Why Users Select The Internet For News And Information
7.09 Largest U.S. Markets For Streaming Media Use 7.38 U.S. Internet Users' Preferred Source Of Information

Section I.
The Internet Population

Definitive data on the number of Internet users and the penetration rate for
Internet access among U.S. households is impossible to find. Every analyst
offers an estimate and no two are the same because of differing methodologies,
samples, and survey periods.
It is nevertheless unarguable that as the penetration of Internet access has
increased, the rate of growth in the number of Internet users has begun to slow.
Between mid-1999 and mid-2000, the Internet population grew by almost 75%.
Over the following 12 months, growth has been closer to 30%.
During 2002, both Forrester Research and Jupiter Media Metrix expect the
number of Internet users to expand by approximately 11%. Jupiter also predicts
that the penetration rate among U.S. Internet users at home will increase further
to 71% -- or approximately 210.8 million users -- by 2006.
1.01 U.S. Internet Population (2001)

Internet Age of Pct. of Date of
Users Users Population Survey Source
203.5 mn All 72.3% July 2001 UCLA Internet Project
176.5 mn All 62.7% Oct. 2001 Nielsen/NetRatings
158.5 mn All 56.3% April 2001 comScore Networks
153.0 mn All 54.3% Sept. 2001 IDC
140.9 mn 18+ 67.4% June 2001 Gartner Group
133.8 mn 18+ 64.0% Sept. 2001 Harris Interactive
131.1 mn All 46.6% April 2001 Scarborough Research (1)
119.2 mn 18+ 57.0% July 2001 Forrester Research
119.0 mn 18+ 56.9% April 2001 Taylor Nelson Sofres
115.2 mn All 40.9% Sept. 2001 Nielsen/NetRatings (1)
110.0 mn 18+ 52.6% Aug. 2001 Pew Research Center
105.0 mn 18+ 50.2% Spring 2001 Mediamark Research (1)
94.0 mn All 33.4% Sept. 2001 Jupiter Media Metrix (1) (2)
91.0 mn All 32.3% Jan. 2001 Morgan Stanley
84.5 mn 18+ 40.4% Aug. 2001 NetValue (1)
(1) Users who accessed Internet in last 30 days only. (2) Users at home only.
1.02 Growth Of U.S. Internet Users (1999-2005)

Millions of Internet users
Jupiter Media Metrix Forrester Research

300
250
207.8
200.5
196.6
187.5
185.2
173.1
170.7
200
157.6
154.9
141.5
137.8
124.0
118.1
150
104.0
100
50
0
1999 2000 2001 2002 2003 2004 2005

The United States accounts for the largest share of Internet users worldwide
with more than three-times the Internet population of the second largest market,
Japan. Despite its large Internet population, however, the U.S. is only second in
terms of Internet penetration. Sweden, with 61% of all homes connected to
Internet, ranks first, followed by the U.S. at 59% and Hong Kong at 58%. Among
21 industrialized counties tracked by Nielsen/NetRatings, more than one-half (11)
already had a residential Internet penetration rate of 50% or higher during the
first-quarter of 2001.
1.03 Leading Countries By Penetration Of Internet Use

Percent of population with Internet access at home
Sweden 61%
USA 59%
Hong Kong 58%
Denmark 58%
South Korea 57%
Singapore 56%
Netherlands 56%
Norway 53%
New Zealand 51%
Taiwan 50%
Australia 50%
Finland 49%
UK 46%
Iceland 46%
Switzerland 43%
Austria 42%
Benelux 39%
Germ any 35%
Italy 34%
France 22%
0% 20% 40% 60% 80%

Source: Nielsen/NetRatings, Q1-2001

1.04 Leading Countries By Number Of Internet Users

Thousands of Internet users
USA 148,400
Japan 48,400
China 38,200
Germany 24,300
South Korea 23,800
UK 20,560
Canada 17,240
Italy 16,700
Brazil 14,190
France 12,360
Russia 9,950
India 9,950
Australia 9,050
Taiwan 8,670
Spain 8,110
0 50,000 100,000 150,000 200,000

Source: eTForecasts, 9/2001
Although the number of Internet users in the U.S. is currently more than six-
times greater than the largest European market -- Germany -- Morgan Stanley
predicts that the U.K. and the European Continent will by-pass the U.S. in 2003
and collectively account for 28% of the global Internet population compared to
27% for the U.S. With a residential penetration that exceeds 50% -- and up to
70% according to some surveys -- today, the U.S. will likely be among the world’s
slowest-growing markets for Internet access going forward while the fastest
growth is expected in Latin America and Asia.
1.05 Share Of Internet Users By Region (2000/2003)

Percent of Internet users worldwide
2000 2003
27%
U.S.A.
31%
7%
Latin America
5%
28%
Western Europe
30%
12%
Japan
10%
26%
Asia (ex Japan)
24%
0% 10% 20% 30% 40% 50%

Source: Morgan Stanley, 3/2001

1.06 Internet Plans Of Individuals Who Are Not Online

Percent of individuals w/o Internet access indicating plans about going online during next 12 months
2000 2001
80%
58.6% 55.6%
60%
40% 31.3%
26.6%
20% 14.8% 13.1%
0%
Not Likely Somewhat Likely Very Likely
Source: UCLA Internet Report, 7/2001
Almost one-half (44%) of American adults who are not currently online are
either somewhat likely or very likely to go online sometime before mid-2002,
according to surveys by the UCLA Internet Project. This is up slightly from 41%
of non-users surveyed by the organization during 2000.
Among those individuals who are not online -- either because they have
dropped-out of the Internet population or they have never had Internet access --
the most common reasons behind their lack of access include: no computer
(cited by 25.5% of respondents), no interest in the Internet (21.4%), do not know
how to use the Internet (6.9%), fear of technology (5.6%), don’t think the Internet
is useful (3.5%), and they think access is too expensive (2.6%). UCLA reports
that the number of non-users who have no interest in going online has declined
by approximately 40% between 2000 and 2001, from one-third of those with no
Internet access to 21%.
1.07 Why Individuals Stop Using The Internet

Percent of Internet users who are no longer online
No Longer Have Computer 21.2%

No Longer Interested 16.7%
Privacy/Security Concerns 10.0%
Too Expensive 4.9%
Consumed Too Much Time 4.0%
Not Useful 3.8%
Didn't Use Enough 3.5%
No Access At New Job 3.0%
Don't Know How To Use 2.9%
Too Difficult To Go Online 2.2%
Too Difficult To Find Things 1.1%
Other 26.7%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Source: UCLA Internet Project, 7/2001

English is, not surprisingly, the principal language of the Internet with 43% of
Internet users speaking it as their native language, according to Global Reach.
The next most popular native languages are Japanese and Chinese which tied in
a distant second place at 9.2% each.
The UCLA Internet Project estimates that approximately one-in-fourteen
(7.3%) Internet users is the U.S. use a secondary language other than English at
least occasionally when they go online. Among these individuals, Spanish was
the language used most frequently followed by French and German.
1.08 Native Languages Of Internet Users Worldwide

Percent of Internet users worldwide
English 43.0%
Japanese 9.2%
Chinese 9.2%
Spanish 6.7%
German 6.7%
Korean 4.4%
Italian 3.8%
French 3.3%
Portuguese 2.5%
Dutch 2.2%
Russian 1.8%
Other 7.2%
0% 10% 20% 30% 40% 50%

Source: Global Reach, 9/2001
1.09 Secondary Languages Used Online By U.S. Internet Users

Percent of Internet users employing more than one language online
Spanish 51.2%
French 24.5%
German 12.9%
Japanese 5.9%
Chinese 4.9%
Russian 1.9%
Other 24.5%
0% 10% 20% 30% 40% 50% 60%


1.10 Growth Of Internet Devices In The U.S. (2001-2006)

Millions of devices in use (PCs, PDAs, WAP phones, etc.)
600
500 443
400 372
306
300 247
191
200
139
100
0
2001 2002 2003 2004 2005 2006
Source: Forrester Research, 5/2001
Forrester Research predicts that the number of Internet-capable devices in the U.S.
will expand from 139 million this year to almost one-half billion in 2006. Most of today’s
connected devices are personal computers, however, in the future portable devices such
as Internet appliances, e-mail pagers, PDAs, and WAP or other varieties of Internet-
capable wireless phones will account an increasingly larger share of connected devices.
By the end of 2002, IDC predicts that the number of wireless, Internet-capable
devices worldwide -- handsets, PDAs, and network appliances -- will exceed wireline
devices. The number of non-PC devices worldwide accessing the Internet in 2005 is
expected to outnumber conventional PCs and laptops by almost 50%, according to the
company, compared to the more than three-to-one lead currently in favor of PCs. Similar
estimates from Cahners InStat are even more aggressive, predicting that the number of
wireless, Internet-capable devices will exceed 1.5 billion worldwide by the end of 2004.
Motorola also expects a majority of Internet users will actually go online via wireless
devices by 2004.
1.11 Devices Accessing The Internet Worldwide (2001/2005)

Millions of devices in use (PCs, PDAs, WAP phones, etc.)
PCs Wireless Phones Internet Access Devices

1000
817
800 707
600
466
400 324
200
64 46
0
2001 2005
Source: IDC, 2001

By 2005, approximately 730 million individuals worldwide will have mobile wireless
Internet access, according to eTForecasts. Estimates from IDC predict that the number
of mobile wireless Internet users will double from 52 million at the end of 2000 to just
over 100 million at the end of 2001 and approximately 580 million at the end of 2005.
Ovum predicts that the number of users will reach almost 500 million in 2005 while
forecasts by Cahners InStat are approximately 700 million worldwide by 2004. Mobile
wireless users will account for approximately 60% of all Internet users worldwide by
2005, according to IDC.
1.12 Mobile Wireless Internet Users By Region (2000/2005)

2000 2005
500
400 378.9
300
200 168.1
89.9
100
51.9 30.4
25.9
1.8 7.2 0.2 0.1
0
North America Western Eastern Latin America Asia Pacific
Europe Europe
Source: eTForecasts
Although North America currently accounts for less than 5% of the mobile wireless
Internet users worldwide, it accounts for almost one-third (31%) of all Internet users,
according to Morgan Stanley. Western Europe and the Asia Pacific region account for
approximately 30% and 34% of all Internet users respectively, according to Morgan
Stanley, while eTForecasts estimates that the Asia Pacific region alone currently
accounts for more than three-in-four (77%) of the world’s wireless Internet users. A five-
country survey by Accenture -- covering Finland, Germany, Japan, the U.K., and the U.S.
-- found that 15% of wireless users accessed the Internet through their wireless devices.
The highest share of users (72%) was in Japan and the lowest share (6%) was in the
U.S.
1.13 Mobile Wireless Internet Users By Region (2000-2005)
Region 2000 2002 2005

North America 1.8 mn 18.6 mn 89.9 mn
Western Europe 7.2 mn 59.1 mn 168.1 mn
Eastern Europe 0.2 mn 3.6 mn 25.9 mn
Latin America 0.1 mn 6.0 mn 51.9 mn
Asia/Pacific 30.4 mn 136.7 mn 378.9 mn
Middle East/Africa 0.0 mn 1.5 mn 15.0 mn
Total Worldwide 39.7 mn 225.5 mn 729.7 mn
Source: eTForecasts

1.14 Leading Countries By Computers In Use

Thousands of PCs in use
USA 162,000
Japan 46,100
Germany 30,400
UK 24,900
France 20,960
China 20,550
Canada 16,550
Italy 16,500
South Korea 14,370
Brazil 10,830
Australia 10,010
Russia 8,950
Spain 7,470
Taiwan 7,110
Netherlands 7,050
0 50,000 100,000 150,000 200,000

Source: eTForecasts, 9/2001
There is, not surprisingly, a high level of correlation between the number of
personal computers in use in a given country and the number of Internet users.
The United States and Japan are number one and two respectively both in terms
of computer use and Internet use, according to estimates by eTForecasts.
Germany, the U.K. and France round-out the top five countries for PC use and
th th th
are ranked 4 , 6 and 10 respectively in terms of the number of Internet users.
Across the U.S., a majority of households in more than one-half of the 50
states own a personal computer, according to an analysis of government data by
the Employment Policy Foundation. Interestingly, both the top 5 and bottom 5
states -- in terms of personal computer ownership -- are all highly rural. Although
th
Washington state is ranked 6 , other states that are traditionally thought of as
“high tech” such as California are conspicuously absent from the list’s top 10.
1.15 Home Computer Ownership By State

Percent of households
Top 10 States Bottom 10 States

1. Alaska 67.0% 41. Tennessee 46.8%
2. Utah 66.8% 42. Kentucky 46.3%
3. New Hampshire 64.3% 43. North Carolina 46.3%
4. Colorado 63.2% 44. Alabama 44.6%
5. Oregon 61.2% 45. South Carolina 44.2%
6. Washington 61.0% 46. West Virginia 43.0%
7. Connecticut 60.7% 47. Oklahoma 42.1%
8. Delaware 58.7% 48. Louisiana 42.0%
9. Wyoming 58.5% 49. Mississippi 38.7%
10. Minnesota 57.2% 50. Arkansas 38.5%
Source: Employment Policy Foundation, 2000

1.16 U.S. Internet Users Online During The Last 30 Days (Oct. 2001)
Millions of individuals
Used Internet in Last 30 Days Have Internet Access
169.4
Residential Users
103.7
43.4
Business Users
40.1
0 50 100 150 200

Source: Nielsen/NetRatings, 10/2001
Among all U.S. households with Internet access, slightly less than two-thirds
(60-65%) actually go online during any given 30-day period, according to data
from Forrester Research, Jupiter Media Metrix and Nielsen/NetRatings. An
evaluation of U.S. Internet penetration rate data from Nielsen/NetRatings shows
that while almost two-thirds (63%) of Americans have Internet access, less than
one-half (41%) actually went online during October 2001.
Business users with Internet access are much more likely than residential
users to actually go online. During October 2001, among 43.1 million Internet
users with access at work, 40.1 million -- or 92% -- went online, according to
Nielsen/NetRatings.
1.17 U.S. Internet Penetration (Oct. 2001)

Percent of population
100%
80%
60%
40%
62.7%
20% 40.9%
0%
Have Internet Access Active Internet User

1.18 U.S. Internet Penetration At Home And At Work (1995-2001)

Percent of adult population
Adults at Other Locations Adults at Work

Adults at Home All Adults
64%
52%
Sep/Oct 2001
28%
19%
63%
49%
Oct/Nov 2000
29%
17%
57%
45%
Apr/May 2000
24%
15%
56%
46%
December 1999
n/a
n/a
35%
22%
Jan/Feb 1998
22%
n/a
30%
16%
May/Jun 1997
18%
n/a
17%
16%
Jun/Sep1996
16%
n/a
9%
n/a
Sep/Nov 1995
n/a
n/a
0% 20% 40% 60% 80%
Source: Harris Interactive, 2001
Growth in the penetration of Internet access across the U.S. has slowed
significantly since 1999, according to most analysts. During 2000 and 2001, both
Harris Interactive and Nielsen/NetRatings estimate that the rate of population
growth among Internet users at home slowed to approximately 10% per year
compared to a rate of roughly 100% per year from 1995 through 1999.
Throughout 2001, both companies estimate that the share of U.S. adults with
Internet access -- either at home and at work -- has hovered slightly above 60%
and Nielsen/NetRatings’ data indicate the number of active Internet users has
remained fairly stable from month to month at between 110 million and 114
million individuals.
The number of Internet users at work has likewise remained reasonably stable
throughout 2001, according to Nielsen/NetRatings, with between 33 and 35

million individuals going online in most months between January and October.
Data from Harris Interactive actually indicates a very small decline in the
penetration rate among U.S. workers -- from 29% in October/November 2000 to
28% in September/October 2001 -- however, NetRatings estimates that there has
been a net increase of approximately 1.5 million individuals accessing the Internet
from work during the same period.
1.19 U.S. Internet Population Growth (Oct. 2000-Oct. 2001)

Millions of users accessing the Internet from home or work at least once during each period
Internet Penetration Rate

(as a percent of total population)
10/2001 62%
150
10/2000 57%
0% 20% 40% 60% 80%

130
115.2
113.7
113.1
112.7
112.9
112.6
112.6
111.1
110.8
109.5
108.7
105.3
110
100.3
90
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
2000 2000 2000 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001
1.20 U.S. Internet Population Growth At Work (Oct. 2000-Oct. 2001)

Millions of users accessing the Internet at least once during each period
45
40
38.1
34.7
34.7
34.5
34.5
34.1
34.0
34.0
33.9
35
33.3
33.1
32.9
32.0
30
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
2000 2000 2000 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001
Source: Nielsen/NetRatings

Internet access is growing fastest among blue-collar households, according to

Nielsen/NetRatings, making them the third-largest group of users based on
occupation. The company estimates that the number of blue-collar users
expanded by 52% between March 2000 and March 2001. The overall Internet
population grew by 25% during the same period. Homemakers were the second-
fastest growing group, expanding by 49% followed by service workers (37%) and
sales professionals (34%).
1.21 U.S. Internet Users By Occupational Group

Thousands of Internet users
Professional 18,455.7
Executive/Managerial 14,397.5
Factory
9,482.8
Operator/Laborer
Self-employed 9,176.9
Technical 8,789.4
Retired 8,463.1
Sales 5,608.1
Clerical/Administrative 5,577.5
Education 4,843.4
Craftsman 4,078.6
Service Worker 2,895.8
Homemaker 2,426.8
Student 2,202.5
Military 1,672.2
0 5,000 10,000 15,000 20,000 25,000

1.22 Growth Among U.S. Internet Users By Occupational Group

Percent change year over year in each group
80%
60% 52%
49%
37%
40% 34%
29% 31%
28% 28% 28%
23% 22% 24% 23%
21%
20%
0%
Homemaker
Service Worker
Operator/Laborer
Craftsman
Education
Clerical/Administrative
Retired
Self-employed
Technical
Executive/Managerial
Professional
Student
Military
Sales
Factory
The penetration rate of Internet access varies significantly between markets,

according to Nielsen/NetRatings. Among the top 25 markets, the penetration rate
in March 2000 ranged from 61% in the San Francisco metro area down to 37% in
Cleveland. One year later, the penetration rate has increased by an average 24%
across the leading markets and more than 50% of the households in all of the 25
metro areas now have Internet access compared to only six in the previous year.
The average penetration rate among those markets is 60.2% in 2001, up from
48.4% the previous year.
1.23 Top 10 U.S. Markets By Internet Penetration (2000/2001)

Percent of households within each market
Penetration Rate Metro Area Pop.

Metro Area Mar. 2001 Mar. 2000 (2000 census)
Portland, Oregon 69.7% 54.0% 2,265,223
Seattle, Washington 68.4% 55.9% 3,554,760
San Francisco, California 69.1% 61.0% 7,039,362
Boston, Massachusetts 68.4% 51.7% 5,819,100
San Diego, California 66.2% 58.0% 2,813,833
Washington, DC 65.2% 56.1% 7,608,070
Denver, Colorado 63.2% 47.3% 2,581,506
Orlando, Florida 61.4% n/a 1,644,561
Hartford/New Haven, CT 61.4% n/a 1,183,110
Kansas City, Missouri 61.2% n/a 1,776,062
Source: Nielsen/NetRatings, U.S. Census Bureau

Section II.
Internet User
Demographics

One of the earliest surveys of Internet users, conducted by CommerceNet and

Nielsen Media Research in the Fall of 1995, found that men accounted for two-
thirds of the online population while women accounted for only 34%. By Spring
2000, the gap had closed, with men and women each accounting for just over or
just under one-half of all Internet users, depending on which analyst’s numbers
one used. The gender of Internet users today essentially mirrors that of the U.S.
population at large, with women accounting for 51% of both the online population
and the U.S. population while men account for 49% of each group.
When it comes to the age of Internet users, the online population still skews
somewhat toward the young. Individuals between 18 and 34 years old account
for 32% of the adult population but they comprise 38% of the online population
while those who are 55 years or older account for 28% of U.S. adults but only
16% of Internet users. In spite of the foregoing facts, Gartner Group estimates
that adult Internet users over 35 outnumber adults under 35 in the U.S. Gartner
also reports that seniors are the fastest growing age group among U.S. Internet
users, with 29% of them online for less than two years compared to 17% of users
between the ages of 18 and 34.
2.01 U.S. Internet Users By Gender

Percent of Internet users
Internet Users U.S. Population
50.9%
Women
51.4%
49.1%
Men
48.6%
0% 20% 40% 60% 80%

Source: U.S. Census Bureau, Intermarket Group, 7/2001
2.02 U.S. Internet Users By Age Group

Internet Users U.S. Population
32.1%
18 - 34 Years
38.2%
39.6%
35 - 54 Years
45.6%
28.3%
55+ Years
16.2%
0% 20% 40% 60% 80%

Source: U.S. Census Bureau, Intermarket Group, 7/2001

2.03 U.S. Internet Penetration By Age Group

Percent of age group with Internet access
Number of Internet Users Penetration Rate Within Age Group

80 100%
81% 80%
75%
80%
60
60%
46%
40
62.4 mn 40%
20
30.9 mn 20%
21.5 mn 26.2 mn
0 0%
18 to 24 25 to 34 35 to 54 55+
Source: GartnerG2, 6/2001
IDC predicts that the Internet penetration rate will continue to increase during
the next few years. As Internet penetration moves past three-quarters (76.6%) of
the entire U.S. population in 2005, the largest increase will occur among users
between 35 and 54 years old, who are predicted to expand by 24.2 million,
followed by individuals 55+ years old, who will contribute another 22.1 million new
users. IDC also predicts that:
• The percentage of children under 12 years old who are online will increase
from 42% in 2000 to 78% by the end of 2005
• The penetration rate among teens ages 12 to 17 will increase from 81% to
96%, the highest among all age groups
• The age group between 18 and 34 will become the second most saturated
with 91% of them online in 2005
• Among adults age 55 and older, the percentage who are online will more than
double between 2000 and 2005 from 26% to 56%
2.04 Marital Status Of U.S. Internet Users

Single Married Other

100%
13.7% 11.8%
22.5%
80%
60% 60.6% 61.2%

51.7%
40%
20%
25.8% 25.7% 27.0%
0%
General Population Have Internet Access Used Internet in Last
30 Days
Source: U.S. Census, Mediamark Research Spring 2001

More than one-half (55%) of U.S. Internet users have been online since 1998
or earlier, according to Scarborough Research. Among current Internet users,
Gartner Group has found a high correlation between age and the number of years
that users have been online. The company reports that more than two-thirds
(67%) of Internet users between the ages of 18 and 34 have been online since
1998 or earlier compared to less than one-half of those age 55 or older.
2.05 Tenure Of U.S. Internet Users By Age Group

Percent of all Internet users in each age group
5% 5% 5% 8%
100%
2001
12% 17% 22% 21%
80%
16% 2000
18%
60% 21%
21% 26%
1999
20%
18%
40% 16%
1998
46% 41%
20% 35% 30% 1997 or
earlier
0%
18 to 34 35 to 54 55 to 69 70+
Source: GartnerG2, 6/2001
2.06 Individual Income Of U.S. Internet Users At Home

General Population (2000)* Internet Users (2000) Internet Users (2001)
6.7%
< $25,000 6.3%
55.6%
27.8%
$25K to $49K 27.5%
27.4%
32.2%
$50K to $74K 31.3%
10.1%
17.2%
$75K to $99K 18.0%
3.4%
16.1%
> $100K 16.9%
3.5%
0% 20% 40% 60% 80%
* Individuals 15+ years old w ith money income during 2000

Source: U.S. Census Bureau, Nielsen/NetRatings, 3/2001

U.S. Internet users today skew towards middle and upper-middle income
individuals, with approximately two-thirds (66.2%) earning $50,000 or more per
year, according to Nielsen/NetRatings. Both Jupiter Media Metrix and the Pew
Internet and American Life Project estimate that slightly more than one-half of
Internet users have an income of $50,000 or more compared to 17% of the
overall U.S. population. Approximately one-in-four Internet users have an income
in excess of $75,000, according to the two organizations, while
Nielsen/NetRatings estimates that 35% fall into the category.
The “digital divide” along racial lines has been shrinking slowly over the last
few years, according to composite data from Forrester Research, Jupiter Media
Metrix, the Cultural Access Group and several other sources. African-Americans
and Hispanic-Americans now account for approximately 10% and 14% of U.S.
Internet users respectively compared to 9% and 13% in 2000. African-Americans
account for 12% of the general population while Hispanic-Americans comprise
13%.
2.07 Ethnic Background Of U.S. Internet Users

Asian-American Caucasian-
6.0% American
70.5%
Hispanic-
American
13.9%
African-
American
9.6%
Source: Intermarket Group, 7/2001
2.08 Ethnic Background Of U.S. Population

Percent of U.S. population
Caucasian-
Other
American
2.5%
69.1%
Asian-American
3.6%
Hispanic-
American
12.5%
African-
American
12.3% Source: U.S. Census Bureau, 2000

2.09 Education Of U.S. Internet Users

College High School

Graduate or Graduate or
More Less
37.0% 28.7%
Attended
College
34.3%
Source: Mediamark Research, Spring 2001
More than two-thirds (71%) of Internet users have attended college and more
than one-in-three (37%) have at least an undergraduate degree, according to
Mediamark Research. The UCLA Internet Project reports that the highest
penetration of Internet access by educational achievment is among individuals
with undergraduate and advanced degrees (89%) while the lowest penetration is
among high school graduates (59%).
2.10 Education Of U.S. Internet Users

Percent individuals in each group with Internet access
100%
89.2% 88.8%
79.4%
80%
64.9%
59.4%
60%
40%
20%
0%
Some High High School Some College College Advanced /
School Graduate Graduate Professional
Degree

2.11 Internet Penetration Among U.S. Seniors

Percent of each age group with Internet access
60%
50%
43%
40%
34%
30%
23%
20%
12%
9%
10%
4%
0%
55 to 59 60 to 64 65 to 69 70 to 74 75 to 80 81 to 90
Source: Pew Internet & American Life Project, 12/2000
2.12 Online Seniors In The U.S. By Gender

Percent of individuals in each group
All Seniors Online Seniors All Internet Users
51%
Women 40%
57%
49%
Men 60%
43%
0% 20% 40% 60% 80%

The penetration of Internet access among seniors decreases as age

increases, according to the Pew Internet & American Life Project. Almost one-
half (43%) of individuals between the ages of 55 and 59 have Internet access
compared to only one-in-eight (12%) individuals between 70 and 74. Gartner
Group reports that mature Americans, however, are among the Internet’s fastest
growing demographic, with 27% of users between 55 and 69 years old and 29%
of users older than 70 online for less than two years. More than one-half (55%) of
Internet users age 70 or older have been using the Internet for less than three
years.
Mature women use the Internet at significantly lower rates than women in
general, according to the Pew survey. Although women now account for a slim
majority of all Internet users in the U.S., they comprise only 40% of the Internet
users over the age of 55 years old.

2.13 Online Seniors In The U.S. By Income

Percent of individuals in each seniors group
All Seniors Online Seniors

80%
63%
60%
40% 33%
24% 25%
21% 19%
20%
8% 8%
0%
< $30,000 $30K to $49K $50K to $74K > $75,000
2.14 Online Seniors In The U.S. By Marital Status


100%
80% 74%
60%
47%
39%
40%
18%
20% 10% 9%
3% 1%
0%
Married Divorced or Widowed Never Married
Separated
Seniors who are online tend to have higher incomes and are more likely to live
with a spouse than the general population of seniors. Almost one-half (44%) of
Internet users over the age of 55 have a household income of $50,000 or more
compared to only 16% of all seniors. Conversely, less than one-in-four (24%)
have a household income of less than $30,000 while a majority (63%) of the
general population aged 55 years and older fall into that income category.
Three-in-four (74%) Internet users over the age of 55 are married, according
to the Pew survey, compared to 61% of all adult Internet users and 47% of all
seniors. On the flip-side, the proportion of online seniors who are widowed is less
than one-half that among the overall population of seniors, which is likely a result
of the skew within this demographic towards younger seniors.

2.15 Online Seniors In The U.S. By Education


80%
60%
46%
40% 34%
29% 30%
21% 20%
20% 16%
4%
0%
Less Than High High School Some College College Graduate
School Graduate
The level of educational achievement among seniors who are online is

significantly higher than among those without Internet access. Three-in-four
(76%) Internet users over the age of 55 have at least some college education --
almost one-half (46%) are college graduates -- compared to slightly more than
one-third (36%) of all seniors. Conversely, less than one-in-twenty online seniors
have less than a high school diploma versus 29% among the general population
of individuals aged 55 or older.
Among teenage Internet users, the Pew Internet & American Life Project
estimates that the population is fairly evenly divided, with slightly less than one-in-
th
five online teens belonging to each of the school grades between 7 (or less) and
th th
11 . Interestingly enough, 12 graders account for only 11% of online teens and
the smallest share among all of the age groups.
2.16 Grade Level Of U.S. Teenage Internet Users

Percent of teen Internet users
40%
30%
18% 19% 18%

20% 17% 16%
11%
10%
0%
7th Grade 8th Grade 9th Grade 10th Grade 11th Grade 12th Grade
Or Less

Many online teens actually posses more experience with the Internet than
their parents, according to the Pew survey. Although 28% of parents have three
or more years of experience online -- compared with 21% of online teens --
almost three-quarters (73%) of teens have two or more years of online
experience versus 62% of parents. In addition, 13% of the parents who have
teenage Internet users at home are not online at all themselves.
2.17 Internet Experience Of U.S. Teenage Users

More Than
Three Years
21% One Year Or
Less
27%
Two To Three
Years
52%
2.18 Internet Experience Of Parents To U.S. Teenage Users

Percent of parents with teen Internet users
Not Online
One Year Or
13%
Less
25%
More Than
Three Years
28%
Two To Three
Years
34%

Asian-Americans continue to lead all other ethnic groups in terms of Internet

use, with approximately three-in-four (74%) having Internet access, followed by
Hispanic-Americans at 50%, according to data from Forrester Research. The
lowest penetration rate remains among African-Americans, however, the take-up
rate has also been faster in this community than any other, expanding by 50%
since 1999, so the gap is slowly closing.
2.19 Internet Penetration By Ethnicity

Percent of individuals within each ethnic group
2001 2000 1999
64%
Asian-American 69%
74%
36%
Hispanic-American 47%
50%
34%
Caucasian-American 43%
46%
23%
African-American 33%
35%
0% 20% 40% 60% 80% 100%

Source: Forrester Research, 2001

By Age
Percent of Internet users within each ethnic group
African-Americans Hispanic-Americans All Internet Users

80.0%
61%
60.0% 57%
46%
38% 38%
40.0% 34%
20.0% 16%
5% 5%
0.0%
18 To 34 35 To 54 55 Or Older
Source: Intermarket Group, 7/2001; Pew Research Center, 2/2001
Based on survey data from the Pew Research Center, it appears that African-
American and Hispanic-American Internet users tend to be younger than the
general Internet population. More than one-half of Hispanic-American (61%)

and African-American (57%) Internet users are between 18 and 34 years old
compared to 38% of all Internet users. On the opposite end of the age scale, only
5% of Internet users from each group are 55 or older versus 16% of the general
Internet population.

By Income
African Americans Hispanic-Americans

80%
60%
50% 49%
40% 33% 33%
17% 18%
20%
0%
< $40,000 $40K To $75K > $75,000
Source: Pew Research Center, 2/2001

By Education
African Americans Hispanic-Americans

60%
50%
40% 37%
33% 32%
28% 27% 26%
30%
20%
8% 9%
10%
0%
Less Than High High School Some College College Graduate
School Graduate

African-American and Hispanic-American Internet users have generally been

online for a slightly shorter period of time than the overall Internet population,
according to the Pew survey. Approximately one-in-ten (11%) Internet users had
been online for less than six months in early-2001 compared to 14% of Hispanic-
Americans and 13% of African-Americans. In addition, more than one-third
(35%) of the general Internet population has been online for three or more years
while only 29% of Hispanic-American and 28% of African-American Internet users
fall into this group.
2.23 Tenure Of U.S. African-American And Hispanic-American

Internet Users
African Americans Hispanic-Americans All Internet Users
11%
Less Than Six Months 14%
13%
16%
One Year 10%
25%
37%
Two To Three Years 47%
32%
35%
More Than Three
29%
Years
28%
0% 10% 20% 30% 40% 50%

2.24 Where U.S. African-American And Hispanic-American Users

Access The Internet
African-Americans (1) Hispanic Americans (2)

100%
77%
80% 71%
60%
40%
18%
20% 14%
0%
From Home From Work Only
Source: Pew Research Center, (1) 8/2000, (2) 2/2001

Section III.
Internet Usage

The Pew Internet & American Life Project reports that Internet users in the
U.S. are most likely to go online between noon and 5:00 PM local time or
between 5:00 PM and 9:00 PM. Inasmuch as Internet users at home outnumber
users at work by approximately 2.5-to-1, it shouldn’t come as much of a surprise
that the most popular times for going online would be in the afternoon and
evening.
A majority (52%) of Internet users spend an average of one hour or less online
per day, according to a June 2001 survey by The Gallup Organization. The
company also found that the largest share of Internet users (17%) spend between
five and six hours online per week while one-in-four spend 16 or more hours per
week online. Adults generally use the Internet more frequently than teens,
according to Jupiter Media Metrix which estimates that the average adult logged-
on to Internet 15 days during April 2001 compared to an average of nine days
among teens. Among adults, Scarborough Research estimates that over one-half
spend five or more hours online in an average week and more than one-quarter
(26%) spend 10 or more hours online.
3.01 Time Of Day Users Access The Internet

Before 9:00 AM 25%
9:00 AM to Noon 25%
Noon to 5:00 PM 34%
5:00 PM to 9:00 PM 32%
After 9:00 PM 16%
0% 10% 20% 30% 40% 50%
3.02 Time Spent Online Per Week By U.S. Internet Users

30%
25%
20% 17%
15% 13% 12% 12% 12% 13%

11%
10% 8%
5% 2%
0%
<1 1 to 2 3 to 4 5 to 6 7 to 8 9 to 10 11 to 15 16 to 20 > 20
Hour Hours Hours Hours Hours Hours Hours Hours Hours
Source: Gallup Organization, 6/2001

3.03 Time Spent Online Per Week By U.S. Internet Users At Home
Average hours per week per user
Time Online Date of Survey Source

12.70 hours per week October 2001 Consumer Electronics Assn.
9.80 hours per week July 2001 UCLA Internet Project
7.93 hours per week January 2001 Arbitron
7.50 hours per week July 2001 Gallup Organization
4.40 hours per week October 2001 Nielsen/NetRatings
4.20 hours per week November 2000 PricewaterhouseCoopers
Source: As noted
New Internet users spend significantly less time online than their more
experienced counterparts, according to surveys by the UCLA Internet Project.
Individuals who have been online less than one year spend an average of 6.5
hours per week online, compared to 8.8 hours for Internet users who have been
online two to four years, and 13.2 hours for Internet users who have been online
for more than five years. The UCLA surveys also found that the 6.5 hours per
week that new Internet users were spending online during 2001 represented an
increase from the 6.1 hours spent online by new users in 2000.
3.04 Time Spent Online By Tenure

Average hours per week per user
20
16
13.2
12 11.1
8.8
7.5
8 6.5
0
< 1 Year 1 To 2 Years 2 To 4 Years 4 To 5 Years > 5 Years
Online Online
Source: UCLA Internet Project, 7/2001
Both men and women spent more time online at home during 2001, according
to Nielsen/NetRatings data from May 2000 and 2001. Although they spent
approximately 8% more time online, women logged-on less frequently and viewed
slightly fewer pages during 2001 compared to 2000. The company also reports
that men spent approximately 16% more time online than women -- about 1-1/2
hours -- and viewed 31% more pages.
3.05 U.S. Internet Use By Gender At Home (2000/2001)

Time spent online and pages viewed
Time Online Number of Sessions Pages Viewed

May 2001 May 2000 May 2001 May 2000 May 2001 May 2000
Men 10:23: 51 9:54:57 20 20 760 736
Women 8:56:01 8:18:26 18 17 580 590

During October 2001, Nielsen/NetRatings estimated that the average amount

of time spent online at home by men had increased to 11 hours, 35 minutes and
women spent an average 9 hours, 53 minutes online. At home and at work
combined, men spent an average 21 hours, 45 minutes online during October
and women spent an average 16 hours, 40 minutes online.
Internet users in the U.S. will collectively spend approximately 804 million
hours online during 2001, according to Jupiter Media Metrix, up from 664 million
in 2000. As the penetration of broadband access increases, its share of the
aggregate time online is expected to expand from 18% in 2000 to 33% in 2001
and 69% in 2005. Broadband’s expanding share of time online is driven not only
by growth in the number of users but also by the 25% in additional time that
broadband users spend online compared to narrowband users.
3.06 Aggregate Time Spent Online By U.S. Internet Users At Home

(2000-2005)
Millions of hours
Narrowband Users Broadband Users

2,000
1,500
1,248
1,000 924
641
433
120 267
500
544 537 578 610 598 552
0
2000 2001 2002 2003 2004 2005
Source: Jupiter Media Metrix, 2001
3.07 Change In Time Spent Online During Last Six Months

Using Internet
Less Using Internet
17% More
29%
Using Internet
About The
Same
54%
A February 2001 survey by the Pew Internet & American Life Project found
that 29% of Internet users at home went online about once a day and another
25% went online several times during the typical day. Just over one-half (51%) of

Internet users at work said they went online several times a day -- up from 40%
one year earlier -- according to Pew.
Among the Internet users who are spending more time online, Pew reports
that the reasons given include:
• 29% say they need to use the Internet more for school or work
• 21% say they have found more things to do on the Internet
• 14% say they have more access to a computer on the Internet than before
• 13% say they learned more about how to use the Internet or are more
comfortable using it
• 5% say they have a faster Internet connection
• 18% listed some other reason, including an increased interest in some
Internet activity, such as e-mailing a particular person, playing a specific
online game, or using a particular service like online banking or auctions
Those Internet users who are spending less time online cited the following
reasons:
• 19% say they are not as interested in the things they used to do on the
Internet
• 16% say they don’t have time or are too busy
• 11% say they no longer need to use the Internet for school or work
• 11% say they didn’t find it useful or worthwhile
• 8% say they no longer have access or have less access than before
• 5% say the Internet is too slow or took them too long to find information
• 4% say they spend less time online because they can do things online more
quickly than before
• 1% say they have a faster Internet connection
3.08 Total Internet User Pageviews And Time Online Per Month
(10/2000-10/2001)
Number of pages viewed and total time online in hours at home and work combined
Total Pageviews Total Time Online

2500 20
19.0
2000 17.6 18.2
17.5 17.4 17.3 17.1
16.7 16.5 16.1 16.5 16.5 15
14.9
1,196
1,196
1,194
1,170
1500
1,130
1,123
1,118
1,114
1,109
1,085
1,071
1,051
10
983
1000
5
500
0 0
Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jly. Aug. Sep. Oct.
2000 2000 2000 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001

Nielsen/NetRatings reports that Internet users at work spend an average 85%

more time online and viewed approximately 71% more pages each month than
individuals who went online from home.
An analysis of user activity during the first week of each month between
January 2000 and October 2001 indicates that the average Internet user at work
spent approximately 5.8 hours online and viewed 372 pages compared to 3.1
hours and 217 pages for Internet users at home.
3.09 Internet User Pageviews At Home vs. At Work (1/2000-10/2001)

Average number of pageviews per user during first week of each month
Users At Home Users At Work

500
427
400
394
387
384
386
383
382
381
373
369
369
364
364
361
358
352
352
400
334
329
300
234
232
231
232
230
227
225
224
225
221
219
219
219
216
216
212
212
208
210
204
196
169
200
100
N/A
N/A
0
Jan. Mar. May Jly. Sep. Nov. Jan. Mar. May Jly. Sep.
2000 2000 2000 2000 2000 2000 2001 2001 2001 2001 2001
3.10 Time Spent Online By Internet Users At Home vs. At Work

(1/2000-10/2001)
Average time online in hours during first week of each month
Users At Home Users At Work

7
6.63
6.55
6
6.20
6.15
6.05
6.00
5.97
5.90
5.82
5.72
5.68
5.67
5.60
5.63
5.57
5.52
5
5.43
5.33
4.97
4.82
3
3.35
3.33
3.33
3.30
3.23
3.23
3.20
3.20
3.17
3.17
3.15
3.15
3.17
3.10
3.08
3.07
3.05
2.97
2.93
2.90
2.88
2.77
0
Jan. Mar. May Jly. Sep. Nov. Jan. Mar. May Jly. Sep.
2000 2000 2000 2000 2000 2000 2001 2001 2001 2001 2001

3.11 Where U.S. Internet Users Access The Internet

Connect at
Connect work and at
elsewhere home
2% 54%
Connect at
work, not at
home
11%
Connect at
home, not at
work
33%
The majority (54%) of Internet users go online both at home and at work,
according to Forrester Research. Almost nine-in-ten (87%) Internet users go
online from home at least some of the time and one-third access the Internet
exclusively from home.
The Pew Internet & American Life Project estimates that a similar number of
teens access the Internet from home at least occasionally and 83% go online
most frequently from home. Approximately one-in-ten (11%) online teens access
the Internet most frequently from school and almost two-thirds (64%) go online
occasionally from school or a friend’s home.
3.12 Where U.S. Teens Access The Internet

Ever Most Often

100%
90%
83%
80%
64% 64%
60%
40% 36%
20% 11% 8%
3% 1% 1%
0%
Home School Friend's Library Other
House Location
Source: Pew Internet & American Lif e Project, 12/2000

Data from Jupiter Media Metrix, Nielsen/NetRatings, Morgan Stanley, and the
Consumer Electronics Association all indicate that approximately 20-25% of U.S.
Internet users had broadband access -- either through a cable modem, DSL
connection, or satellite -- at home in late 2001. The consensus also holds that
cable modem households currently outnumber DSL households by at least 2-to-1
and that satellite and fixed wireless connections combined account for
approximately 1% of U.S. Internet households.
Among the three-in-four Internet households with dial-up access, more than
three-quarters (77%) connect through 56Kbps modems and another 19% use
either 33.6 Kbps or 28.8 Kbps modems, according to Nielsen/NetRatings. Just
under one-in-twenty (4.7%) dial-up users -- and approximately one-in-thirty of the
entire U.S. Internet population -- access the Internet through a 14.4 Kbps modem.
3.13 Types Of Connections Among U.S. Internet Users At Home

Percent of Internet users at home
Dial-up
Other/Don't Connection
Know 64%
10%
DSL Service .
8%
Cable Modem
18%
Source: Consumer Electronics Assn., 10/2001
3.14 Speed Of U.S. Internet Users’ Dial-Up Connections At Home

Percent of dial-up Internet users
56 Kbps
76.8%
28.8/33.6 Kbps
18.5%
14.4 Kbps
4.7%

Section IV.
Broadband Internet Access

Broadband Internet access is generally defined as a connection that provides

data transfer rates of 128 Kbps of faster. The principal broadband options for
Internet users at home and in small businesses include cable modems, Digital
Subscriber Line (DSL) service, and two-way satellite service.
Approximately 21.3 million individuals in the U.S. accessed the Internet via
residential broadband connections -- or 20% of all Internet users -- in November
2001, up from 11.2 million one year earlier, according to Nielsen/NetRatings.
Jupiter Media Metrix predicts that more than 30 million U.S. households will
access the Internet via broadband connections by 2005. Much of the uptake in
residential broadband connectivity remains concentrated among early adopters
and higher-income households, with 53% of Internet users at the beginning of
2001 expressing little or no interest in the faster service compared to 56% in late
1999, according to Jupiter.
4.01 U.S. Broadband Households (1999-2005)

Millions of households
50
40
30.7
30 25.7
20.6
20 15.4
10.0
10
5.2
1.8
0
1999 2000 2001 2002 2003 2004 2005
Source: Jupiter Media Metrix, 5/2001
4.02 U.S. Cable Modem Subscriber Growth By Quarter (1999-2001)

Thousands of subscribers for Comcast+Cox+RoadRunner+AT&T+Adelphia+CableVision+Charter+
Insight
8,000
6,000
5,080
4,378
4,000
3,062
2,305
1,760
2,000 1,393
298 368 494

237
0
Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2-
1999 1999 1999 1999 2000 2000 2000 2000 2001 2001

The migration of Internet users away from dial-up service and towards
broadband connections should continue steadily over the next several years in
U.S. homes and at work, according to both Jupiter and Morgan Stanley. At the
end of 2000, approximately one-in-ten Internet users at home had broadband
connections, while more than one-half (57%) of Internet users at work had high-
speed access. This gap is expected to close steadily over the next five years. By
the end of 2005, Jupiter Media Metrix predicts that 87% of employees who are
online will have broadband access while data from Morgan Stanley forecasts that
59% of residential Internet users will have broadband connections.
4.03 Growth Of Broadband vs. Dial-up Access At Work In

The U.S. (2000/2005)
Dial-up Users Broadband Users
55.0
2005
8.1
24.3
2000
18.4
0 10 20 30 40 50 60
4.04 U.S. Broadband vs. Dial-up Marketshare At Home (2000-2005)

Broadband Users Dial-up Users

100%
80% 41.2%
48.0%
55.4%
64.3%
60% 75.0%
87.5%
40%
58.8%
52.0%
20% 44.6%
35.7%
25.0%
12.5%
0%
2000 2001 2002 2003 2004 2005

4.05 U.S. Broadband Subscribers At Home (2000-2005)

Millions of households
Source 2000 2001 2002 2003 2004 2005

Jupiter Media Metrix 5.2 10.0 15.4 20.6 25.7 30.7
Cahners InStat 6.8 12.7 19.0 -- -- --
Paul Kagan & Associates 6.0 11.8 20.0 26.4 31.9 --
eMarketer 4.9 9.9 16.9 23.0 31.0 --
Yankee Group -- -- -- -- -- 31
Source: As noted
Kinetic Strategies estimates that approximately 9 million U.S. households had

broadband Internet access at the end of the third-quarter (9/30/2001), including
6.2 million cable modem customers, 2.7 million DSL customers served by
telecom companies, and the balance connected via fixed wireless and satellite.
By the beginning of December 2001, U.S. cable modem customers had
increased by an additional 511,000 to 6.7 million and DSL customers had jumped
by almost 232,000 to 2.9 million. The company predicts that the number of cable
modem and DSL customers in North America -- including Canada -- will reach
8.5 million and 3.7 million respectively by the end of 2001.
Over the next three to five years, Jupiter predicts that the pricing for low-end
broadband service will trend downward until it is roughly the same as current dial-
up service -- $20-25 per month -- by 2005. Declining infrastructure costs,
competitive forces and the bundling of applications with access are the principal
drivers behind this anticipated decline in pricing. The company also expects the
market for both cable modem and DSL services will be viable over the long-term.
By 2005, cable modems will serve 48% of broadband households in the U.S.
while DSL will account for 41%, according to Jupiter.
4.06 U.S. Cable Modem vs. DSL Marketshare At Home (2000-2001)

Percent of combined residential cable modem and DSL subscribers
DSL Service Cable Modem Service
69.8%
Q3-2001
30.2%
68.9%
Q2-2001
31.1%
69.5%
Q1-2001
30.5%
70.5%
Q4-2000
29.5%
0% 20% 40% 60% 80%

Source: Kinetic Strategies, 11/2001

The demographics of broadband users are generally more male -- especially

among users who connect via DSL -- and primarily range in age from 25 through
34 years old, according to Nielsen/NetRatings. The company reports, however,
that females are gaining ground and adopting high-speed connections at a more
rapid rate than males, indicating that the demographics of broadband are poised
to shift.
A majority of adult broadband users at home are between 18 and 40 years old,
according to the Consumer Electronics Association. Arbitron reports that the
highest penetration of residential broadband access is among Internet users
between 18 and 24 years old -- almost one-half (46%) of them go online through
broadband connections -- followed by users between 35 and 44 years old (39%)
and users between 25 and 34 years old (38%).
4.07 U.S. Broadband Users At Home By Age

Percent of broadband users at home
18 To 24
65 And Older 16%
2%
55 To 64
9% 25 To 34
20%
45 To 54
26% 35 To 44
27%
Source: Consumer Electronics Association, 10/2001
4.08 U.S. Broadband Penetration At Home By Age

Percent of Internet users in each age group
60%
50% 46%
38% 39%
40%
32%
30%
23%
21%
20%
11%
10%
0%
12 To 17 18 To 24 25 To 34 35 To 44 45 To 54 55 To 64 65+
Source: Arbitron, 5/2001

4.09 U.S. Broadband Users At Home By Income

Percent of broadband users at home
> $100,000 < $10,000

10% 5%
$10K To $19K
$75K To $100K 7%
15%
$20K To $29K
9%
$30K To $39K
13%
$50K To $74K
27% $40K To $49K
14%
Source: Consumer Electronics Association, 10/2001

The Yankee Group estimates that cable modem or DSL service will be
available to approximately 75% of U.S. by the end of 2001, up from 60% the
previous year. Cable modems are more widely available at present, with service
accessible to 66% of homes compared to 45% for DSL.
Almost one-half (45%) of all current broadband users are located in just ten
specific markets, according to Nielsen/NetRatings, with one-in-ten residing in
New York alone. Data from Forrester Research indicates that the local markets
with the highest penetration of broadband access are dominated by high tech
locales such as San Francisco and San Jose, California; Boston, Massachusetts;
Seattle, Washington; and Austin, Texas. More than one-in-five homes in the San
Jose and San Francisco Bay Area have high-speed Internet access, according to
Forrester.
4.10 U.S. Broadband Users By Local Market Area

Percent of all broadband users at home
New York 10.2%

Los Angeles 5.9%
San Francisco 5.8%
Boston 4.7%
Seattle 3.6%
Dallas 3.5%
Chicago 3.1%
Philadelphia 2.9%
San Diego 2.7%
Detroit 2.4%
All Others 55.2%
0% 10% 20% 30% 40% 50% 60% 70%

4.11 U.S. Broadband Penetration By Local Market Area

Percent of all households in each market
Broadband Penetration
Local Market Rate
San Francisco, California 22%
San Jose, California 21%
Boston, Massachusetts 19%
New Haven, Connecticut 17%
Nashville, Tennessee 17%
Seattle, Washington 16%
Austin, Texas 16%
Columbus, Ohio 16%
Orlando, Florida 15%
Phoenix, Arizona 14%
Orange County, California 14%
Raleigh-Durham, North Carolina 12%
Central New Jersey 12%
Kansas City, Missouri 12%

Broadband users increase their Internet use across the board once they
upgrade from narrowband dial-up connections, according to Nielsen/NetRatings.
Time spent online increased by 23% to an average of more than 15 hours per
month and pageviews per user jumped by 55%. Thanks in large part to the
“always-on” aspect of broadband service, the number of user sessions increased
by 25%. Surveys by the UCLA Internet Project during May and July 2001 found
that dial-up users spent an average 7.1 hours per week online while broadband
users spent an average 10.3 hours per week.
4.12 U.S. Internet Use By Broadband Users

Time spent online and pages viewed
Time Online Number of Pages

Source Period During Month Sessions Viewed
Activity before broadband
Nielsen/NetRatings 1/2000 12:21:50 22.03 757
Jupiter Media Metrix 9/2000 16:54:00 52.00 1,359
Activity with broadband
Nielsen/NetRatings 7/2001 15:14:00 27.50 1,170
Jupiter Media Metrix 3/2001 21:30:00 71.00 1,589
Pct. change: Nielsen/NetRatings + 23% + 55% + 25%

Pct. change: Jupiter Media Metrix + 27% + 17% + 37%
Source: Nielsen/NetRatings, Jupiter Media Metrix
Jupiter Media Metrix has also found that Internet use increases when users
switch from dial-up to broadband access. The amount of time spent on
entertainment sites -- see chart 4.13 -- would have shown a significantly larger
increase, according to Jupiter, had it not been for a decrease in time spent
downloading music (i.e., the same number or more downloads at a much faster
speed).
4.13 Time Spent Online By Activity For Broadband vs. Dial-up Users
Average time online per user in hours for each period
Narrowband Users (9/2000) Broadband Users (3/2001)
8.62
E-mail, Chat, IM
4.47
1.62
News, Information Sites
0.92
1.42
Consumer Transaction Sites
1.25
5.05
Entertainment Sites
4.37
1.28
Portal/Search Sites
0.87
3.50
Other Sites
5.05
0 2 4 6 8 10

4.14 User Satisfaction With Broadband Service In The U.S.

Percent of broadband users
Not Sure Very Happy

6% 41%
Not At All
Happy 2%
Not Very Happy
7%
Somewhat
Happy 44%
Source: Rasmussen Research, 12/2000
4.15 User Satisfaction With Broadband Speed In The U.S.

Satisfied All Of The Time 39%
Satisfied Most Of The Time 34%
Satisfied Some Of The Time 12%
Satisfied Occasionally 3%
Rarely/Never Satisfied 4%
Not Sure 8%
0% 10% 20% 30% 40% 50%
Source: Rasmussen Research, 12/2000
4.16 Why Internet Users Do Not Subscribe To Broadband Service

Percent of Internet users not using broadband service
Not Interested 57%
Too Expensive 22%
Not Available In My Area 15%
Don't Have Necessary Equipment 4%
Too Complicated/Hard To Use 5%
0% 20% 40% 60% 80%
Source: Taylor Nelson Sofres, 5/2001

Section V.
Online Activities of
Internet Users

5.01 Top Website Categories Among U.S. Internet Users (May 2001)
Percent of Internet users visiting one or more sites within category during period
Search Engines/Portals And

92.4%
Communities
Telecom/Internet Services 69.9%
Entertainment 66.6%
Computers/Consumer
46.9%
Electronics
Multi-category Commerce 40.8%
News And Information 39.7%
Finance/Insurance/Investment 31.8%
0% 20% 40% 60% 80% 100%
5.02 Leading Websites By Traffic (October 2001)

Thousands of users
Nielsen/ Jupiter Media comScore

Online Property NetRatings Metrix NetScore
AOL Time Warner 80,593 (1) 102,128 (1) 88,750 (3)
Yahoo! 71,142 (2) 68,364 (3) 91,674 (2)
MSN 66,905 (3)
83,871 (2) 98,405 (1)
Microsoft 44,098 (4)
Terra Lycos Network 34,212 (5) 39,514 (4) 51,637 (4)
Amazon.com 27,800 (6) 24,298 (11) 40,433 (5)
About/Primedia 26,617 (7) 33,220 (7) 32,682 (7)
Walt Disney Internet Group 26,281 (8) 25,386 (9) 30,296 (10)
eUniverse Network 24,181 (9) 25,156 (10) 31,305 (8)
eBay 23,092 (10) 25,945 (8) 31,291 (9)
Google 21,271 (11) 21,146 (14) 26,927 (14)
American Greetings 21,263 (12) 20,814 (15) 26,419 (15)
Excite Network 20,616 (13) 36,458 (6) 34,914 (6)
CNET Network 18,990 (14) 21,723 (12) 28,312 (13)
Source: As noted
Search engines and portal sites are the most popular Internet destinations,
according to Nielsen/NetRatings, which reports that nine-in-ten users visit at least
one site within the category during a typical month. Sites within the
telecom/Internet services category are the second most popular, due in large part
to their serving as a browser start page for many subscribers to services such as
AOL, MSN, and Excite@Home.
Among e-commerce sites, electronic gadget distributor X10.com is the traffic
leader, followed by eBay and Amazon.com. Traffic numbers for X10.com,

however, are somewhat misleading with most “visitors” driven to the site by its
ubiquitous pop-up/pop-under ads that open in a new browser window. The
average X10.com visitor spent only 1.6 minutes on the site during the month of
October compared to 96 minutes for eBay and 17 minutes for Amazon.com.
5.03 Leading E-commerce Websites By Traffic (October 2001)

Thousands of unique visitors and average minutes per user per month
X10.com 39,334 (1.6 min.)
eBay.com 25,945 (96.3 min.)
Amazon.com 24,298 (16.8 min.)
AmericanGreetings.com 20,814 (10.8 min.)
Columbia House Sites 15,560 (5.2 min.)
Ticketmaster Sites 13,090 (15.0 min.)
Homestore.com
12,863 (12.6 min.)
Network
Bizrate.com 10,353 (4.7 min.)
NextCard.com 9,281 (3.2 min.)
AmericanExpress.com 8,454 (14.9 min.)
0 20,000 40,000 60,000
5.04 Leading Portals By Traffic (October 2001)

Thousands of unique visitors and average minutes per user per month
AOL-Time Warner 102,128 (1307.1 min.)
MSN/Microsoft 83,871 (535.3 min.)
Yahoo! 70,720 (155.5 min.)
Terra Lycos 68,364 (153.5 min.)
About/Primedia 33,220 (14.8 min.)
Walt Disney Internet 25,386 (36.7 min.)
Excite@Home 21,723 (51.9 min.)
CNET Networks 21,368 (18.8 min.)
Infospace Network 20,670 (8.5 min.)
AskJeeves 16,741 (14.9 min.)
0 30,000 60,000 90,000 120,000 150,000

5.05 Online Activities Among U.S. Internet Users

Search For
91%
Information
Weather, Current
72%
Events
Web-based E-m ail 63%
Shopping 59%
Entertainment/Sports
58%
News
Financial/Busines s
49%
News, Quotes
Online Chat 26%
Calendaring 12%
0% 20% 40% 60% 80% 100%
Source: IDC, 11/2000
5.06 Online Activities Among New And Veteran U.S. Internet Users
Veteran Internet Users New Internet Users
88%
Send/Read E-mail 97%
60%
Search For Information 87%
64%
Look For Information On Hobbies 83%
44%
Get News 78%
30%
Look For Job-Related Information 65%
31%
Shopping 64%
Go Online For Fun 61%

64%
47%
Look For Health-Related Information 63%
21%
Look For Financial Information 54%
33%
Listen To Music Online 45%
27%
Download Music 33%
3%
Buy/Sell Stocks 18%
14%
Visit Adult Sites 15%
0% 20% 40% 60% 80% 100%

The most common online activity among all groups of Internet users is
sending and receiving e-mail. Other frequently mentioned activities that Internet
users engage in are searching for various types of information and online
shopping.
Veteran Internet users -- individuals who have been online for more than 12
months -- generally engage in a wider variety of activities compared to new users.
The differences between veterans and new users where greatest when it came to
their respective levels of interest in retrieving news, job-related information, and
financial information and in transactional activities such as shopping, and trading
stocks online.
Almost nine-in-ten (84%) users have used the Internet to contact or get
information from one or more affinity or special interest groups and online
communities, according to the Pew Internet & American Life Project. Among
these particular users, 79% maintain regular online contact with at least one such
group. Pew reports that the most popular groups or online communities among
Internet users are trade associations, professional groups, and groups organized
around a particular hobby or shared interest.
5.07 Online Community Activities Among U.S. Internet Users

Percent of all Internet users who participate in online communities
Trade association or professional group 21%
A group for people who share a hobby or interest 17%
A religious organization 6%
A group of people who share your lifestyle 6%
A fan group of a particular team 6%
A sports team or league in which you participate 5%
A group of people who share your beliefs 4%
A local community group or association 4%
A political group 3%
A fan group of a TV show or entertainer 3%
A support group for a medical condition or

2%
personal problem
Ethnic or cultural group 1%
Labor union 1%
Not in contact with any particular group 16%
0% 5% 10% 15% 20% 25%

5.08 Online Activities Among Seniors In The U.S.

Percent of online seniors
Online Seniors All Internet Users
76%
Look For Information On Hobbies
58%
61%
Get News
55%
56%
62%
Get Weather Reports 53%
64%
65%
Look For Travel Information 51%
73%
Research Products 48%
44%
49%
Visit A Gov't. Website
40%
Shopping 48%
36%
Get Political News Or Information 39%
36%
63%
Look For Info. About Music, Books, Etc. 36%
34%
Play A Game 32%
37%
Check Sports Scores 31%
Send An Instant Message 45%
30%
Make Travel Reservations 36%
25%
Use A Video Or Audio Clip 48%
23%
50%
Work-Related Research 20%
54%
School Research Or Job Training 18%
37%
13%
Buy/Sell Stocks 12%
28%
Chat Online 12%
27%
Look For A Place To Live
11%
Look For Religious Information 22%
11%
Bank Online 18%
8%
15%
Participate In Online Auction 8%
38%
5%
Play Lottery Or Gamble 4%
0% 20% 40% 60% 80% 100%

Adults generally engage in a wider variety of online activities than teens,

according to Jupiter Media Metrix. When it comes to favorite online activities,
significantly more adults than teens enjoy reading local news or content, retrieving
information related to hobbies or personal interests, and sending e-mail
greetings. Teens were more likely to include Instant Messaging, downloading
MP3s, and reading humorous content among their favorite online activities.
5.09 Most Common Online Activities Among U.S. Adult And Teen
Internet Users
Percent of Internet users responding to question: “Which online activities do you enjoy most when
you have leisure time?”
Adults Teens
67%
Send/Read E-mail
79%
21%
Personal Interest And Hobbies
42%
21%
Send E-mail Greetings
36%
51%
Instant Messaging
35%
37%
Plat Online Games
35%
31%
Read Humorous Content
26%
3%
Read Local Content
17%
31%
Download MP3s
13%
0% 20% 40% 60% 80% 100%

Among teenage Internet users, boys are more likely than girls to engage in
most online activities. The handful of activities that girls engage in at a greater
rate than boys include looking for news; visiting entertainment sites;
communicating through e-mail, Instant Messaging, and online chat; looking for
diet or health information; and looking for information on hobbies.
The largest divergence between boys and girls in their relative levels of
interest in specific online activities where in retrieving sports scores -- 62% of
boys had done so versus 32% of girls -- shopping or researching purchases
online, playing or downloading games online, and downloading music.
5.10 Online Activities Among U.S. Teen Internet Users By Gender

Percent of teen Internet users in each group
Girls Boys
Send/read e-mail
89%
95%
Go online for fun

83%
85%
81%
Visit entertainment sites
85%
71%
Use instant messaging
78%
66%
Look for news
70%
76%
Look for information on hobbies
62%
Listen to music
59%
59%
Play or download games

75%
57%
Visit chat room

55%
56%
Research potential purchases

77%
55%
Download music
60%
47%
41%
Visit sites for clubs or teams they belong too
38%
38%
Visit sites where they can express opinions
38%
62%
Look for sports scores
32%
22%
Look for diet/health information
30%
Visit sites where people trade or sell things

42%
20%
Create own website

29%
19%
Look for info. on topics that are hard to talk about 19%
with others 17%
0% 20% 40% 60% 80% 100%

The relative levels of interest in most online activities is reasonably consistent

between young teens (age 12 to 14) and older teens (age 15 to 17), according to
the Pew Internet & American Life Project. The biggest differences were in the
interest levels for playing or downloading games online -- an activity which 75% of
young teens engaged in but only 58% of older teens -- downloading music, and
looking for diet and health information.
5.11 Online Activities Among Younger vs. Older Teen Internet Users
Teens Age 12 To 14 Teens Age 15 To 17
95%
Send/read e-mail
89%
58%
Play or download games
75%

81%
66%
73%
Look for news
63%
71%
60%
Visit chat room

60%
49%
61%
Download music
44%
44%
Visit sites for clubs or teams
33%
35%
27%
36%
Shop online
26%
26%
Create own website
21%
32%
Look for diet/health information
18%
with others 14%
0% 20% 40% 60% 80% 100%

As is the case with younger and older teens, the relative levels of interest in
most online activities is also reasonably consistent between new teen Internet
users -- those who have been online for 12 months or less -- and veteran teen
users, according to the Pew Internet & American Life Project. The biggest
differences were in the interest levels for Instant Messaging -- an activity which
89% of veteran users engaged in but only 61% of new users -- downloading
music, and shopping online.
5.12 Online Activities Among New vs. Veteran Teen Internet Users In
The U.S.
New Teen Users Veteran Teen Users
94%
Send/read e-mail
85%
85%
Go online for fun
78%
75%
Look for information on hobbies
64%
89%
61%
74%
Look for news
58%
76%
54%
64%
Visit chat room
53%
65%
Listen to music online
49%
47%
Check sports scores
41%
70%
Download music
36%
49%
Visit sites where they can express opinions
33%
47%
Visit sites for clubs or teams they belong too
28%
42%
25%
41%
Shop online
21%
29%
Create own website
20%
with others 17%
0% 20% 40% 60% 80% 100%

5.13 Online Activities Among U.S. African-American Internet Users

Percent of African-American Internet users in each group
Men Women
90%
71%
76%
77%
67%
65%
63%
49%
60%
Get News 66%
58%
57%
Look For Job-Related Information
N/A
55%
56%
50%
Play A Game 46%
47%
55%
Visit A Gov't. Website 44%
46%
Chat Online 39%
42%
N/A
37%
Look For A Place To Live
N/A
36%
Shopping 36%
45%
40%
31%
31%
Download Music 36%
28%
Bank Online 14%
22%
Buy/Sell Stocks 10%
10%
7%
0% 20% 40% 60% 80% 100%

5.14 Online Activities Among U.S. Hispanic-American Internet Users

Percent of Hispanic-American Internet users in each group
Men Women

83%
73%
70%
72%
67%
65%
81%
59%
56%
Get News 65%
58%
55%
48%
48%
49%
44%
42%
Visit A Gov't. Website 44%
Play A Game 41%
34%
40%
38%
Shopping 43%
42%
35%
Download Music 38%
34%
51%
33%
Chat Online 31%
32%
Look For A Place To Live 24%
Bank Online 21%
19%
22%
9%
Buy/Sell Stocks 14%
7%
0% 20% 40% 60% 80% 100%

5.15 Online Activities Of Dial-up vs. Broadband U.S. Internet Users

Percent of Internet users in each group
46%
Download Music
26%
48%
Listen To Music
30%
36%
Watch Video
18%
48%
Online Banking
30%
Stock-Related 35%
Activity 23%
0% 10% 20% 30% 40% 50% 60%

5.16 Common Activities Among U.S. Wireless Internet Users

Percent of all Internet-capable cell phone users
TNS Intersearch J.D. Power & Associates

80%
69%
55%
60%
43%
42%
40% 26%
25%
25%
24%
21%
20%
11%
8%
n/a
n/a
n/a
0%
Read E- News, Send E- Web Online Online Pay Bills
mail Sports & mail Browsing Purchases Games Online
Weather
Among mobile wireless Internet users, e-mail is the most popular online activity,
according to recent surveys by Arthur Andersen, TNS Intersearch, and J.D. Power &
Associates, followed by retrieving news headlines, sports scores and stock quotes;
playing online games; and general web browsing. Not surprisingly, Arthur Andersen
found that individuals who owned larger form factor devices such as PDAs used them for
more complex tasks like shopping online, and web browsing at rates three- to five-times
higher than individuals with Internet-capable cellular phones.
One-in-three mobile wireless Internet users (32%) conduct research with their
devices, according to a January 2001 survey by TNS Intersearch, and 24% engage in
wireless web browsing for general entertainment purposes. Retrieving news and topical

information was another popular activity among individuals in the TNS Intersearch
survey, with 25% of users reading news headlines, 20% interested in sports scores, and
19% interested in stock quotes. Other popular activities among wireless Internet users
are Instant Messaging, online betting, checking weather forecasts, and retrieving city
information and travel directions.

Section VI.
Online Communication
Activities

Internet users in the U.S. collectively own almost 240 million e-mail addresses,
according to IDC, and the number is expanding by approximately 10% per year. In
2001, users at work accounted for 137 million e-mail addresses or 57% of all e-
mail addresses, while residential users owned 102 million e-mail addresses.
The Gallup Organization reports that almost two-thirds (63%) of Internet users
at home check their e-mail only once a day or less, compared with fewer than one-
in-six (16%) users at work. A majority (51%) of Internet users at work check their
e-mail at least once an hour and more than four-in-five (84%) check their e-mail
several times per day.
6.01 U.S. E-mail Boxes At Home And At Work (1999-2002)

Millions of e-mail boxes
Users at Home Users at Work

200
152
150 137
119
112
100 102
93
100 82
50
0
1999 2000 2001 2002
Source: International Data Corp., 2000
6.02 How Frequently Do U.S. Internet Users Check Their E-mail

Percent of Internet users in each location
Frequency at Work Frequency at Home

60%
41%
40%
32% 33%
30%
22%
19%
20%
11%
3% 3% 5%
0%
Continuously Once an hour Couple times a Once a day Less often
day

Gartner Group predicts that by 2005, Instant Messaging (IM) will surpass e-
mail as the primary method Internet users employ to interact with each other.
The company estimates that approximately 200 million individuals worldwide
already use IM and 25% of those users have signed-up for more than one
service. An August 2001 survey by Insight Express found that more than one-
third (35%) of current IM users in the U.S. already use the technology as at least
a partial replacement for e-mail.
Slightly less than one-half of U.S. Internet users over the age of 18 use IM at
least occasionally, according to a June 2001 survey by the Gallup Organization,
and more than 10% use it frequently. Insight Express estimates that
approximately 47% of all Internet users -- both at home and at work -- currently
use IM applications; 96% of those individuals use IM at home, according to the
company and 20% use it at work.
6.03 Instant Messaging Use Among U.S. Adults

Percent of adult Internet users
70%
58%
60%
50%
40%
31%
30%
20%
8%
10%
3%
0%
Use every time Use frequently Use occasionally Never use
online
6.04 How Instant Messaging Is Used In The U.S.

Percent of IM users
See a "buddy" online 82%
See a "buddy" sign on or off 70%
Use IM instead of telephone 49%
Block messages from known persons 42%
Use IM instead of e-mail 35%
0% 20% 40% 60% 80% 100%
Source: Insight Express, 8/2001

6.05 Instant Messaging Users Worldwide (1999-2001)

Millions of individuals using AOL IM and ICQ
250
205
192
200
171
152
150 132
113
93
100
77
63
51
50
0
Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2-
1999 1999 1999 1999 2000 2000 2000 2000 2001 2001
Jupiter Media Metrix estimated that Internet users spent an average 20

minutes per day using IM during the fourth quarter of 2000. In comparison, users
spent an estimated average of 54 minutes per day using browsing applications
and 27 minutes using stand-alone e-mail clients, such as Eudora and Outlook
Express, according to the company.
IM use has grown significantly faster in the workplace than at home between
September 2000 and September 2001, according to Jupiter. The amount of time
spent by users on IM increased 56% at work during that period compared to an
increase of only 16% at home. IM users at work spent an average 7% more time
with IM applications than users at home during September 2000, but one year
later, the difference had widened to 45%.
6.06 Time Spent On Instant Messaging At Home And At Work By

U.S. Internet Users (2000/2001)
Total minutes per month
September 2000 September 2001
253
IM Activity At Home
218
366
IM Activity At Work
234
0 100 200 300 400 500


AOL’s Instant Messaging applications -- the AIM standalone application, the

proprietary Messenger application, and ICQ chat -- are the clear market share
leader both at home and in the workplace. Almost one-half (45%) of Internet
users at home indicated that AOL was the IM application they used most
frequently, compared to 29% for MSN Messenger and only 16% for Yahoo,
according to Insight Express. Many IM users, however, use more than one
application, which is where both MSN and Yahoo pick up significant additional
market penetration. Jupiter estimates that 29% of IM users at home used at least
two competing applications during September 2001 and 23% of IM users at work
did the same. Insight estimates that almost one-half (47%) of IM users use MSN
at least occasionally and almost one-third (32%) use Yahoo at least occasionally.
6.07 U.S. Penetration Of Instant Messaging Services At Home

Percent of IM users at home
IM service used at all IM service used most frequently
45%
AOL
56%
29%
MSN
47%
16%
Yahoo
32%
6%
ICQ
14%
5%
Other
6%
0% 20% 40% 60% 80%

Source: Insight Express, 8/2001
6.08 U.S. Penetration Of Instant Messaging Services At Home

(2000/2001)
Percent of IM users at home
77%
AOL
82%
34%
MSN
23%
22%
Yahoo
23%
0% 20% 40% 60% 80% 100%


Although AOL is still the clear leader among IM users at home, MSN
Messenger made significant in-roads between September 2000 and September
2001, almost doubling the number of individuals using its IM application and
increasing its penetration rate to 34% of IM users from 23% in 2000. AOL’s
market penetration during the same period declined to 77% of IM users from 82%
and its share of total IM use -- in minutes per month -- declined to 72% in
September 2001 from 81% in September 2000.
6.09 U.S. Instant Messaging Users By Service At Home (2000/2001)

Millions of IM users at home
41.7
AOL
34.5
18.5
MSN
9.6
11.9
Yahoo
9.5
0 10 20 30 40 50
6.10 Aggregate U.S. Instant Messaging Use At Home (2000/2001)

Billions of minutes
9.76
AOL
7.56
1.88
MSN
0.73
1.95
Yahoo
0.99
0 2 4 6 8 10 12

Approximately 13.4 million individuals used IM at work in September 2001,

according to Jupiter, which was up from 10 million one year earlier. The company
also estimates that aggregate use of IM applications in the workplace increased
from 2.3 billion minutes in September 2000 to 4.9 billion minutes in September
2001.
In the workplace as at home, AOL’s market penetration has declined, to 66%
of IM users at work in September 2001 from 76% in September 2000. AOL’s
share of total IM use at work -- in minutes per month -- however, has increased to
74% in September 2001 from 63% in September 2000. The growth in AOL’s
share has come at the expense of both MSN and Yahoo.
6.11 U.S. Penetration Of Instant Messaging Services At Work

(2000/2001)
Percent of IM users at work
66%
AOL
76%
36%
MSN
26%
26%
Yahoo
19%
0% 20% 40% 60% 80% 100%

6.12 U.S. Instant Messaging Users By Service At Work (2000/2001)

Millions of IM users at work
8.8
AOL
7.6
4.8
MSN
2.6
3.4
Yahoo
1.9
0 2 4 6 8 10
Jupiter Media Metrix, 9/2001

6.13 Aggregate U.S. Instant Messaging Use At Work (2000/2001)

Billions of minutes
3.63
AOL
1.46
0.65
MSN
0.49
0.60
Yahoo
0.38
0 1 2 3 4 5
6.14 U.S. Instant Messaging Users By Gender

Percent of Internet users and IM users
Internet Users IM Users
45.1%
Female
51.4%
54.9%
Male
48.6%
0% 20% 40% 60% 80%

Source: NetValue, 8/2001; Intermarket Group, 7/2001
IM users are more likely than Internet users in general to be male, according
to NetValue. An analysis by the company from August 2001 found that 55% of IM
users in the U.S. during the month were male while men accounted for only 49%
of the overall U.S. Internet population.
Almost two-thirds (64%) of all U.S. teens who are online have used IM,
according to the Pew Internet & American Life Project. Among teen IM users,
more than one-in-three (35%) say they use it every day and 34% use it more than
once a week; 45% say they use IM every time they go online. Girls between 15
and 17 years old are the most likely teen demographic to use IM and boys
between 12 and 14 years old are the least likely.
The penetration of IM among teens increases along with household income,
from 65% among teen Internet users with a family income of less than $30,000 to

79% among teens with a family income in excess of $50,000. IM penetration

among teens also increases as their level of experience with the Internet
increases. Almost nine-in-ten (89%) teens who have been online for more than
three years use IM compared to 61% of teens with less than one year of Internet
experience.
6.15 IM Penetration Among U.S. Teens By Age And Gender

Percent of teen Internet users within each group
Age 12 to 14 Age 15 to 17
100%
80% 83%
80% 72%
60%
60%
40%
20%
0%
Boys Girls
6.16 IM Penetration Among U.S. Teens By Family Income

100%
79%
80%
69%
65%
60%
40%
20%
0%
< $30,000 $30K to $50K > $50K
6.17 IM Penetration Among U.S. Teens By Internet Experience

100%
89%
80% 75%
61%
60%
40%
20%
0%
One year or less 2 to 3 years More than 3 years

Section VII.
Downloading and Streaming
Media Activity

The longer an individual has been online, the more likely he or she is to view
or listen to streaming content, according to Scarborough Research. Sixty-one
percent of those individuals who use the Internet at least three times a day and
two-thirds of those who have been online for more than three years are frequent
consumers of streaming content. The company also reports that individuals who
view or listen to streaming content are 26% more likely than the average Internet
user to have a broadband connection.
7.01 Streaming Media Use Among U.S. Internet Users

Percent of Internet users accessing streaming video or audio
80%
60%
52%
48%
40%
25%
20% 12%
0%
Have Used Used In Last 30 Used In Last Never Used
Days Week
7.02 Streaming Media Use Among U.S. Broadband vs. Dial-up

Internet Users
Percent of users in each group accessing streaming video or audio

80%
69%
60% 53%
47%
44%
40%
31%
28%
23%
20%
10%
0%
Days Week

A July 2001 survey by Arbitron found that more than two-thirds (69%) of
Internet users with broadband connections and more than one-half (53%) of dial-
up users had accessed streaming audio and or video content at least once.
Earlier surveys by the company found that roughly one-third of broadband users
had accessed streaming video content, compared to only one-in-five (19%) dial-
up users. Nielsen/NetRatings estimated in March 2001 that 34.6 million
individuals accessed streaming video, representing slightly more than one-in-
three (35%) U.S. Internet users.
7.03 Streaming Media Use Among U.S. Broadband Internet Users

Ever Used Used In Last week
12%
Streaming Audio
38%
12%
Download Audio
37%
5%
Streaming Video
24%
3%
Download Video
46%
0% 10% 20% 30% 40% 50% 60%

7.04 Streaming Video Use Among U.S. Broadband vs. Dial-up

Internet Users

100%
81%
80%
66%
60%
40% 33%
19% 18%
20% 9% 10%
3%
0%
Days Week

Arbitron’s July 2001 survey also found that more than one-third (36%) of
broadband users access streaming audio content once per week or more
frequently compared to only 16% of dial-up users. Almost three-in-four (72%)
broadband users have accessed streaming audio at least once, according to the
same survey, which is up from only 38% in a May 2001 survey by the company
(see also 7.03).
A potential early sign of the possibilities for streaming media can be seen in
Arbitron’s finding that more than one-in-four users with broadband connections
have replaced at least some portion of their radio/television broadcast content
consumption with streamed content.
7.05 Streaming Audio Use Among U.S. Broadband vs. Dial-up

Internet Users
Dial-Up Users Broadband Users

60%
50%
40%
40%
28%
30% 25%
22% 20% 20%
20% 14%
11% 13%
10%
3%
0%
Nearly Every At Least Once Per Every Few Almost Never
Day Once Per Month Months
Week
7.06 Streaming Content vs. Broadcast Media Among U.S. Broadband

Internet Users
Percent of broadband Internet users changing viewing/listening habits
Video/Television Audio/AM-FM Radio

80%
65% 67%
60%
40%
26%
20%
20%
4% 6%
0%
Replaced A Large Replaced A Small In Addition
Portion Portion

7.07 Streaming Video Quality Assessment Among U.S. Broadband

Internet Users
Percent of broadband streaming video users responding to question: “The quality of streaming video
on the Internet is good enough.”
60%
50% 46%
42%
40%
30%
20%
9%
10%
2%
0%
Strongly Agree Agree Disagree Stronly Disagree
A surprisingly high proportion of broadband Internet users (44%) indicated that

they thought the current quality of streaming video is acceptable, according to
Arbitron. A substantial majority (70%) of the same individuals however, also said
that they would view more streaming video if the quality was better.
Convenience is a theme that is apparent among many of the suggestions that
streaming audio users indicated would motivate them to listen more frequently.
On-demand availability was mentioned by 79% of those surveyed by Arbitron
while 78% agreed that it should be easier to find the specific types of streaming
audio that interested them and 70% said that they would like better online
directories for streaming audio content.
7.08 What Would Motivate Internet Users To Access Streaming

Audio More Frequently
Percent of streaming audio users
Get the audio programming you want on-demand when you want it 79%
Easier to find the types of streaming audio you want 78%
Able to listen on a device that was as easy to use as a regular radio 74%
Better online directories of available streaming audio programming 70%
More radio stations available to listen to over the Internet 62%
Could listen to streaming audio in the car 61%
Listen to streaming audio on a portable device 55%
Personalities such as Howard Stern or Rush Limbaugh on the Internet 31%

Many of the top 10 largest markets for streaming media use are also among
the top 10 largest markets for Internet use in general. New York and Los Angeles
-- which collectively account for more than 16% of all broadband users nationwide
-- are the number one and number two largest markets in terms of the number of
individuals who access streaming media. Both locations can also be found
among U.S. markets with the highest penetration for streaming media use,
however, cities with higher penetration rates include Miami, Cleveland (OH),
Houston (TX), Pittsburgh (PA), and Hartford (CT).
7.09 Largest U.S. Markets For Streaming Media Use

Internet users accessing streaming media during December 2000
Streaming Total
City Media Users Internet Users
New York, NY 2,621,050 7,004,615
Los Angeles, California 1,912,679 5,181,405
Boston, Massachusetts 1,084,770 2,960,624
Chicago, Illinois 1,068,256 3,033,520
Washington, DC 897,155 2,463,050
Dallas, Texas 767,020 2,091,876
Seattle, Washington 738,582 2,019,500
Houston, Texas 670,745 1,763,703
Cleveland, Ohio 521,314 1,429,794
Miami, Florida 506,320 1,174,323
7.10 U.S. Markets With The Largest Penetration Of Streaming Media

Use
Percent of Internet users accessing streaming media
Miami, FL 43.1%
Cincinnati, OH 41.0%
Houston, TX 38.0%
Pittsburgh, PA 37.9%
Hartford, CT 37.7%
New York, NY 37.4%
San Diego, CA 37.4%
Los Angeles, CA 36.9%
Columbus, OH 36.9%
Raleigh, NC 36.8%
0% 10% 20% 30% 40% 50% 60%

Movie trailers and music videos are the most commonly accessed forms of
streaming video, with more than one-half of all streaming video users viewing
each, according to Arbitron. A November 2001 survey by the Yankee Group
found that among streaming media users, 42% had viewed streaming video of
national news at least once during the last three months, 13% had watched “how-
to” videos, 8% had watched video streams of homes in real estate listings, and
5% had engaged in some form of distance learning or online education with
video.
7.11 Types Of Streaming Video Accessed By U.S. Broadband And

Dial-up Internet Users
Percent of streaming video users in each group who have accessed each type of content
Movie Trailers/Previews 58%

71%
Music Videos 57%
59%
Short/Full-Length Movies 28%
42%
Video Newscasts 29%
40%
Video From TV Stations 28%
39%
Video Weather 35%
35%
Video Sports Highlights 30%
34%
22%
Video From Non-Local U.S. TV 31%
Video Business Reports 15%
31%
Live Sporting Events 15%
22%
Video From Local U.S. TV 11%
19%
Video From Non-U.S. TV 5%
16%
Video Traffic 9%
14%
Video Talk Shows 7%
9%
0% 20% 40% 60% 80%

7.12 Types Of Streaming Audio Accessed By U.S. Internet Users

Music 44%
Radio Stations 25%
News Reports 24%
Music From Napster 24%
MP3 Audio 22%
News Not On Local Radio 22%
Music Not On Local Radio 22%
0% 10% 20% 30% 40% 50% 60%

The number of individuals who access streaming audio and video at work has
increased from 17.4 million in September 2000 to 21.1 million one year later,
according to Nielsen/NetRatings. This means that more than one-half (55.8%) of
active Internet users at work now use streaming media.
Among broadband users at work, Arbitron reports that only 41% of those
accessing streaming video indicated that the content viewed was work-related. A
majority (53%) of those individuals, however, also indicated that they would be
“very likely” to watch streaming video reports with news about their company or
industry and almost one-half (44%) were interested in streamed training videos.
7.13 Streaming Media Users At Work

Millions of individuals
Sep. 2001 21.05
Sep. 2000 17.36
0 5 10 15 20 25
7.14 Interest In Work-Related Streaming Media Content By U.S.

Broadband Internet Users
Percent of broadband Internet users at work
Conference/Convention
26%
Sessions
Product Demos 31%
Company Meetings 35%
Training Videos 44%
Industry/Company
53%
News Reports
0% 20% 40% 60% 80%


Seven-in-ten broadband users have accessed out-of-market AM/FM radio

programming at least occasionally with streaming audio, according to a May 2001
survey by Arbitron, making it the most popular streaming audio application. Other
uses for streaming audio include listening to local AM/FM programming and to
Internet-only content. In terms of broadband users’ favorite type of streaming
audio content, Arbitron reports that 25% indicated they accessed local AM/FM
programming the most frequently, followed by out-of-market AM/FM stations
(18%), Internet-only programming (13%), and sports play-by-play (10%).
7.15 Streaming Audio Programming Preferences Among U.S.

Broadband Users
As a percent of broadband users who access streaming audio
100%
80% 70%
64%
60%
40% 37%
40%
28%
22%
20%
0%
Out Of Local Internet Other Sports Foreign
Market AM/FM Only Play-By- AN/FM
AM/FM Play
7.16 Household Income Of Streaming Media Users

Percent of users in each group accessing streaming video or audio

40%
30%
25% 26%
23%
21%
19%
20% 17%
11% 12%
10%
10%
3%
0%
< $25,000 $25K To $50K $50K To $75K $75K To > $100,000
$100K
Arbitron estimates that the highest penetration of streaming media use is

found among Internet users with a household income between $50,000 and
$75,000, with approximately one-in-four of all Internet users from that group
accessing either streaming audio or video. The lowest penetration rate was
among Internet users with a household income of less than $25,000.

Streaming audio users generally tend to be younger, with the highest

penetration among individuals between 18 and 24 years old. One-half of
broadband users within that age group have accessed streaming audio content
and one-in-five (19%) do so frequently. The next-highest penetration rate (13%)
among frequent streaming audio users is for Internet users in the 12 to 17, 25 to
34, and 45 to 54 year old age groups.
7.17 Age of U.S. Broadband Streaming Audio Users

Percent of broadband users in each group accessing streaming audio
Ever Used Used In Last Week

60%
50%
50% 46%
40% 37%
34%
30% 25%
23%
21%
19%
20%
13% 13% 13%
9% 8%
10% 5%
0%
12 To 17 18 To 24 25 To 34 35 To 44 45 To 54 55 To 64 65+
RealNetworks controls the largest market share of the streaming media player
market, with 32% of all U.S. Internet users at home and 36% of users at work
using either one or both of the company’s media players, according to Jupiter
Media Metrix. Morgan Stanley estimates that more than 280 million copies of
RealNetworks’ various streaming content player applications had been
downloaded by mid-2001.
7.18 RealNetworks Users Worldwide (1999-2001)

Cumulative downloads in millions for Player, RealPlayer, Jukebox and Jukebox Premium
400
300 280
257
226
200
200 172
146
118
93
100 73
58
0
Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2-
1999 1999 1999 1999 2000 2000 2000 2000 2001 2001

Jupiter also estimates that the number of individuals using stand-alone media
players of all types at home jumped from 31.3 million -- or roughly 40% of all U.S.
Internet users in early 2000 -- to 41.7 million in January 2001, bringing the
penetration rate up to 51% of all Internet users.
Among users at work, 52.9% used stand-alone media players in January
2001, up from 48.3% one year earlier.
7.19 U.S. Media Player Market Share At Home

Percent of Internet users at home
RealNetworks RealPlayer 30.7%
RealNetworks RealJukebox 4.3%
Windows MediaPlayer 26.4%
QuickTime 8.9%
All Stand-alone Media Players 51.1%
0% 10% 20% 30% 40% 50% 60%
Source: Media Metrix, 1/2001
7.20 U.S. Media Player Market Share At Work

Percent of Internet users at work
RealNetworks RealPlayer 34.6%
RealNetworks RealJukebox 6.1%
Windows MediaPlayer 30.4%
QuickTime 6.5%
All Stand-alone Media Players 52.9%
0% 10% 20% 30% 40% 50% 60%
Source: Media Metrix, 1/2001

7.21 Aggregate Usage Of Napster Application At Home

Cumulative thousands of minutes during each period
U.S.A. Worldwide
8,000,000
6,303,464
6,000,000
4,943,330
3,426,616
4,000,000 3,123,353
4,002,989
3,912,349 2,188,098
3,023,596
2,000,000 2,559,128
2,024,329
1,419,976
1,190,206
0
Jan. 2001 Feb. 2001 Mar. 2001 Apr. 2001 May 2001 Jun. 2001
7.22 Unique Users Of Napster Application At Home

Millions of Internet users during each period
U.S.A. Worldwide
50,000
40,000
26,389
21,123
21,098
30,000 20,310
18,262
17,666
13,561
11,538
10,787
20,000
8,930
8,027
7,940
10,000
0
Jan. 2001 Feb. 2001 Mar. 2001 Apr. 2001 May 2001 Jun. 2001

7.23 Unique Users Of File Sharing Applications At Home

Thousands of unique users during each period
May 2001 July 2001

Application Media Metrix (1) Net/Ratings (2) NetRatings (3)
Napster 8,027 4,073 2,268
Bodetella 1,011 -- --
AudioGalaxy 978 534 707
iMesh 474 262 331
Limewire 388 -- --
BearShare 382 197 274
KaZaA -- 179 433
(1) Covers entire month of May. (2) Covers week between 5/21/2001-5/27/2001, except KaZaA
which covers 5/27/2001-6/3/2001. (3) Covers week between 7/9/2001-7/15/2001
Source: As noted
7.24 Teen Use Of Leading File Sharing Applications At Home

Unique users between 12 and 17 years old during each period
Week Ending 5/27/2001 Week Ending 7/15/2001
1,009,152
Napster
1,564,439
162,808
KaZaA
58,282
77,542
BearShare
37,410
223,412
AudioGalaxy
132,699
116,181
iMesh
90,102
0 500,000 1,000,000 1,500,000 2,000,000

Internet users who download music are more likely to be male and are
generally younger than the overall Internet population. More than one-third (36%)
of male Internet users have downloaded music, according to the Pew Internet &
American Life Project, versus 23% of female Internet users. Arbitron estimates
that one-third of all broadband users between 12 and 24 years old are frequent
downloaders. The highest penetration (61%) is among Internet users between 15
and 17 years old, according to Pew.
Pew also reports that the penetration of downloading declines as household
income increases, from 36% among Internet users with a household income of
$30,000 or less to 24% among users whose household income exceeds $75,000.
7.25 Penetration Of Downloading Activity By Gender And Ethnicity

Percent of each group downloading music
60%
50% 46%
40% 36%
30%
30% 26%
23%
20%
10%
0%
African- Hispanic- Caucasian- Women Men
Americans Americans Americans
7.26 Age of U.S. Broadband Audio Downloaders

Percent of broadband users in each group downloading music
Ever Used Used In Last Week

100%
77%
80% 71%
60%
37%
40% 33% 34%
27%
23%
15% 17%
20% 13%
6% 8%
2% 3%
0%
12 To 17 18 To 24 25 To 34 35 To 44 45 To 54 55 To 64 65+

7.27 Penetration Of Downloading Activity By Age

50+ 15%
30 To 49 23%
18 To 29 51%
15 To 17 61%
12 To 14 44%
0% 20% 40% 60% 80%

7.28 Penetration Of Downloading Activity By Household Income

> $75,000 24%
$50K To $75K 29%
$30K To $49K 31%
< $30,000 36%
0% 10% 20% 30% 40% 50% 60%

Approximately one-half (49%) of U.S. Internet users indicated that the online
content they value most is related to their hobbies and other personal or special
interests. The next most-frequently mentioned favorite is entertainment-related
content.
A February 2001 survey by the Consumer Electronics Association found that
the most widely downloaded content formats were pictures and games, with 50%
or more of U.S. Internet users having retrieved at least one of each file type.
Audio files, such as MP3s and other digital music formats, have been
downloaded by approximately 42% of U.S. Internet users.
7.29 What Web Content Is Most Important To U.S. Internet Users

Entertainment/
Music/Fun
News 20%
11%
Don't Know Other Personal

2% Or Special
Interest
49%
Work-Related
18%
Source: Content Intelligence, 4/2001
7.30 Content Downloaded By U.S. Internet Users

Percent of adult Internet users
Pictures 63%
Games 50%
Software 48%
Information 42%
Audio Files 42%
Sound Files 38%
Video Clips/Movies 35%
Electronic Books 12%
0% 20% 40% 60% 80%

Source: Consumer Electronics Assn., 2/2001

7.31 U.S. Internet Users’ Willingness To Pay For Online Content

Percent of Internet users responding to question: “What is your reaction to the question, ‘I think
Internet users will pay for some web content.’?”
Somewhat
Agree
Strongly Agree 47%
8%
Don't Know
4%
Strongly
Disagree
8%
Neutral
Somewhat
23%
Disagree
10%
7.32 Internet User Response When Free Sites Charge For Access
Percent of Internet users asked to pay for access to previously free websites
Completely
Stopped Using Paid For Access
That Type Of 12%
Information Or
Service
37%
Found Free
Alternative
51%
An April 2001 survey of Internet users by Content Intelligence found that a

majority (55%) thought that under at least some circumstances people would pay
for online content. Less than one-in-five (18%) disagreed with the proposition.
The survey also found that:
• Men are more likely to pay for online content than women
• Affluent users are more likely to pay
• A high correlation exists between the number of years of Internet experience
and the willingness to pay for online content
Nineteen percent of Internet users have already paid for online content,
according to the company, and 24% of users with six or more years of Internet
experience had done so. The types of content mentioned most frequently that
users had paid for include adult content, industry-specific business websites,
online database services, premium music/video sites, and specialized or
premium news sites.

A July 2001 survey of streaming content users by Arbitron found that a

significant percentage of respondents had at least some interest in paying for
certain types of streaming video and audio content. The survey respondents
were most likely to indicate an interest in subscription-based music services
(27%) followed by streamed audio of concerts (24%), and streamed video of
concerts (19%). Interest in either audio or video coverage of sporting events was
fairly uniform at 6-8% of respondents for a majority of the specific sports.
7.33 Types Of Streaming Content Users Might Purchase On

Subscription Basis
As a percent of Internet users who access streaming video or audio
Video Content
Concerts 19%
NFL Games 11%
NCAA Football 7%
NBA Games 7%
"Sophisticated" Or Controvesial Radio 7%
NCAA Basketball 6%
NASCAR 6%
Professional Wrestling 3%
Audio Content
Songs And Albums 27%
Concerts 24%
NFL Games 10%
NBA Games 8%
"Sophisticated" Or Controvesial Radio 7%
NCAA Basketball 6%
NCAA Football 5%
0% 10% 20% 30% 40%

The Pew Internet & American Life Project reports that almost one-in-eight
(12%) Internet users have seen one of their favorite websites go out of business
in recent years. The majority of those individuals (62%) moved on to a competing
site while almost one-third (31%) simply stopped using that type of information or
service. Five percent were unable to find an alternative to the failed site,
according to the organization.
The same Pew survey found that one-in-six (17%) Internet users had been
asked to pay for access to a website or online service that had previously been
free. Out of that 17%, one-half moved on to a free alternative while 12% elected
to pay for continued access (see 7.32).
7.34 Representative Subscription-Based Online Content Services

Content Provider Content Service Cost
Access to rumors and comments
F--ckedCompany.com archive $75.00 per month
F--ckedCompany.com Access to comments archive $25.00 per month
FreeEdgar Watchlist and full-text SEC filings $14.95 per month
Gameday Audio archive of 2001
Major League Baseball season on streaming audio $4.95 (1)
Unlimited Pass archive of 2001
Major League Baseball season on streaming video $14.95 per month
MusicNet/RealNetworks RealOne Music digital music service $9.95 per month
NewsStand digital edition of daily
New York Times newspaper $26.80 per month
Rivals.com Premium sports content and forums $9.95 per month
Rush 7/24 two-week radio program
archive and “Dittocam” streaming
Rush Limbaugh video $39.95 per year
Salon Premium exclusive content
Salon.com and no ads $30.00 per year
Space.com Space News Business Report $99.0 per year
Online counterpart to daily print
Variety.com publication $59.00 per year (2)
Real-time premium financial news
Yahoo! Finance and securities price quotes $9.95 per month
(1) Provides access until start of 2002 season. (2) Access is free for print publication subscribers.
Source: Intermarket Group; company websites

The level of consumer interest in digital music subscription services is on the

rise, according to surveys by Jupiter Media Metrix. A June 2001 survey of online
music buyers -- individuals who had purchased music online in the previous 12
months -- found that 59% were potentially interested in purchasing such a
subscription. Only 41% of online music buyers expressed such an interest in a
similar survey by the company in June 2000.
The Jupiter data also seems to indicate that consumers are most interested in
improved levels of service and security in return for their subscription fees. The
most frequently mentioned features among survey respondents were “guaranteed
music file quality,” “guaranteed virus free files,” and “high-speed transfer
connection.”
7.35 Top 10 Features Consumers Would Pay For In Digital Music

Subscription Service
Percent of online music buyers
Guaranteed Music File Quality 38%
Guaranteed Virus Free Files 33%
High Speed Transfer Connection 31%
Free Digital Music Player 28%
No Advertising On Site Or In Files 26%
Free Internet Connection 25%
Concert & Event Discounts 21%
Accurate, Concise Search Results 19%
Discounted/Free Artist-related Merchandise 11%
Discounted Broadband Access 7%
0% 10% 20% 30% 40% 50%
7.36 Consumers “Most Wanted” Digital Music Subscription Service

Features
Percent of online music buyers
Pct. of
Feature Respondents
Ability to make copies of downloaded songs 48%
Ability to listen to songs on any device 36%
Highly personalized online radio 30%
Advertising-free song files 27%
Ability to listen to songs an unlimited number of times in a limited
time period 20%
Ability to share songs with friends 15%
Ability to listen to songs a limited number of times in an unlimited
time period 14%

7.37 Why Users Select The Internet For News And Information
Internet Is
Cheaper Internet Is
6% Faster And
Easier
Other Internet 65%
Reasons
12%
Better
Information
Available On
Internet
17%
A majority of Internet users (57%) strongly agree and 38% agree somewhat
that the Internet enables them to find the specific information that they need or
want, according to Content Intelligence.
The company also reports that a majority of Internet users at home and just
under one-half (48%) of users at work now view the Internet as their preferred
source of information. The Internet is preferred by more than three-times as
many users at home as the next closest information source, magazines, which
were preferred by 18% of those surveyed. Internet users at work were far more
equivocal, with almost one-in-four expressing no clear preference for any single
information source.
7.38 U.S. Internet Users’ Preferred Source Of Information

Personal Interest Information Work-Related Information
48%
Internet
63%
7%
Magazines
18%
8%
Newspapers
6%
2%
Radio
3%
2%
Television
6%
9%
Other
3%
24%
Don't Know
2%
0% 10% 20% 30% 40% 50% 60% 70%


Appendix
Data Sources

The charts, tables, and other data provided in this report are all sourced from
published, publicly available information produced by the following organizations:
ActivMedia Research Gartner Group, Inc./GartnerG2

www. activmediaresearch.com www.gartner.com
Accenture Global Reach
www.ac.com www.glreach.com
ACNielsen Goldman Sachs Group, Inc.
www.acnielsen.com www.gs.com
Advertising.com Gomez Advisors Inc.
www.advertising.com www.gomez.com
The Arbitron Company Greenfield Online, Inc.
www.arbitron.com www.greenfieldonline.com
Arthur Andersen Harris Interactive Inc.
www.arthurandersen.com www.harrisinteractive.com
Bank of Tokyo-Mitsubishi Insight Express
www.btmny.com www.insightexpress.com
BIGresearch International Data Corp. (IDC)
www.bigresearch.com www.idcresearch.com
Bizmetric Inc. Internet Advertising Bureau (IAB)
www.bizmetric.com www.iab.net
BizRate.com Jupiter Media Metrix
www.bizrate.com www.jup.com
The Boston Consulting Group Paul Kagan Associates, Inc.
www.bcg.com www.kagan.com
Cahners InStat Group Kinetic Strategies
www.instat.com www.kineticstrategies.com
CMRi Knowledge Systems & Research
www.cmr.com www.ksrinc.com
Cognitiative Inc. KPMG International
www.cognitiative.com www.kpmg.com
comScore Networks Mediamark Research
www.comscore.com www.mediamark.com
Consumer Electronics Morgan Stanley Dean Witter
Association (CEA) www.msdw.com
www.techhome.org Myers Reports
Content Intelligence www.myers.com
www.contentintelligence.com National Retail Federation (NRF)
Cultural Access Group www.nrf.com
www.accesscag.com NetValue
CyberDialogue, Inc. www.netvalue.com
www.cyberdialogue.com NextCard Inc.
eMarketer, Inc. www.nextcard.com
www.emarketer.com Nielsen/NetRatings Inc.
Employment Policy Foundation www.netratings.com
www.epf.org The NPD Group Inc.
Ernst & Young LLP www.npd.com
www.ey.com Odyssey L.P.
eTForecasts www.odysseylp.com
www.etforecasts.com Ovum
Forrester Research www.ovum.com
www.forrester.com Pew Research Center
The Gallup Organization www.pewinternet.org
www.gallup.com J.D. Power & Associates
www.jdpa.com

PriceWaterhouseCoopers Universal McCann

www.pwcglobal.com www.mccan.com
Rasmussen Research Inc. U.S. Census Bureau
www.portraitofamerica.com www.census.gov
Roper Starch Worldwide Inc. Veronis Suhler
www.roper.com www.veronissuhler.com
Scarborough Research Visa USA
www.scarborough.com www.visa.com
Taylor Nelson Sofres and Vividence Corp.
TNS Intersearch www.vividence.com
www.tnsofres.com The Yankee Group
Telephia Inc. www.yankeegroup.com
www.telephia.com Zona Research
UCLA Internet Project www.zonaresearch.com
www.ccp.ucla.edu

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Published December 2001

The Internet Commerce Briefing | 1

Table of Contents .......................................................................2

Section I. The Internet Population ........................................5

Section II. Internet User Demographics ...............................19

Section III. Internet Usage ....................................................32

Section IV. Broadband Internet Access.................................40

Section V. Online Activities of Internet Users.......................49

Section VI. Online Communication Activities ........................63

Section VII. Downloading and Streaming Media Activity........72

Appendix Data Sources and Contact Information...............93

Other reports in the Internet Commerce Briefing series:

The Internet Commerce Briefing | 2

Charts and tables in this report

The Internet Commerce Briefing | 3

Charts and tables in this report (con’t.)

The Internet Commerce Briefing | 4

The Internet Commerce Briefing | 5

1.01 U.S. Internet Population (2001)

1.02 Growth Of U.S. Internet Users (1999-2005)

Jupiter Media Metrix Forrester Research

The Internet Commerce Briefing | 6

1.03 Leading Countries By Penetration Of Internet Use

0% 20% 40% 60% 80%

The Internet Commerce Briefing | 7

1.04 Leading Countries By Number Of Internet Users

0 50,000 100,000 150,000 200,000

1.05 Share Of Internet Users By Region (2000/2003)

0% 10% 20% 30% 40% 50%

The Internet Commerce Briefing | 8

1.06 Internet Plans Of Individuals Who Are Not Online

20% 14.8% 13.1%

1.07 Why Individuals Stop Using The Internet

No Longer Have Computer 21.2%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Source: UCLA Internet Project, 7/2001

The Internet Commerce Briefing | 9

1.08 Native Languages Of Internet Users Worldwide

0% 10% 20% 30% 40% 50%

1.09 Secondary Languages Used Online By U.S. Internet Users

0% 10% 20% 30% 40% 50% 60%

The Internet Commerce Briefing | 10

1.10 Growth Of Internet Devices In The U.S. (2001-2006)

1.11 Devices Accessing The Internet Worldwide (2001/2005)

PCs Wireless Phones Internet Access Devices

The Internet Commerce Briefing | 11

1.12 Mobile Wireless Internet Users By Region (2000/2005)

1.13 Mobile Wireless Internet Users By Region (2000-2005)

Region 2000 2002 2005

The Internet Commerce Briefing | 12

1.14 Leading Countries By Computers In Use

0 50,000 100,000 150,000 200,000

1.15 Home Computer Ownership By State

Top 10 States Bottom 10 States

The Internet Commerce Briefing | 13

Used Internet in Last 30 Days Have Internet Access

0 50 100 150 200

1.17 U.S. Internet Penetration (Oct. 2001)

The Internet Commerce Briefing | 14

Internet Commerce Briefing: Internet Population & Online Activities Report

Internet Commerce Briefing: Internet Population & Online Activities Report