Online analysis

The Internet continues to double in size every 12 to 15 months.

Some estimates put the increase in traffic as high as two to three per cent a week.

The way the Internet has evolved makes it extraordinarily difficult to gauge its size. For a long time a figure of 30 million users was floated as a reasonable estimate but some observers now put the total far higher.

Eric Lepers-Morse, senior analyst for LAN research services at Context, reckons 50 million is now nearer the mark.

For several years now, Mark K Lotter has produced the twice-yearly Network Wizards' Internet Domain Survey According to his reasearch, by July 96 the number of hosts was approaching 13 million, up from less than nine million at the beginning of the year (see Fig 1).

For the next stage in the Internet's evolution, from encyclopedia and surfboard to serious business tool and electronic trading post, the most important question is not how many people are using it, but who are they?

Is there any validity, for example, in the traditional image of the anorak-clad computer science student?

On the contrary. A recent survey by Consumer Surveys (see Fig 2) suggests that Internet usage in the UK is now heavily skewed towards company directors, professionals and managers. It's in the highest household income group, more than #40,000 a year, where Internet use is most over-represented compared with the ordinary person in the street.

Looking at the newspapers they read, it's the European and Financial Times which top the list, followed by The Independent, The Sunday Times and The Guardian. The tabloids are nowhere in sight. Under leisure interests the highest rating is for home computing and science and technology. But also well up this list are art, cinema and personal finance.

Nevertheless, the Internet market in Europe remains less mature than in the US. Carsten Hejndorf, of IDC Scandinavia, explains that compared with Europe, the US Internet surfer is "old, less technical and better paid".

Not surprisingly, there is still a strong male bias. A separate study, The Graphics, Visualisation and Usability Center's 5th World Wide Web survey, puts the percentage of US women on the Web at 31.5 per cent. Although the UK leads the rest of Europe in the number of women online, the GVU figure is just 22 per cent. Figures from IDC put the number of female users in the UK far lower. Its studies indicate that only 21 per cent of them are female.

The GVU survey, based on 11,7000 responses from Web users in April and May 1996, estimates the average age of UK Internet users at 28 and a half.

This ties in with data from the Consumer Surveys report, which suggests Internet users are over-represented compared with the general population, in all age groups from 16 to 50. Recent figures from IDC also bear this out (see Fig 3). But as the UK Internet audience matures, the demographic, from a marketeer's point of view, is likely to improve as higher paid, less technical people go online.

What are people using the Internet for?

The GVU survey suggests that most people use the Internet for browsing and for entertainment. But another report, this time from Coopers & Lybrand, paints a slightly different picture. This report divided US online users into three distinct clusters - communicators, information seekers and browsers. Communicators, who make up 22 per cent of US online users, are early adopters who are comfortable with technology. They're interested in chat, email, newsgroups and meeting people. Information seekers (24 per cent) also tend to be male but they are less technologically adept and likely to have young children. They spend their time on the Internet obtaining information, downloading software and reading online magazines.

The largest group, making up 54 per cent of online users, are browsers - lighter users with an almost even male/female split. The least technologically adept group, they are most interested in general information, email, databases and straightforward browsing.

Given the long-term implications of the Internet for traditional print publishing, it's perhaps surprising that it has had a favourable impact on print. The amount users spend on Internet books and magazines, estimated by Coopers & Lybrand at $300 to $600 million per year, is roughly double the revenue currently generated by online commerce.

But if the Internet is to be commercialised successfully, people have to be persuaded to part with their cash. According to the Cooper's survey, only a small minority of consumers - 15 per cent of direct Internet users and 19 per cent of subsribers to services such as AOL and CompuServe - have used credit cards to make purchases online. Eighty per cent of users indicated that they were concerned about the security of financial data.

The GVU research showed, for the first time, a small increase in interest in Web shopping. Fifteen per cent of respondents said it was important, up from 11 per cent in previous studies. Never mind the fact that unencrypted data on the Internet is no less secure than the telephone, the perception remains that it is unsafe. It will require standards for electronic commerce (see SET cover story page 34) to convince people otherwise.

Paying for content

Paradoxically, Internet users are resistant to advertiser-supported content (37 per cent opposed it in the Coopers survey) and unwilling to pay for it directly. However, they are less hostile to "advermation", a horrible word meaning ads containing detailed information - 41 per cent said they'd use them. And almost a quarter of Coopers' respondents would use customisation (ads targeted to meet a consumer's interest) and "advermarts" (ads designed to make ordering easier). Less than 10 per cent of users were in favour of "advertainment", interactive ads designed to entertain.

The Coopers research does beg the question of who is going to make money from the Web, a medium where people don't like ads but aren't prepared to pay for content. More than 65 per cent of respondents to the GVU survey said they were unwilling to pay for access to information. The rollout of satellite television in the UK points the way forward - give people a lot for practically nothing, and only start to charge when they're hooked.

Talk to anyone involved in producing serious Web content and the idea of charging in the future is not far from their minds.

Another problem identified by the research is that as the number of Web sites mushrooms, it becomes more difficult to attract the attention of users. After traditional media (39 per cent), Internet users cited word of mouth (44 per cent) and browsing (32 per cent) as the most common ways they learn about Web sites to visit. Eighty per cent of GVU respondents said speed of obtaining information was a problem.

Already the Internet is having a negative impact on TV watching - the Coopers & Lybrand survey found this was borne out by 58 per cent of users.

The GVU survey indicated that 36 per cent of respondents surfed the Web daily in preference to watching television. According to Jim Pitkow, a researcher at the Georgia Institute of Technology: "We're going from channel clicking to mouse clicking."

Entertainment was not part of the original plan for the Internet but it looks certain to become an increasingly important component. In fact, many people go further and expect the Internet to be the medium which eventually replaces television. The infrastructure is far from ready but it's possible to imagine the high-speed Internet of the future delivering all the goodies which as yet remain the preserve of interactive television, including video on demand. Intel's recently announced Intercast technology, which delivers Web pages in the space between frames currently occupied by Teletext, indicates the way forward.

There are a few points on which all the surveys are in agreement - the Internet will continue to grow rapidly, its audience will mature and electronic commerce will grow with it. But plenty of questions still remain unanswered.

For instance, how will advertising on the Internet develop? How fast will Internet commerce grow? And how soon will people be able to start charging for their Web content?

FIG 1 ESTIMATED SIZE OF THE INTERNET
Date              Hosts                  Domains
Jul 96            12,881,000             488,000
Jan 96            9,472,000              240,000
Jul 95            6,642,000              120,000
Jan 95            4,852,000              71,000
Jul 94            3,212,000              46,000
Jan 94            2,217,000              30,000
Jul 93            1,776,000              26,000
Jan 93            1,313,000              21,000
(Source: Network Wizards Internet Domain Survey 1993 to 1996)

FIG 2 PROFILE OF TODAY'S INTERNET USERS
Where a score is over 100 per cent, Internet users are over-represented.
Where a score is under 100 per cent, they are under-represented.
Sex                      (%)
Male                     148.3
Female                   57.7

Occupation               (%)
Director                 563.5
Housewife                41.1
Manager                  239.8
Teacher/Lecturer         150.7

Income                   (%)
#15 - 20K                64
#20 - 25K                92.3
#25 - 30K                131.8
#30 - 40K                202
#40K +                   412.8

Newspapers               (%)
European                 587.9
Daily Mirror             52.4
Financial Times          394.3
Guardian                 277.3
(Source: Consumer Surveys, Lifestyle Focus 1996)

FIG 3 HOW OLD ARE INTERNET USERS?
                  US (%)            Europe (%)
18 years          2.2               5.0
18-29             29.0              51.5
30-39             26.1              31.5
40-49             26.5              10.4
50-59             11.5              1.1
60-69             4.0               0.7
70+               0.6               0.0
(Source: IDC, first half 1996)

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