Category: Research

High-speed access monopolies have been raising prices gradually for years, until the flow of new customers has decreased to a trickle [PDF], according to ARS Research. (Thanks, Medialife)
ARS predicts that the next step will be the introduction of tiered levels of high-speed access, such as sub-300K service for less than $40/month. As the access monopolies continue to eliminate competition like DirecTV Broadband, we can expect to see them charge us for services that cost them nothing, but are valuable to us.
Directory Assistance used to be free. Back in the 70s, AT&T started running ads on TV “educating” the public about people who were too lazy to pick up the damn phone book and instead used 411. Twenty years later, they were charging $1.25 for a 30-second call to Directory Assistance. That’s $150 an hour.
The onging campaign against “bandwidth hogs” is the first step toward charging you for bandwidth.

The digital divide is growing in the San Francisco Bay Area. Of course, it has to close soon, because Internet penetration among households with incomes over $80,000/year is now more than 90%.
I don’t know who came up with the phrase “Digital Divide”, but it’s brilliant. It (unintentionally) redirects us from the growing divide between the rich and the poor in this country. Should we focus on ameliorating the digital divide or on helping the poor with income, housing, education, and medical care? How can we focus on the digital divide when Republicans and Democrats alike are targeting income, inheritance, and dividend tax breaks at the rich?
The real digital divide is that the poor depend on schools and libraries for Internet access–and these systems are under lockdown from the religious right and their whores in DC.

Online shoppers are buying the same old things from the same old merchants, according to Gartner, who call it “playing it safe”. I call it developing habits. Not many people mentioned that they were buying from online-only retailers, but it looks like an unaided-recall survey, which would disproportionately benefit established brands. No wonder online businesses advertise online.
The Internet is maturing as a medium. Although the number of Internet users continues to grow, they’re becoming set in their ways.

Online businesses are more likely to use online advertising. I’ve been saying this forever, and here’s further proof from Double-Click and Nielsen.
Sectors that spend more than ten percent of their advertising budgets online included employment services (41 percent of $41 million in ad spending), media companies (15.5 percent of $479 million), retailing (15 percent of $3 billion), and travel 12 percent of their $788 million).
Categories that depend on branding, rather than online selling–such as pharmaceuticals, consumer packaged goods, and automobiles–are not spending much of their ad budgets online.

Broadband users are on the web more often and view more pages than dial-up users, according to Comscore, but they don’t appear to have any special interest in content designed for their speedy connections.

	Broadband	Dial-up
Average Days per month per user	30	18
Average Pages per Usage Day	131	108
Average Minutes per Visitor	1,850	1,119
Average Pages per Visitor	3,882	1,921

They use “Radio”, “Movies”, and “Multimedia” more than dial-up users, but they use “Taxes”, “Shipping”, and “Classifieds” a lot more, too. A lot of the differences in their habits can be accounted for by their greater household incomes.

	Broadband Visitors As % of Total Visitors
Total Internet	32%
Taxes	55%
Radio	52%
Shipping	52%
Car Rental	49%
Politics	49%
Classifieds	48%
Jewelry/Luxury Goods	48%
Movies	47%
Hotels/Resorts	47%
Weather	47%
Home Furnishings	47%
Consumer Goods	46%
Multimedia	46%
Online Gambling	46%
Comparison Shopping	45%

There’s little or no evidence in this study that broadband users are looking for broadband content. And once you account for the fact that they were probably heavier than average users when they had dial-up connections, it’s even unclear how much of their increased usage is due to their higher-speed connections.

It’s probably not a mistake to think that the one-third of US Internet usrs who have broadband will mind slow sites less than the two-thirds who have dial-up. But thinking that broadband users demand a new kind of Web is a mistake.

Broadband doesn’t change Internet users’ behavior — a least not in the ways we’d expect. A new study from the UK says that broadband users don’t necessarily gravitate to “broadband” applications, treat the Internet as “always on”, or even increase their use of content.
The UK experience is slightly skewed, because most phone calls (and therefore most dial-up connections) are billed by the minute there. The biggest effect the researchers found was the users were more leisurely in their use because the clock wasn’t running in their heads.
The conclusion of the study — consumers don’t find faster connections or always-on connections compelling benefits of broadband — is dramatic. The benefit are more subtle: a better-quality experience.
I’ve always believed that broadband adoption didn’t demand broadband content. Broadband improves the quality of the standard Web experience in much more subtle ways, making it more responsive and more like…print.
Clearly, broadband enables uses that are tedious on modem connections: e.g. Flash, P2P, background streaming, downloads. But these applications are icing on the cake of a better Web experience.
Here in the US, broadband adoption is lagging our expectations, and most consumers don’t believe the benefits justify the expense. As the Telecommunications Act of 1996 is gutted de facto by the cable and telephone monopolies and de jure by the FCC, the price is rapidly rising. Meanwhile, the copyright hoarders are pushing digital rights management as necessary to “unleash” the broadband-only content that they claim will pull broadband adoption.
Broadband adoption is being held back by a lack of competition, not an excess. Only when real competition drives the price of broadband access down to a price set by the market will we see wide broadband adoption. I doubt the price is much over $20/month. And in a competitive market, there is no doubt that the winning providers could make a nice living at that price.

Here’s a shocker: online downloading is hurting online sales of CD’s.
So, online CD’s sales are off 25%. Let’s face it, the current distribution system suits the needs of the record companies, because it makes it gives them something concrete they can count and make sure they get paid. But it doesn’t suit the needs of tens of millions of computer users who want their music in a format they can control and really use.
What’s shocking is that consumers are so desperate for music files that they are willing to put up with the hopeless agony of using Kazaa or LimeWire. Imagine how much they would pay if they could get authorized, quality copies when and where they needed them. The demand is there and the money is there, as soon as the RIAA is willing to give up control.

MIN’s spin is that major media (newspaper) companies have done pretty well since the market bottomed out in 1987, gaining 230% in 15 years.
But on the same chart shows that the Dow gained 379% in the same period, showing that a chimp with a pellet gun could have invested his money more wisely than the executives of the top newspaper companies.

US Mobile phone users aren’t interested in wireless internet service, according to the Yankee Group: 82 percent of respondents said they did not use wireless Internet service.
About half of the nonusers either didn’t want to do so or didn’t need too.
16 percent said it was too expensive. Other reasons: it was too complicated, too slow, or not available in respondents’ area.
Now, think about the billions invested in 3G spectrum and infrastructure. That money is never coming back.

Jupiter says online advertising will be up 10% next year. They’re especially enthusiastic about online classifieds, which they peg at about a billion dollars. They’re not optimistic about prospects for increasing CPM’s anytime soon.
UPDATE [10/26]: Emarketer has an excellent roundup of Internet advertising numbers, with a positive forecast for the fourth quarter.
That is, of course, unless AOL restates their earnings again and wipes out the increase all by themselves.
Elsewhere, Jupiter is predicting that rich media will be about a quarter of online advertising in five years. I still don’t understand where this groundswell of interest in rich media is coming from. Eyeblaster’s PR team is earning their money, because I’m seeing their name on a lot of these stories. This idea has been around since the dawn of Flash. This trend could be bad for Macromedia, as more people discover that Flash is now used almost exclusively for ads and should treated like any other virus.