One Out Of Five Americans Feel The Internet Is “Most Essential” To Their Lives.

When compared with traditional media, one out of five Americans feel that the Internet is the “most essential” medium to their lives, according to a new study by Arbitron Inc. and Edison Media Research.

According to the study, “Internet 9: The Media and Entertainment World of Online Consumers,” Americans chose the Internet and TV (34 percent and 35 percent, respectively) as the most “cool and exciting” medium. Nearly half (46 percent) of 12-to-34 year-olds chose the Internet, with 29 percent choosing TV as the most “cool and exciting” medium.

The study also revealed that weekly “Streamies” – those who have watched or listened to streaming media online in the past week – bought more than one and a half times the number of compact discs in the past year than the average American.

In addition, weekly Streamies go to movie theaters considerably more often (3.19 times) than the typical consumer (1.85 times) in the past three months. Of particular interest to movie marketers, nearly two-thirds (62 percent) of video Streamies have viewed movie trailers or previews online, making trailers and previews the number one content for video Streamies.

“This research indicates that those who consume streaming media most frequently are also the same group that tends to buy more CDs and attend more movies,” said Bill Rose, vice president and general manager, Arbitron Webcast Services, Arbitron Inc. “While some in the entertainment industry have viewed streaming as a threat, the study shows that it really represents a tremendous opportunity. Marketing music on streaming media channels provides access to a lucrative group of record buyers that could be an important key to revenue growth for record labels. Similarly, movie studios have the opportunity to reach frequent movie-goers by promoting their new films via webcasting.”

The study also confirms that superfast at-home broadband connections continue to grow despite the slowing economy. Residential broadband adoption has doubled in the last 18 months, jumping from 13 percent of those with at-home Internet access in January 2001 to 28 percent in July 2002. Furthermore, this growth trend appears to be far from over. According to the study, one out of five of those with dial-up home Internet access intends to convert to broadband in the coming year.

The study also shows that record numbers of Americans continue to consume Internet audio and video. As of July 2002, an estimated 83 million Americans have now experienced Internet audio or video. The number of people who have listened to audio or watched video online in the past month grew slightly from the prior year – from 37 million in July 2001 to 38 million in July 2002.

“These numbers are remarkably strong considering the turmoil in the streaming media sector,” said Larry Rosin, president, Edison Media Research. “While a number of radio stations and webcasters have ceased streaming due to the newly imposed government digital rights fees, consumers are still seeking out compelling audio and video content in record numbers. This underscores the need for streaming media to develop unique content of its own. When the cable industry began to develop compelling, original content, audiences grew dramatically, along with advertising revenues. The streaming media sector is now facing a similar situation. To remain vibrant, the industry needs to develop ‘must see’ and ‘must hear’ content that will spur consumer awareness and passion.”

Streamies are very concerned about recent industry turmoil. Among weekly Streamies, half are aware of the digital rights controversies that have caused several webcasters to cease streaming. Two-thirds of monthly Streamies indicate that they are upset about not being able to listen to canceled Internet audio webcasts and a similar number support action by Congress to help Internet audio webcasters afford to continue streaming.

Streamies displayed more interest than ever before in paying for online content. In July 2002, nearly a quarter (22 percent) of Internet audio Streamies – an estimated 16 million Americans – indicated that they would be willing to pay a small fee to listen to the online audio channel they currently listen to the most. In comparison, only 14 percent were interested in paying a fee in January 2002.

Additional findings from the Internet 9 study include:

Access to the Internet has leveled off at approximately 70 percent of all Americans. Despite the slowing growth of Internet adoption, the average daily time spent online continues to steadily increase, approaching one hour per day. In July 2002, Americans reported spending an average of 58 minutes online per day, up from 41 minutes in July 2001.

Monthly Streamies are more educated and affluent than average consumers. More than half (57 percent) have a household income over $50,000, compared to 38 percent of the total population. Nearly half (45 percent) have a college degree or higher level of education compared to 32 percent of the total population.

The upscale, savvy nature of Streamies translates into buying power. Monthly Streamies spent $895 online in the past year, compared to $596 for online users as a whole.

There is a strong correlation between interest in streaming media and satellite media. An estimated 18 million Americans are very interested in satellite radio and 63 percent of these people have tried audio streaming. These consumers appear to share a common interest in seeking unique audio content that is not currently available over traditional radio. In addition, satellite radio is suitable for in-car listening but does not fare well in the workplace. Meanwhile, people often listen to streamed audio at work but are unable to do so in their cars. This suggests that the satellite radio and streaming media industries should work together because they are quite complementary.

The findings reported here are based on a July 2002 survey consisting of 2,511 telephone interviews with a randomly selected national sample of Arbitron’s Spring 2002 radio diary keepers. Since 1998,

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