"Content is where I expect much of the real money will be made on the Internet, just as it was in broadcasting," Bill Gates wrote way back in 1996 in an article entitled "Content Is King."
It has taken eight years - and it's still not exactly clear how the money will be made. But now a report finally puts some numbers on the assumption: For the first time, content can be officially crowned.
That's good news for a wide array of news, sports, and entertainment websites - from CNN.com to Yahoo! Sports - that are supported by advertising. Such sites have finally topped e-mailing and other online communication activities.
Last month, people spent 40.2 percent of their time online viewing content (see chart at right), more time than they spent on communication (39.8 percent), commerce (15.8 percent), or search (4.3 percent), according to an Internet Activity Index released Thursday. It was the second straight month that the index had shown content as the highest-rated activity.
A year earlier the same survey showed a dramatically different picture: E-mail and other communication occupied 45.2 percent of people's online time with content at just 35.3 percent, commerce at 16.5, and search at 3.0.
"What we've been seeing is slowly but surely the amount of time spent on content is going up and up," says Michael Zimbalist, president of the Online Publishers Association (OPA), which commissions the monthly study from Nielsen//NetRatings. One reason, he says, is the rise of broadband connections, which allow users to be online continuously and to quickly access content such as video and audio. The number of people using broadband to access the Internet surpassed those using dial-up phone connections for the first time in July.
The survey is meant "to provide a kind of macro view of what's happening on the Internet in these four distinct areas," Mr. Zimbalist says. Government sites, such as the Internal Revenue Service or other government agencies whose addresses end in .gov, were not included. Neither were school and university sites, whose addresses end in .edu.
The OPA also reported this week that consumer spending for online content in the first half of 2004 grew to $853 million, a rise of 14 percent over the same period in 2003. Online content includes activities such as downloading music and playing games, as well as subscriptions to online publications, but does not include buying products over the Net. The three fastest-growing areas in paid content are games, sports, and entertainment, Zimbalist says. Their growth is "fueled by a [younger] generation growing up with the Internet as part of their lives."
Yahoo!, the popular Web portal site, recently hired Lloyd Braun, the former chairman of ABC television, to head its media and entertainment group. Observers see that move as yet another effort to build bridges between the Internet and Hollywood's entertainment content. Previous efforts have failed, but were made before broadband connections to the Net were widely available. Websites already promote movies and television shows and offer ancillary activities such as games, contests, and background information. So far the Web has not become a major vehicle for delivering video.
But the popularity of the JibJab.com political cartoon site during the recent election showed how quickly original Internet programming can find an audience in the millions. The clever musical videos are free to watch, paid for by display advertising and sales of related materials.
Subscription fees, similar to what premium cable TV channels charge, are seen as another possible revenue model for online content.
The definition of what is content on the Web is a broad one, says Michelle Manafy, editor of EContent magazine. Any smart business has a Web presence, she says. "We believe that all organizations are content publishers now."
The Internet attracts people looking for content because they can "find information in real time rather than waiting for a newspaper to come out or the evening news," Ms. Manafy says, "a sort of at-your-leisure, on-your-own-time" way to find information.
In addition to the speed of broadband connections, bigger and better display screens "with incredible resolutions" are getting more people to stay online longer and read or view more comfortably, she says, noting that even the small video screens on mobile devices are improving.
Tracking these four types of Internet usage - and crowning content king - is useful, says Jonathan Zittrain, codirector of the Berkman Center for Internet & Society at Harvard University Law School. But the categories are likely to be inadequate to describe Internet activity in the future.
"My guess is we won't see the same four [categories] five years from now," he says. "The trick is not to just figure out how [the Internet is used now] but where it's going."
What may be needed, he suggests, is an "other" category because "it's from that slice of activity that the next generation of killer applications might grow and in turn completely transform our understanding of how people are using the Net."
As more and more kinds of devices are hooked up to the Internet, an index of Web activities may become harder to define. People playing online video games against each other may not even think of themselves as "on the Web." Would we have an Electricity Activity Index today, Professor Zittrain asks, that measures if you're "using" the refrigerator more? "What does that mean? The thing is on all the time keeping the food cold."
The categories describing Internet activity may have to change, just as many of the stocks making up the Dow Jones Industrial Average aren't the same as they were in 1950, he says.
The only certainty may be that online content of some kind will be king. "The Internet is inherently an information medium," he says. "It's too efficient and sensible a way to distribute information for it not to become very powerful. That, I think, is the good news for online publishers."