After the crash

As Internet business models soured, the World Wide Web still grew 33 percent

On the surface, it was a bad year for the Internet.

The bust left hundreds of companies out of business, thousands of people out of work, and millions of investors out-of-pocket.

But as investors and the economy tried to avoid being sucked down in the whirlpool created when companies and their stocks capsized, the actual, everyday world of cyberspace continued to transform the ways we live, work, study, play, and just, well, waste time.

Part of the reason that some people may have missed the significance of the Internet's increasing impact is that it was no longer a fad, but more and more an everyday part of life, and thus less noticeable.

Even if you decided you didn't want to use it to buy groceries, when you clear out all the Wall Street static, the facts online speak for themselves: Web users grew at a healthy pace.

As of August 2001, more than 513 million people were online, an increase of about 150 million from the year before. And that's not counting the many others who signed up after Sept. 11. Many of them came from the US - 72.3 percent of Americans use the Internet, an increase of about 6 percent from last year, according to the UCLA Internet Report 2001.

New classroom - the Internet

Take education, for instance. The Pew Internet and American Life Project found that "94 percent of youth aged 12-17 who have Internet access say they use the Internet for school research, 78 percent say they believe the Internet helps them with schoolwork, and 71 percent of online teens say that they used the Internet as the major source for their most recent school project or report."

Of course, that was when they weren't chatting online using AOL's Instant Messenger software. Almost 13 million American teenagers used some kind of instant message service as the new way to "hang out." Overall, about 130 million people used the new software so much that people referred to the current era of the Internet as "the instant message generation."

The Internet's role as a tool for communication was even more obvious in Europe, where an Internet-like system offered on cell phones called the Short Message Service (SMS) was responsible for almost 30 billion messages in Europe alone.

Next year, European and Asian cell phone providers hope to be able to offer even more services over cell phones, including streaming video (trials are already underway in South Korea). Globally, 950 million people currently use wireless phones, with that number reaching 1 billion by the summer of 2002.

People also used the Internet for more mundane tasks, often ones that meant they wouldn't have to stand in lines. Almost 50 percent of America's community banks now allow their customers to view their balances online, according to a 2001 survey by The Independent Community Bankers of America, with 39 percent of them allowing people to use the Net to pay bills. The other 50 percent say that moving in this direction is their top technology priority in the next 12 months.

And even if the overall retail market was down this Christmas, online shopping was way up. According to Neilsen NetRatings, online consumer spending in the US went up 91 percent from November. More important for online retailers, 45 percent of those surveyed said they were very satisfied with their experience, up more than 20 percent from last year.

One of the most interesting books written this year about the Internet and its future was Michael Lewis's "Next: The Future Just Happened" (reviewed July 19). One theme of the book is that technology acts as the "great leveler," often taking power away from the elites and giving it to the masses. A very important example of this happened late in 2001 when a New York Supreme Court Judge ruled in a libel case that online journalists have the same "heightened" First Amendment rights that protect big media outlets like The New York Times or CBS. Basically, the ruling means that anyone who publishes a website and does his best to tell a story fairly is a "journalist" - even if he's never worked in a newsroom or attended a journalism school. He or she is entitled to the protections of a journalist.

Meanwhile, in an astonishing view of the future, Tim Berners-Lee, the man who invented the World Wide Web, published an article in Scientific American that looked forward to a Web where personal "agents" will be able to semantically process and "understand" the contents of a Web page and use inference rules to conduct "automated reasoning." No more hunting around on Google for the best restaurant in your area. Your own agent (a personal search engine) will know you like to go out on Thursday nights and already have a list of restaurants that you like (or might like) waiting for you to look at, even before you ask for them.

But perhaps the Internet's greatest impact came on on the day of, and in the days following, the terrorist attacks on New York and Washington. Internet use reached new record levels in September and October, according to Neilsen, a jump of 15 percent from the year before. People used the Internet as a means to contact relatives, to find out about friends, to tell stories of survival, to share their grief, even to pray together. In fact, Jupiter Media Matrix released a list of sites that for the first time had at least 500,000 monthly visitors - and five of the top ones were patriotic sites, and two of them were prayer sites.

Worldwide, people used the Internet as never before as a way to follow the news about the terrorist attacks - so much so that websites for major media outlets were barely able to accommodate the flood of visitors who wanted to know what had happened. Traffic to newsites jumped 14 percent in September and much of that gain has been sustained, as people have moved away from just following mainstream US media to supplement their news diets with overseas and alternative sources.

Nowhere has this desire for alternative sources been more obvious than in the success of weblogs (collections of links and observations of interest to the weblog's creator), a new form of Web journalism most often practiced by nonjournalists.

As we enter 2002, look for the Internet to continue to grow, especially overseas, and for prominent online companies to start to make money, like, Priceline, and the New York Times' digital operation. Nevertheless, industry analysts say it may take awhile for the high-tech sector to recover from the current recession.

Slouching towards Redmond, Wash.

Meanwhile, in other technology-related news, Microsoft emerged slightly bloodied, but completely unbowed in its antitrust battle with the states and federal government, when a last-second agreement with President Bush's new Department of Justice team left competitors and the attorneys general from nine states yelling "Foul!"

On another front, the Recording Industry Association of American (RIAA) beat back Net upstart Napster with the help of the courts. The battle left online song swappers looking for alternatives, and the recording industry looking for ways to make consumers pay for the same music twice - once for listening on their Walkmans and then again on their computers.

After Sept. 11th, when people's number-one worry was catching terrorists, the FBI's Carnivore e-mail snooping program came back, hungrier than ever. The FBI also talked of using computer viruses to hack into people's computers in order to follow their key strokes or perhaps listen to their conversations.

Civil libertarians worried that one of the costs in the war on terrorism would be our online privacy. And a new computer virus had security consultants and systems administrators screaming "Code Red, Code Red!"

So while the Web appeared down in 2001, look for it to flourish anew in 2002.

Sales for video games are roaring. High-speed Internet access will get itself straightened out. And don't forget the looming giant of digital TV. Meanwhile in Europe, the EU wants to encourage "eGovernment." Watch for European Parliamentary elections to be conduct via e-mail in some places.

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