Sussing Out The Broadband Consumer A new study commissioned by a frightened old-economy industry--radio--looks at the habits of users with fast Web links. It's a glimpse of our broadband future.
By Stewart Alsop

(FORTUNE Magazine) – Have I told you about my new routine for writing this column? Early Monday morning (and I mean early, as in 5 A.M.), I sit down at my DSL-armed desktop computer in the Digital Manor, fire up Microsoft Word, and tune in my favorite radio station--at www.koit.com on the Web. That's right, like millions of other people, I now listen to radio on the Web. The station, in this case San Francisco's KOIT (96.5 on the FM dial), "streams" its broadcast onto the Internet. This gives the station an additional opportunity to get people to listen, which seems like a good thing.

Of course, to the old-economy types in the radio industry, my broadband DSL connection is also a threatening thing. Why could adding audience be scarifying? Because any change as big as the Internet leads to further unanticipated changes--like maybe radio stations don't need to broadcast at all! Or maybe the Internet changes the way people want to hear music. Who knows?

Anyway, I'm not a radio guy, and this is not a column about radio. It's about a study the radio guys ordered up, I'm sure, because they're so worried about the broadband Internet that's just around the corner (once the cable and phone companies actually install the stuff, that is). These guys are so worried that they invited me, strictly a computer guy, to be a panelist at their National Association of Broadcasters conference, where they unveiled the results of the study of people with fast Internet connections. (You can find "Can Radio Survive the Broadband Revolution?," which was done by two research outfits, Coleman and Arbitron, at www.colemanresearch.com.)

The first thing that popped out at me was how happy people seem to be with the Internet, once they get faster connections. Okay, it does seem patently obvious that anyone who wants to be connected to the Net would be happier with a faster connection. But what struck me is how happy these people are! The study showed that 85% of the people with broadband connections to the Net report themselves to be happy with the service. Fewer than half of these people are happy with radio or television. I get that: Ever since the Net came along, I've been getting really itchy about having to watch television or listen to radio on someone else's schedule. And the ads! I cruise the Net without listening to or reading ads, and then TV networks expect me to sit still through two or three minutes of their commercials! Not likely.

But broadband is about more than just getting the stuff you're accustomed to at top speed. For instance, DSL ushers you into a world of constant connection--whenever your PC is on, you're hooked into the Net (just like at work). And having top speed means you experiment with stuff that drove you nuts over a slow dial-up connection, like audio and video. The Arbitron/Coleman study discovered that broadband people spend about the same amount of time using the Net as watching TV or listening to the radio. If that's the broadband future, then we're looking at a major shift: For 40 years television and radio have dominated media consumption. Suddenly households may spend just as much time in front of their computers as their TV sets or radios.

What they'll do while they're online is even more interesting. Being for the radio crowd, this study focused on consumers' media habits. But nearly half the households reported that they shopped more on the Web once they got broadband. This was unexpected, but it makes sense if you think about it. As your PC gets more integrated with the Net, it feels safer and more a part of your life, so you start trusting it for stuff like shopping.

Getting back to the music business, I found one other result fascinating. Call it part of the Napster phenomenon. The study found that the younger you are, the more likely you are to download music; the older you are, the more likely you are to listen to streamed music. (Downloading means you transfer the digital file to your PC; streaming means listening to a digital file from a remote server as it is played.) Napster enables people to download music free, and the majority of Napster users are college students and other youngsters with broadband connections. If you're a radio guy you'd like this result to mean that the older (i.e., richer) you get, the less compelled you are by free music, implying that this younger generation will grow to enjoy having someone else choose and play music for them. Or you could be distressed and decide that this younger generation, the generation that you were counting on as your next listeners, expect free music. So much for future revenue streams.

Whatever the truth of the Napster phenomenon, this Arbitron/Coleman study made one thing clear to me: We are on the precipice of a major change in our behavior. Right now about three million households have a cable modem or DSL connection to the Internet. Most believable forecasts call for 15 million to 20 million households to acquire fast Net service by 2003. If this study is on target, it's easy to imagine that we're changing from a nation of couch potatoes into a nation of surfers, shoppers, and media mavens.

STEWART ALSOP is a partner with New Enterprise Associates, a venture capital firm. Except as noted, neither he nor his partnership has a financial interest in the companies mentioned. He can be reached at alsop_infotech@fortunemail.com. His column can be bookmarked online at www.fortune.com/technology/alsop.