Personal Finance
Income fuels digital divide
June 20, 2000: 8:34 a.m. ET

Report finds ethnicity, age are also factors in Internet-usage gulf
By Staff Writer Rob Lenihan
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NEW YORK (CNNfn) - The rich aren't only getting richer, a new report finds they're also getting wired.

The study by Internet research company Jupiter Communications Inc., entitled "Assessing the Digital Divide(s)" offers new population projections for Internet use from 1999 through 2005. The report covers such areas as age, income, gender and ethnicity.

While the report found extensive gaps continue to exist between ethnic groups and age groups, the widest chasm existed between high-income and low-income households.

Most experts were optimistic about the future, however, saying the Web gap will narrow as the Internet becomes a greater factor in more people's daily lives.

The report also found that in 2000, for the first time, more women than men will be online in the United States.

"While the online gender mix does not match that of the U.S. population, the gender gap has essentially closed," the report said.

Critical mass

Until 2005, Jupiter (JPTR: Research, Estimates) projects the wealthiest segment, or those with household income over $75,000, will continue to be the largest segment online. By contrast, the report found less than half of U.S. households with average incomes under $15,000, about 19 percent of the country's population, will be "Netizens" by 2005. graphic

The study said there will be about 15 million of the wealthiest households online by the end 2000 and close to 20 million in 2005. The poorest segment will represent 3 million online households and grow to 9 million by 2005.

"For the Internet to be a true mass medium, it will have to achieve higher penetration among all consumer segments," said senior analyst David Card.

However, Card added, when underreached segments reach critical mass penetration of 15 percent, businesses serving online consumers should be encouraged, as these relatively small markets can generate revenue for content and services targeted at specific communities.

"When VCR's reached about 15 percent penetration in the United States, that's when Blockbuster was created," Card said. "You had this whole new business explode."

Youth movement

Teen-agers and kids from low-income households will gain Internet experience at school, Card said, and personal computer and Net access pricing pressures will increase Web access.

"The kids will use the computer at school, they'll get addicted to it, and they'll go home and buy it eventually," he said.

Computer industry expert Mark Bunting said the economic Web gap is not surprising, but he said prices should come down with the proliferation of free dial-up services and the continued lowering cost of hardware. graphic

"I'm an eternal optimist," said Bunting, who is also a television show host. "Prices will come down as the Internet becomes an unavoidable reality of what you do every day."

Bunting said the growth of the Internet should mirror technological advances of the past, such as the telephone and the automobile, which were once exclusively used by the wealthy.

Among older Americans, the Jupiter study projected that 5.6 million seniors -- over age 65 -- will be online, along with another 17 million older adults, ranging in age from 50 to 64. Also, 32 million older adults and 17 million seniors will be online in 2005.

However, the report said 36 million U.S. consumers over 50 won't be online, and Jupiter said it does not expect Internet penetration among seniors to reach 50 percent by 2005.

"The lag is dependent on both income and discomfort with PCs, leaving opportunities that can be exploited with easier-to-use, lower-cost appliances and online services," the study said.

Ethnic and gender differences

Based on household access, the Jupiter study found distinct gaps existed in U.S. Internet penetration based on ethnicity, as currently 60 percent more white households are online than African-Americans are.

But while African-American and Hispanic American segments have the lowest Internet penetration, they reached levels of 30 percent and 33 percent respectively in 1999, exceeding critical mass. As more low-income households come online, the report predicted the ethnic digital divide will close.

Jupiter forecast that 4.6 million African-American households will be online by the end of 2000, compared to 3.8 million Hispanic households and 2.2 million Asian-American households. Card noted that Asian-Americans were the most wired group.

"The number of African-American and Hispanic households online will increase annually at double-digit rates for the next five years," the report said.

In the gender category, the study found women tend to respond more favorably to affinity programming and less favorably to technology-based gimmicks than men do.

Women participate less in financial and work-related online services less, but view health-related sites and local content more than men do. Women also appear to favor games and sweepstakes more than men, the report said. Back to top


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