internet publishing and broadcasting in the us industry report

WWW.IBISWORLD.COM� Internet�Publishing�and�Broadcasting�in�the�US February 2011 1

IBISWorld Industry Report 51913bInternet Publishing and Broadcasting in the USFebruary�2011� Casey�Thormahlen

The big bang: Revenue will surge ahead, aided by strong advertising and demand

2� About�this�Industry2 Industry Definition

2 Main Activities

2 Similar Industries

3 Additional Resources

4� Industry�at�a�Glance

5� Industry�Performance5 Executive Summary

5 Key External Drivers

6 Current Performance

8 Industry Outlook

10 Industry Life Cycle

12� Products�&�Markets12 Supply Chain

12 Products & Services

12 Demand Determinants

13 Major Markets

14 International Trade

15 Business Locations

17� Competitive�Landscape17 Market Share Concentration

17 Key Success Factors

17 Cost Structure Benchmarks

18 Basis of Competition

19 Barriers to Entry

19 Industry Globalization

20� Major�Companies20 Google Inc.

21 Amazon.com

22 Yahoo! Inc.

24 Apple Computer Inc.

25 Facebook

27� Operating�Conditions27 Capital Intensity

28 Technology & Systems

28 Revenue Volatility

29 Regulation & Policy

29 Industry Assistance

30� Key�Statistics30 Industry Data

30 Annual Change

30 Key Ratios

31� Jargon�&�Glossary

www.ibisworld.com��|��1-800-330-3772��| ��[email protected]


This industry consists of organizations and individuals which publish or broadcast news, videos, images or written content exclusively over the internet. This industry includes social networking

websites, internet radio, video sharing websites and blogs (among others). This industry does not include search engines, internet service providers or publishers of offline content.

The�primary�activities�of�this�industry�are

Online video sharing and broadcasting

Internet based radio

Online news

Social networking

Online comics

Blogs

E-book publishing

Internet forums

Special interest websites

Podcasts

51212 Movie�&�Video�Distribution�in�the�USCompanies in this industry distribute movies and videos through offline channels.

51311 Radio�Broadcasting�in�the�USThis industry broadcasts music and other radio programs over radio waves, rather than over the internet.

51411 News�Syndicates�in�the�USOrganizations in this industry distribute news and other information for offline publication.

51419a Internet�Service�Providers�in�the�USThis industry provides internet access to consumers and businesses.

Industry�Definition

Main�Activities�

Similar�Industries

About�this�Industry

The�major�products�and�services�in�this�industry�are

Audio streaming services

Blogs

Forums and discussion boards

Image sharing

News

Other content

Social networking

Video streaming services


About�this�Industry

45411a E-Commerce�&�Online�Auctions�in�the�USCompanies in this industry sell products and services over the internet.

51913a Search�Engines�in�the�USSearch engines direct a large portion of traffic on the internet.

Similar�Industriescontinued

For�additional�information�on�this�industry

www.comscoredatamine.com�Comscore Datamine

www.paidcontent.org�PaidContent

www.quantcast.com�Quantcast

Additional�Resources

�IBISWorld writes over 700 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com


Mill

ion

150

0

25

50

75

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125

1602 04 06 08 10 12 14Year

Number of broadband connections

SOURCE: WWW.IBISWORLD.COM

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Revenue Employment

Revenue vs. employment growth

Products and services segmentation (2011)

32.6%Other content

3%Image sharing

27%News

2%Forums and

discussion boards 1.2%Audio streaming

services

13.7%Social networking

10.7%Blogs

9.8%Video streaming

services


Key�Statistics�Snapshot

Industry�at�a�GlanceInternet�Publishing�and�Broadcasting�in�2011

Industry�Structure Life Cycle Stage Growth

Revenue Volatility Medium

Capital Intensity High

Industry Assistance None

Concentration Level Medium

Regulation Level Light

Technology Change High

Barriers to Entry Low

Industry Globalization Low

Competition Level Medium

Revenue

$38.7bnProfit

$6.6bnWages

$5.6bnBusinesses

50,558

Annual�Growth�11-16

6.8%Annual�Growth�06-11

21.4%

Key�External�DriversNumber�of�broadband�connectionsTotal�US�advertising�expenditureDownstream�demand�from�search�engines�Price�of�computers�and�peripheral�equipmentCompetition�from�arts,�entertainment�and�recreation

Market�ShareGoogle Inc. 16.7%

Amazon.com 10.0%

Yahoo! Inc. 9.3%

Apple Computer Inc. 9.2%

Facebook 5.9%

p. 20

p. 5

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 30



Key�External�Drivers Number of broadband connectionsConsumers who use broadband connections to connect to the internet are better equipped to handle the data-intensive content (e.g. video streaming, large downloads and flash animation) of the modern internet. Consumers who are limited to dial-up internet access can only access a very limited subset of the content available on the internet. This driver is expected to increase during 2011, representing a potential opportunity for the industry.

Total US advertising expenditureAdvertising is one of the most potent methods of generating revenue for internet publishers. When advertisers increase their budgets, companies in this industry generally benefit. This driver is expected to increase during 2011.

Downstream demand from search enginesSearch engines are a major source of traffic for internet publishers and also provide advertising allocation services to

Executive�Summary

The Internet Publishing and Broadcasting industry is a powerfully disruptive force of innovation in the distribution of media. The increasing penetration of broadband internet connections and the decentralized nature of this network have radically increased competition with traditional media. Internet publishing has severely challenged newspapers, periodicals and print media by radically increasing the number of “soap boxes” for people to

broadcast their opinions and creativity. The result has been spectacular already, with revenue growing 21.4% annually from 2006 to 2011. In 2011 alone, revenue is expected to grow 18.8% to $38.7 billion. While traditional media outlets have struggled with large losses, this industry achieves an average profit margin of 17.1%. Promisingly, this technology’s benefits are reaching an enormously wide audience through entrepreneurship. More than 90% of

the industry’s 50,558 establishments are non-employers who produce their own blogs, news commentary, original art and videos.

During the five years to 2016, the wild west environment of the Internet Publishing and Broadcasting industry will begin to settle, becoming a mainstream media outlet nearly as quickly as it became a disruptive force. Industry revenue growth will slow to 6.8% annually through 2016, to $53.7 billion. While revenue growth is projected to slow, the volume of content produced will continue its dramatic climb over this period. The primary limiting factor to revenue growth keeping pace is the limited potential to monetizing that content; advertising is the primary source of revenue for internet publishers, so revenue cannot continue dramatic growth without similarly dramatic growth in advertising spending. Advertising spending in the United States is expected to grow 2.1% annually during the next five years, to $308.8 billion; however, the proportion of advertising budgets that is spent online is expected to continue growing dramatically, at an estimated rate of 12.0% annually.

Industry�PerformanceExecutive�Summary�� |�� Key�External�Drivers�� |�� Current�PerformanceIndustry�Outlook�� |�� Life�Cycle�Stage

� Advertisers will devote more of their budgets to online outlets, spurring industry growth


Industry�Performance

Current�Performance

The Internet Publishing and Broadcasting industry has produced meteoric growth during the last five years. From 2006 to 2011, industry revenue is expected to grow 21.4% annually, to $38.7 billion. In 2011 alone, industry revenue will rise 18.8% from 2010. Revenue figures alone actually understate the influence of this industry, because it offers so much content for free that in prior decades would have required subscription fees or newsstand visits. This revolutionary stance has caused major disruptions in other industries, particularly those involved in publishing and print media. Today, internet publishing is settling in as a mainstream form of media, though true

universal acceptance will only come with the aging of a generation. People over the age of 65 are far less likely to consume internet-distributed content than younger generations are.

This industry’s rise to power would have been far more uncertain without widespread adoption of broadband internet connections. Computer users without broadband internet connections (i.e. dial-up subscribers) face severe practical limitations to the amount and types of content they can consume online. With dial-up, streaming videos are impossible and images can take a long time to load, essentially limiting these subscribers to text-based content and e-mail. Broadband internet

Key�External�Driverscontinued

this industry. This driver is expected to increase during 2011.

Price of computers and peripheral equipmentThe price of computers and peripheral equipment is negatively related to the availability of such devices to the public, particularly people with low income. Therefore, when prices go up, fewer people can afford to purchase equipment to access the internet.

This driver is expected to decrease during 2011.

Competition from arts, entertainment and recreationInternet publishers compete for consumers’ scarce time, which may otherwise be spent enjoying arts, recreation or other forms of entertainment. This driver is expected to remain flat during 2011; however, it remains a potential threat for the industry.

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Total US advertising expenditure


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125

1602 04 06 08 10 12 14Year

Number of broadband connections



Current�Performancecontinued

connections have increased at a 22.4% annualized rate during the last five years to 128.1 million today.

Even with excellent content and ubiquitous access to it, the industry’s rise depended on answering the question that plagued the 1990’s dot-com bubble: how do you make money? For most websites, the answer has been advertising or subscription-based content, directly turning user visits into much-needed revenue. Online advertising is considerably less lucrative on an advertising-to-content basis than traditional advertising, but the speed, efficiency and accountability it offers is extremely attractive for advertisers. With innocuous tracking software, advertising networks (like Google’s AdSense system) can help advertisers precisely target their customers based on income, sex, location and even interests. This extent of targeting represents a quantum leap over traditional advertising, in which an

advertiser must display their ad for all readers of the newspaper (or similar medium). The industry produces profit equal to about 17.1% of revenue, or $6.6 billion in 2011; profit has been rising during the last five years as online advertising has gained more acceptance among advertisers.

Employment�and�establishments

In addition to revolutionizing the way companies advertise, internet publishing has created an enormous number of employment and entrepreneurship opportunities. The number of jobs in this industry has risen 12.6% annually to 119,461 in 2011. Similarly, the number of establishments has risen 13.3% annually, to about 50,558. However, more than 90% of these establishments are non-employers, reflecting an enormous

growth in entrepreneurs. These owner-operators include self-employed bloggers, online cartoonists, filmmakers and opinion writers. The average employee in this industry earns an enviable wage of more than $47,000. Even sweeter, this explosion in opportunity has exponentially increased the number of voices that can be heard in the media, giving the public a much greater diversity of opinions and creativity.

Internet�everywhere The reach of the Internet Publishing and Broadcasting industry grew dramatically during the last five years, driven by technological advancements and new electronic platforms. Faster wireless internet connections, including those provided by cell phone carriers, have

made broadband internet access commonly available on the go. In 2011, consumer electronics manufacturers are offering a diverse array of products that provide internet connectivity where it did not exist five years ago, within TVs, Blu-ray players and video game consoles.

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Industry revenue




Unrealized�opportunity

The full potential of the Internet Publishing and Broadcasting industry will not be realized during the next five years, despite its maturation. Internet publishing revolutionized the distribution of print media and news unequivocally, but it has had more difficulty extending that success to television and movie distribution. The wall holding the industry back from this second wave of success is

intellectual property agreements and the reluctance of old media content producers to make their content fully available online. These content owners are uncomfortable releasing their products into internet distribution for fear of reducing their own profitability, though they could certainly expect revenue and viewership gains if it was done in a controlled manner (i.e. avoiding piracy).

Expanding�universe The reach of the internet universe will continue its rapid expansion during the five years to 2016. Internet-connected home electronics are becoming mass

market products in 2011. As prices on these products come down and technology platforms mature, more people will have access to internet-based

Industry�Outlook

The Internet Publishing and Broadcasting industry will rapidly mature during the five years to 2016, almost as quickly as it leapt into the media as a disruptive force a decade ago. Industry revenue is forecast to grow at an average annualized rate of 6.8% through 2016 to $53.7 billion. Despite slowing revenue growth, the depth and quantity of content produced by this industry will hardly slow; revenue growth will lag, not because of less content production, but diminishing returns to the monetization of that content. Advertising networks like Google’s AdSense already distribute advertisements alongside website content efficiently and effectively, so adding more content without a drastic increase in advertising budgets will cause growth to slow. Fortunately for this industry, advertisers are spending larger portions of their budget online. In 2012 alone, revenue is expected to rise 16.1% to $44.9 billion.

Profitability in the internet publishing business will weaken only marginally during the next five years, primarily due to moderate increases in wages in

relation to revenue. Wages are expected to rise 3.0% annually over the five years to 2016, consuming 12.1% of revenue, down from 14.5% in 2011. The entrepreneurial spirit that drove growth early on will continue to drive the way the industry uses resources. While the number of industry jobs is expected to grow 3.8% annually, the growth in the number of establishments will outpace it at 5.0% annually to 64,674 in 2016. Experienced workers in the Internet Publishing and Broadcasting industry will branch out on their own to start their own blogs, news websites and online communities. They will certainly not lack an audience: the number of broadband connections in the United States is expected to rise 2.5% annually to 145.1 million in 2016.

� Advertisers will spend larger portions of their budgets online, resulting in solid revenue growth



Expanding�universecontinued

content in a greater variety of places. Internet-connected televisions, including those built on the GoogleTV platform, will be particularly important in making the internet a truly universal medium in the United States. Smartphone ownership will also drive growth in this industry, driven particularly by open source operating systems like Google Android; Google’s decision to give away this mobile

operating system is encouraging cell phone manufacturers to move away from simpler phones, because production of smartphones does not require much more in manufacturing costs. Wide availability of broadband internet on cell phones will unlock the potential for location-based services, including location-aware advertising and offers, further expanding the industry’s reach.


Industry�PerformanceMarket potential is expanding rapidly

Technological innovations favor industry growth

Revenue is expected to grow dramatically over the next five years

Life�Cycle�Stage


30

25

20

15

10

5

0

–5

–10–10 100 20–5 155 25 30

%�G

row

th�o

f�pro

fi�t/G

DP

%�Growth�of�establishments

DeclineCrash or Grow?

Potential�Hidden�GemsFuture Industries

Quality�GrowthHigh growth in economic importance; weaker companies close down; developed technology and markets

Time�WastersHobby Industries

MaturityCompany consolidation;level of economic importance stable

Shake-out

Shake-out

Quantity�GrowthMany new companies; minor growth in economic importance; substantial technology change

Key�Features�of�a�Growth�Industry

Revenue grows faster than the economyMany new companies enter the marketRapid technology & process changeGrowing customer acceptance of productRapid introduction of products & brands

E-Commerce�&�Online�AuctionsSoftware�Publishing

Movie�&�Video�Distribution

Data�Processing�&�Hosting�Services

Radio�Broadcasting

Internet�Publishing�and�Broadcasting



Industry�Life�Cycle The Internet Publishing and Broadcasting industry is solidly in the growth phase of its life cycle. During the ten years to 2016, industry value added is expected to climb at a 6.3% annual rate, to $10.7 billion, significantly faster than the growth of the overall economy. This industry is a hotbed for innovation and has played a significant role in the life-cycle downturns of competing traditional broadcasters, particularly in print media (e.g. newspapers). While regulatory and intellectual property

rights currently provide protection to other broadcasters, particularly premium cable television broadcasters, loosening of such rules would produce outcomes similar to what happened with print media (these events are not included in the industry forecast). Internet publishing is continuously proving to be a force for democratization of media, enabling would-be writers to distribute their content in ways that were once reserved for authors with contacts at publishing firms.

�This industry is Growing


DemandDeterminants

Demand for internet publishing and broadcasting is highly dependent on the availability of broadband internet access and computers. The industry’s ability to

generate revenue is also tied to the size of online advertisers’ budgets; contextual ads, banner ads and interactive ads are the sole source of

Products�&�Services

Internet publishers produce an extremely diverse array of content. The most popular website categories (by unique visitors) are news (27.1%), social networking (13.7%), blogs (10.7%) and video streaming (9.8%). Image sharing, audio streaming and discussion boards are considerably less popular (3.0% or less of unique visits). Other types of websites bring in 32.6% of unique visits,

representing the largest and broadest category; “other content” websites include informational and special interest websites. The near-infinite array of interests represented on the internet ensures that just about any content type has a constituency. Social networking websites have been growing very quickly in popularity: the largest social network, Facebook.com, was launched in 2004.

�Products�&�MarketsSupply�Chain�� |�� Products�&�Services�� |�� Demand�DeterminantsMajor�Markets�� |�� International�Trade�� |�� Business�Locations

KEY�BUYING�INDUSTRIES

9901� Consumers�in�the�US�The general public consumes the content produced by internet publishers and broadcasters.

KEY�SELLING�INDUSTRIES

51121� Software�Publishing�in�the�US�This industry provides software used by internet publishers to create and publish their content.

51419a� Internet�Service�Providers�in�the�US�Internet publishers pay companies in this industry for internet access.

51421� Data�Processing�&�Hosting�Services�in�the�US�Companies in this industry provide website hosting services for internet publishers.

Supply�Chain

Products and services segmentation (2011)

Total $38.7bn

32.6%Other content

3%Image sharing

27%News

2%Forums and

discussion boards 1.2%Audio streaming

services

13.7%Social

networking

10.7%Blogs

9.8%Video streaming

services



Products�&�Markets

Major�Markets

The income demographics of consumers of internet-based content skew wealthier than the overall population. There are two primary reasons behind this skew in the number of users: wealthier consumers are more likely to have internet access at home and at work; poorer consumers are more likely to share internet and computer access and have less time to spend on the internet. Households with different income levels have different consumption patterns with

regard to types of internet content. Blogs, audio streaming and image sharing websites are each visited in roughly equal rates by all demographics.

Low incomeLow income internet users are slightly more likely than average to visit social networking websites. Social networking websites include Facebook.com, Myspace.com, Twitter.com, Tagged.com and LinkedIn.com. This demographic is

DemandDeterminantscontinued

revenue for many websites. Internet publishers compete with other forms of entertainment (e.g. sports, television and hobbies) for the scarce leisure time of consumers. If consumers begin spending more time playing sports then, all else being equal, they will spend less time viewing internet content.

The availability of attractive content is also a major driver of industry demand. Demand for video streaming is currently limited because content providers are reluctant to fully embrace internet broadcasting, for fear of cannibalizing revenue generated from traditional media sources like cable television. Hulu, a joint venture of

several TV networks, is routinely hobbled by its owners placing limitations on the number of TV episodes available online. Restricting the legal availability of content online also tends to encourage piracy. Low likelihood of prosecution and broad content availability encourage some consumers to resort to online piracy of content (particularly movies, music and TV shows), typically through peer-to-peer file sharing services. If the content is conveniently and legally available online, most consumers will choose to purchase content through legal avenues, as evidenced by the success of Apple’s iTunes.

Major market segmentation (2011)

Total $38.7bn

30%Household incomes

over $100,000

27.9%Household incomes

between $60,000 and $100,000


between $30,000 and $60,000


under $30,000



Products�&�Markets

International�Trade This industry is not involved in the international trade of any goods or services. Internet publishing and

broadcasting is a global enterprise however, with US sites attracting visitors from non-US addresses on a regular basis.

Major�Marketscontinued

less likely than average to visit special interest and informational websites. Lower income internet users are also the most likely to access the internet via mobile phones, because computers and high speed internet connections can be difficult to afford on a consistent basis for this demographic. The major social networking websites (i.e. Facebook and Twitter) are optimized for mobile internet access, which makes it easy for this demographic to keep in touch with friends at all times.

Medium incomeMiddle income internet users are more likely than average to visit special interest and informational websites like Wikipedia.com, IMDb.com, WebMD.com and CNET.com. This demographic is also slightly more likely to visit news websites like MSN.com, CNN.com, Foxnews.com,

Huffingtonpost.com, and TMZ.com. Middle income internet users are more likely than most to use the internet as an informational and news resource, and commonly use it to access reviews and research products when making purchasing decisions.

High incomeHigh income internet users are more likely than average to visit news websites, as well as forums and discussion boards like Reddit.com, Digg.com and Ivillage.com. This demographic is slightly less likely to visit video streaming (Youtube.com, Metacafe.com, Hulu.com) and special interest websites. High income internet users are less burdened by expensive traditional media subscriptions (e.g. cable TV); therefore, they are less likely to seek out free content online.


�Products�&�Markets

Business�Locations�2011

MO0.2

West

West

West

Rocky Mountains Plains

Southwest

Southeast

New England

Great Lakes

VT0.1

MA5.5

RI0.0

NJ4.3

DE0.2

NH0.2

CT2.4

MD1.1

DC1.2

1

5

3

7

2

6

4

8 9

Additional�States�(as marked on map)

AZ0.6

CA22.7

NV0.3

OR0.8

WA2.8

MT0.1

NE1.4

MN0.9

IA0.1

OH11.7 VA

4.8

FL3.0

KS0.3

CO2.3

UT1.0

ID0.1

TX3.7

OK0.4

NC0.4

AK0.0

WY0.1

TN0.5

KY0.3

GA3.1

IL3.5

ME0.1

ND0.1

WI0.2 MI

1.2 PA1.1

WV0.0

SD0.1

NM0.1

AR0.1

MS0.1

AL0.0

SC0.0

LA0.1

HI0.2

IN0.2

NY16.4 5

67

8

321

4

9


Mid- Atlantic

Revenue�(%)�

� Less�than�3%� 3%�to�less�than�10%� 10%�to�less�than�20%� 20%�or�more


�Products�&�Markets

Business�Locations The Internet Publishing and Broadcasting industry is most heavily concentrated in the West and Mid-Atlantic regions. The West produces 26.7% of industry revenue, while the Mid-Atlantic produces 24.3%. The Great Lakes and Southeast region are the next largest, with 16.9% and 12.5% of revenue, respectively. California is the most productive state for this industry, generating 22.7% of revenue. New York comes second, with 16.4% of revenue. Ohio (11.7%), Massachusetts (5.5%) and Virginia (4.8%) round out the top five states in this industry by revenue. The states with the highest concentrations of industry revenue all have wide availability of broadband internet access, which is a major infrastructure requirement for the consumption of this industry’s services. States with low levels of broadband internet access, particularly rural states like Wyoming or Montana, have a very small presence in this industry. Increasing broadband

penetration into rural states could significantly change the geographic landscape of this industry during the five years to 2016.

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RevenuePopulation

Distribution of revenue vs. population



Cost�Structure�Benchmarks

The Internet Publishing and Broadcasting industry is highly profitable, reaping about 17.1% of revenue as profit. The cost of labor was once the most costly expense for this industry, but this has declined substantially over the last five years. In 2006, wages consumed 28.9% of industry revenue, with the average employee earning $64,000. In 2011, wages will account for 14.5% of revenue and workers will earn $47,000 on average. Industry wages have fallen over this period due to growth in the number of small time

operators and employees engaged in marketing or writing; growth in these employee segments have diluted the impact of higher wage employees involved with IT, database management and software development. This trend is expected to continue during the five years to 2016, with wages falling to just 12.1% of revenue.

In 2011, purchases will be the largest expense for companies in this industry, at 15.0% of revenue. This expense includes computer equipment, software,

Key�Success�Factors Developing a clear nicheWebsites live and die by the loyalty of their fans and their ability to keep them interested in the site. Successful websites cultivate a unique culture and continuously appeal to their user base.

Word of mouth recommendationsWord of mouth recommendations are an invaluable way to build up a website’s user base. Websites that can successfully get users to talk to their friends about the site, especially offline, tend to grow faster.

Access to investment fundingFor many websites, investment funding (e.g. venture capital funding) is an

essential bridge from a website’s initial growth phase until it develops a way to monetize its traffic.

Producing content currently favored by the marketInternet users can be extremely fickle. Keeping fresh content that is currently popular with users is a crucial element to a website’s survival.

Attracting advertisersAdvertising is a major source of industry revenue. Unless a website can convince users to pay subscription fees or sell merchandise, websites must attract advertisers to generate revenue.

Market�Share�Concentration

The four largest companies in the Internet Publishing and Broadcasting industry control about 45.2% of industry revenue. Low start-up costs, minimal barriers to entry and the industry’s appeal to hobbyists create an environment that encourages the start up of new players.

Acquisitions are a routine feature of this industry, but they rarely have a significant effect on concentration. Major companies like Google or Facebook may purchase a smaller

company that has a particular product or technology in the hopes of improving their existing offerings or to safeguard against patent lawsuits. Yahoo, AOL and other internet content holding companies prefer to acquire websites that consistently generate popular content and offer significant value for generating advertising revenue. Facebook is a fast rising competitor in this industry and an increasingly important force in the distribution of internet media.

Competitive�LandscapeMarket�Share�Concentration�� |�� Key�Success�Factors�� |�� Cost�Structure�BenchmarksBasis�of�Competition�� |�� Barriers�to�Entry�� |�� Industry�Globalization

Level��Concentration in this industry is Medium

�IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:


Competitive�Landscape

Basis�of�Competition Externally, the Internet Publishing and Broadcasting industry competes for the leisure time of consumers. In this respect, the industry primarily competes against other forms of entertainment including: recreational sports, radio broadcasting, television broadcasting, tourism, newspaper publishers, book publishers, video game publishers and periodical publishers. Internally, internet publishers compete with each other for the attention of users by offering original content,

attractive web design, ease-of-use (website usability) and popularity among other users (i.e. websites that are popular tend to get more popular and vice versa). The popularity of any individual website or service often has significant impact on the advertising rates the website is able to charge. Social networking websites (e.g. Facebook) have exploded in popularity during the last five years by combining exclusive content (non-members can’t view profiles or pictures) with socializing.

Cost�Structure�Benchmarkscontinued

and office supplies. Industry operators routinely purchase new computers and software to replace obsolete equipment and keep software up-to-date. Spending on new software rises particularly in years in which Microsoft releases new versions of the Windows operating system. Depreciation consumes 7.0% of industry revenue, principally accounting for the rapid obsolescence of existing computers. Office space rental and utilities account for 6.0% and 2.5% of industry revenue, respectively.

Industry specific expensesCompanies operating in different segments of this industry have unique

expenses related to their operations. Most companies in this industry spend an average of 12.4% of revenue on advertising expenses, which they split between banner ads and search ads. Advertising helps increase traffic to their websites and can help build a loyal user base. Sellers of digital books and music pay royalties to content owners, which average 6.0% of revenue. Companies that run advertising networks (e.g. Google, Yahoo and Microsoft) pay about 5.0% of the revenue they garner from ads back to the owner of the website; this expense is referred to as traffic acquisition costs (TAC).

Industry�Costs�and�Average�Sector�Costs■�Profi�t■�Rent■�Utilities■�Depreciation■�Other■�Wages■�Purchases

Industry�Costs�(2011)�

Average�Costs�of�all�Industries�in�sector�(2011)�

17.1Profit

15.014.537.97.02.5

6.0

9.9Profit

19.320.437.27.4

2.2SOURCE: WWW.IBISWORLD.COM

0 100%

3.5

Level�&�Trend��Competition in this industry is Medium and the trend is Steady


Competitive�Landscape

Industry�Globalization

The Internet Publishing and Broadcasting industry is not particularly involved in globalization. Most firms in the industry are domestically owned, and no products or services are traded across borders. However, the borders of traditional nation-states are essentially irrelevant to the internet, so users from different countries can easily access and enjoy the same content (unless there are licensing constraints). Google earns a little more than half of its total revenue

abroad and half of Facebook’s users live outside the US. Google achieves its excellent international penetration by striving for localized results, routinely hiring native speakers to improve the relevancy of their searches. In 2010, Google pulled its operations out of mainland China due to privacy concerns and security breaches relating to Chinese censorship; for the time being, Google serves the mainland China market from servers based in Hong Kong.

Barriers�to�Entry The Internet Publishing and Broadcasting industry has extremely low barriers to entry. New entrants can launch a website with just the code for the site, cash for hosting and internet access fees and determination. Regulation is extremely light and does not inhibit new entrants. The most significant barrier to entry is the development of the code or software to build the website, which can range from the very simple to the exceedingly complex. A wide variety of vendors offer free or by-fee services that allow a website developer to

create websites from existing templates or toolsets (e.g. Wordpress, Blogger, Blogspot and Tumblr).

Barriers�to�Entry�checklist� LevelCompetition MediumConcentration MediumLife Cycle Stage GrowthCapital Intensity HighTechnology Change HighRegulation & Policy LightIndustry Assistance None


Level�&�Trend��Barriers to Entry in this industry are Low and Steady

Level�&�Trend��Globalization in this industry is Low and the trend is Steady


Player�Performance Google is the world’s largest search engine. Google operates in this industry through its Blogger (a blogging platform) and Youtube.com (video sharing) subsidiaries. Google’s AdSense affiliate program also contributes to its operations in this industry. Youtube.com is the online video site, and the fourth largest website in the US by unique visitors (behind Google.com, Facebook.com and Yahoo.com). Blogger is the largest blogging platform, which includes Blogspot.com. Google offers a wide array of free services, including web-based e-mail and office productivity suites (competitors to Microsoft Office). Google generates 97% of its revenue from online advertising, chiefly through its AdSense platform.

StrategyGoogle’s main revenue source, advertising, is set up in such a way that very little of the company’s resources are spent maintaining and administering advertising sales. Google AdSense is a self-serve advertising platform, allowing advertisers to create ads and bid for ad placement independently. Google uses automatic processing algorithms to approve and disapprove of ads, as well as to place those ads on a variety of advertising properties. Through AdSense, advertisers can bid to place ads on a Google search engine result page (SERP) for specific keyword combinations, which can be further refined based on data Google has about the search user (e.g. location, gender or income level).

Advertisers can also use AdSense to place ads on websites not owned by Google, but enrolled in the AdSense program, based on the relevancy of the ad to the website. Website owners receive a small proportion of this revenue, which varies from site to site.

Google spends most of its engineering and software development resources developing products that will be distributed freely, on iterative improvements to its search algorithms or on tangentially-related research and development. Google’s focus on innovation has produced many of its most popular services, including: Gmail, a web-based e-mail service; Android, an open-source mobile operating system; and Chrome, a lightweight internet browser. By giving services away for free, Google encourages more people to use its

�Major�CompaniesGoogle�Inc.�� |�� Amazon.com�� |�� Yahoo!�Inc.Apple�Computer�Inc.�� |�� Facebook�� |�� Other�Companies

48.9%Other

Google�Inc.�16.7%

Amazon.com�10.0%

Yahoo!�Inc.�9.3%

Apple�Computer�Inc.�9.2%

Facebook�5.9%SOURCE: WWW.IBISWORLD.COM

Major�players(Market share)

Google�Inc.�(US�segment)��–�fi�nancial�performance

YearRevenue�

($ million) (% change)

2005 3,745 N/C

2006 6,045 61.4

2007 8,629 42.7

2008 10,680 23.8

2009 11,116 4.1

2010 14,893 34.0

2011* 16,137 8.4

*EstimateSOURCE: ANNUAL REPORT AND IBISWORLD

Google�Inc.��Market share: 16.7% Industry�Brand�NamesYoutube.com Blogger.com Google Google AdSense Google AdWords


Major�Companies

Player�Performance Amazon.com is the largest online retailer in the United States. Amazon started as an online bookstore, but it soon diversified to selling DVDs, CDs, MP3 downloads, computer software, video games, electronics, apparel, furniture and toys. Amazon competes in this industry through its sale of MP3 downloads and e-books (digital books). Amazon also owns the Internet Movie Database (IMDb), a popular destination for information about movies and actors. In 2007 Amazon launched the Kindle, an e-book reader that uses an

energy efficient “E ink” screen. By July 2010, e-book sales for the Kindle outnumbered sales of hardcover books from Amazon. Amazon’s online music store, Amazon MP3, launched in 2007 as the first digital rights management (DRM)-free music store.

StrategyThe core of Amazon’s business is online retail. Amazon strives to offer an enormous variety of goods, acting as a true “one stop shop” for online shoppers. Competition in the online retail space is

Player�Performancecontinued

products and websites, which increases the size of its search audience and thus revenue potential. Many of Google’s products function much more robustly if users are logged-in to their Google accounts; by using accounts in this way, Google can get a much more accurate idea of individual users’ behaviors and tastes, which it uses to customize the advertising seen by the user.

Financial performanceGoogle is truly the juggernaut in the Internet Publishing and Broadcasting industry, boasting rapid revenue growth

and immense size. In 2011 alone, Google’s US operations are expected to generate $16.1 billion in revenue, up 8.4% over 2010. During the five years to 2011, Google’s revenue grew at a 21.7% annual rate, from $6.0 billion in 2006. Google generates this revenue from search ads and “content ads,” which are displayed next to relevant website content. Google’s market share has gained rapidly during the last five years, primarily driven by its dominance as a provider of online advertising services, leading to the widespread use of AdSense on affiliate websites.

Google�Inc.�–�fi�nancial�performance

YearRevenue�

($ million) (% change)Net�Income�


2005 6,139 N/C 1,465 N/C

2006 10,605 72.7 3,077 110.0

2007 16,594 56.5 4,204 36.6

2008 21,796 31.3 4,227 0.5

2009 23,651 8.5 6,520 54.2

2010 29,786 25.9 8,857 35.8

2011* 32,933 10.6 10,355 16.9


Amazon.com��Market share: 10.0% Industry�Brand�NamesAmazon Kindle Amazon MP3 IMDb


Major�Companies

Player�Performance Yahoo is the second most popular search engine in the US, and a major publisher of internet content. Since 2009, Yahoo has been distancing itself from the “search engine” label because it has been unable to gain ground against its rival Google. Yahoo now prefers to focus on its content generating properties, including Yahoo.com and Flickr.com (an image sharing site). Flickr is the most popular dedicated image sharing website (Facebook is a larger social networking website that also hosts images). Yahoo’s

main website (Yahoo.com) acts as a “web portal” connecting users to their wide variety of free services, as well as displaying links to current news stories.

StrategyPrior to 2009, Yahoo’s main strength was search advertising, facilitated by the second largest customer base of search engine users. Yahoo has suffered from continuous erosion of its search market share (see 51913a – Search Engines) as it struggled to compete against Google.


extremely tight, but Amazon keeps a leg up on its rivals through the diversity of its products, responsive customer service and free shipping incentives. Customers who spend more than $25 can choose a slower free shipping option (shipping at most retailers is at least $5); customers who subscribe to Amazon Prime get free shipping on all of their purchases for a $100 annual fee. Amazon further enhances the customer service experience by allowing reviews on all of its items.

In the digital music market, Amazon is a potent price competitor. Amazon MP3 one-ups Apple’s iTunes store by offering music at a standard price of $0.89 per song, compared to iTunes’ $0.99. Furthermore, music purchased from Amazon does not include restrictive DRM technology, which prevents users from creating copies of their music. Despite these advantages, Amazon MP3 still trails behind iTunes, principally due to the latter’s strong affiliation with iPod media players.

In the digital book space, Amazon benefits from first mover advantage: Amazon’s Kindle was the first affordable, portable e-book reader. Kindle e-books can be read on most internet-connected devices, including computers, Kindle e-readers, Apple iOS devices (e.g. iPhone

and iPad) and Google Android devices. Amazon’s Kindle is the best selling dedicated e-reader, with its e-ink screen providing a key advantage: the Kindle can easily be read in direct sunlight and does not draw power continuously.

Financial performanceAmazon’s US media segment is expected to boast 10.0% annual revenue growth from 2006 to 2011. In 2011 alone, segment revenue is expected to rise 13.0% to $7.8 billion. Growth since 2007 has been driven by the launch of Amazon’s digital music and e-book stores.

Amazon.com�(US�media�segment)��–�fi�nancial�performance

YearRevenue�


2006 3,582 N/C

2007 4,630 29.3

2008 5,350 15.6

2009 5,964 11.5

2010 6,881 15.4

2011* 7,775 13.0


Yahoo!�Inc.��Market share: 9.3% Industry�Brand�NamesFlickr.com Yahoo.com Yahoo! Search Marketing Yahoo! Widget Engine


Major�Companies


Yahoo’s struggles against Google stem from Yahoo’s less systematic search algorithms (Google’s are entirely automated, whereas Yahoo allowed advertisers to promote their websites in line with standard results) and declining popularity of services like Yahoo Mail. In 2009, Yahoo signed an agreement with Microsoft to use Microsoft’s Bing search algorithms behind the scenes for Yahoo Search. The agreement allowed Yahoo to stop spending resources on search engine development while still receiving a portion of the proceeds from advertising on the SERP. Yahoo’s strategy from then onward has been to acquire and develop websites with established user bases, primarily generating revenue through advertising on those sites.

Yahoo has periodically improved its technology offerings through acquisitions. In 2007, Yahoo acquired Blue Lithium for $300 million. Blue Lithium offered a combination of behavioral targeting and analysis software to help optimize advertising campaigns; after the acquisition, Blue Lithium was renamed Yahoo! Advertising. In 2009 Yahoo faced a rollercoaster of upheaval: Yahoo’s board of directors rejected an acquisition offer from Microsoft, resulting in the ouster of founder and CEO Jerry Yang. After

rejecting Microsoft’s acquisition offer, Yahoo continued to face dwindling search marketing share and eventually ended up giving Microsoft access to Yahoo Search technology anyway. During this upheaval, Yahoo’s new CEO, Carol Bartz, sold off investments in Gmarket (a Korean shopping website) and Alibaba (a China-based business-to-business sourcing website) to generate liquidity.

Financial performanceDuring the five years to 2011, Yahoo is expected to achieve annualized revenue

Yahoo!�Inc.�–�fi�nancial�performance

YearRevenue�

($ million) (% change)Net�Income�


2005 5,258 N/C 1,877 N/C

2006 6,426 22.2 732 -61.0

2007 6,969 8.5 639 -12.7

2008 7,209 3.4 418 -34.6

2009 6,460 -10.4 598 43.1

2010* 6,530 1.1 1,450 142.5

2011* 6,686 2.4 1,355 -6.6


Yahoo!�Inc.�(US�segment)��–�fi�nancial�performance

YearRevenue�


2005 3,681 N/C

2006 4,370 18.7

2007 4,739 8.4

2008 5,190 9.5

2009 4,716 -9.1

2010* 4,898 3.9

2011* 5,148 5.1



Major�Companies

Player�Performance Apple competes in the Internet Publishing and Broadcasting industry through its iTunes Store division. With iTunes, users can download and manage a huge range of music, movies, television shows, podcasts or games. During the five years to 2011, Apple’s iTunes store is expected to boast annualized revenue growth of 25.8%, to $5.9 billion. In 2011 alone, IBISWorld expects 19.9% revenue growth for iTunes.

StrategyApple’s strategy with iTunes relies on two general principles: standardized pricing and association with premium products. Early on in the evolution of iTunes, Apple stood a hard line in negotiations with record labels; record labels wanted to be able to set prices on their albums and songs, while Apple pushed for standard pricing with minimal exceptions. In the end Apple got its way, which ended up being hugely beneficial to both Apple and the record labels. Prior to iTunes, the predominant method of acquiring digital music was through illegal sources (e.g. peer-to-peer networks like Napster, Limewire or Bittorrent). By standardizing music prices at $0.99 per song, Apple

successfully lured many music lovers away from free illegal music through convenience. If record labels had instead been allowed to price music at parity with retail CD sales, illegal distribution of music would likely continue to dominate.

The second half of iTunes’ success is really the success of Apple’s portable media devices. Apple was certainly not the first company to release portable digital music players, but it was the first to make them simple and easy to use. Apple’s iPhone smartphone and


growth of 3.3% to $6.6 billion, with 2.4% growth in 2011 alone. Yahoo’s growth has lagged significantly behind its newer rivals (Yahoo was founded in 1995, Google in 1998 and Facebook in 2004) during the last five years. Fundamentally, Yahoo’s vision for its role on the internet has changed fundamentally since its founding: Yahoo’s co-founder Jerry Yang always wanted Yahoo to be a “portal” website where users began each session on the internet. Yahoo began lagging behind when search became the key technology behind web portals. In fact, from 2000 to 2004, Google provided Yahoo’s

search results; Yahoo’s internal search technology was only in use from 2004 through 2009, when Microsoft’s Bing took over as the provider of Yahoo! Search. Unfortunately for Yahoo, the technology behind search turned out to be the most lucrative tool for monetizing internet traffic, and Yahoo struggled to keep up with its rival Google, which was founded with a core focus on search technology. Under the leadership of Carol Bartz, Yahoo has decided to stop fighting a losing battle over search technology, and instead focus on providing a wealth of desirable internet content and communities.

Apple�Computer�Inc.�(iTunes�segment)��–�fi�nancial�performance

YearRevenue�


2006 1,885 N/C

2007 2,496 32.4

2008 3,340 33.8

2009 4,036 20.8

2010 4,948 22.6

2011* 5,935 19.9


Apple�Computer�Inc.��Market share: 9.2% Industry�Brand�NamesApple iTunes iPod iPhone iPad


Major�Companies

Player�Performance Facebook is the world’s largest social networking site, with more than 600 million active users. Facebook was founded in 2004 by Mark Zuckerberg, and was the subject of the academy award-nominated film The Social Network. Facebook is a private company with an estimated market capitalization of $41 billion. Facebook’s stakeholders include major venture capital firms, company employees and other institutional investors. Facebook is expected to file for an initial public offering in 2012. During the five years to 2011, Facebook is expected to achieve an estimated annual revenue growth rate of 123%, from $52 million to $2.85 billion.

OriginsFacebook began as an online equivalent of a college yearbook, with the added functionality of image sharing and communication with other members. Initially, only students with .edu email addresses could sign up for Facebook. By September 2006, anyone over the age of 13 with a valid email address could join Facebook. Since these early days, Facebook has taken steps to monitize the enormous level of traffic it receives, through purchases (often for Facebook-based games) and advertising. Facebook ads are less likely to be clicked (click-through rate) than those of other major websites, but advertisers have a much higher degree of accuracy with ad targeting (e.g. only display ads to users who use a

keyword in their profile or went to a certain school) than on traditional advertising networks.

StrategyFacebook’s strategy in this industry is constantly evolving and did not establish a clear, commercial direction until about 2007. Facebook’s strength is in the level and depth of knowledge it holds about its users and their friends. Facebook can place ads based on keywords in the user’s profile, the schools they attended, their political affiliation, or even on the content of their “status updates.” Facebook is still in the early stages of experimenting and expanding its advertising capabilities. In 2011, Facebook began experimenting with “sponsored recommendations,” which would highlight product or service recommendations made by friends in a user’s network.


iPad tablet computer followed up on the formula pioneered by the iPod, with spectacular results. All of these devices are designed to work specifically with iTunes, making the

iTunes store highly visible to owners of these products. Competing services like Amazon’s music store or Pandora rely on word-of-mouth or advertising to bring users into their sites.

Facebook�–�fi�nancial�performance

YearRevenue�


2006 52 N/C

2007 150 188.5

2008 280 86.7

2009 775 176.8

2010 2,000 158.1

2011 2,850 42.5

SOURCE: IBISWORLD

Facebook��Market share: 5.9% Industry�Brand�NamesFacebook


Major�Companies

Other�Companies The Internet Publishing and Broadcasting industry includes thousands of companies. However, the remaining companies in this industry generate less than 5.0% of industry revenue. Among these remaining companies, Hulu (a division of Comcast) and Pandora represent rising forces in the industry.

HuluEstimated market share: 2.1%Hulu is a website that offers streaming video of TV shows and movies from NBC, Fox, ABC and other television networks and content producers. Hulu is a joint venture of NBC Universal (formerly a division of General Electric, now a division of Comcast), Fox Entertainment Group (a division of News Corporation) and ABC (a division of The Walt Disney Company). Hulu generates revenue through very short (no longer than 30 second) video ads shown during shows. The content provider receives between 50% and 70% of the revenue from these ads, depending on the specific agreement. In late 2010, Hulu began offering a premium service (Hulu Plus) that gives subscribers increased access to the websites content. The availability of a given episode of a TV show hosted on Hulu is strongly controlled by the

content owner, frequently resulting in non-sequential episodes being available. Hulu’s content providers have been reluctant to fully support the website (e.g. by allowing sequential episodes to be viewed) for fear of cannibalizing revenue from falling cable television subscriptions.

PandoraEstimated market share: 1.0%Pandora is an automated music recommendation service, which offers personalized internet radio stations. Users indicate what music genres, artists and songs they like, and Pandora’s music sorting algorithm determines what songs to play to the listener. Pandora’s algorithms use the companies “Music Genome Project”, which labels thousands of songs and artists with 400 different musical attributes, producing uniquely fine-tuned recommendations. Pandora is backed by venture capital firms, with Greylock Partners holding the largest stake ($35 million). The company generates revenue through audio advertisements and premium subscriber accounts. An increasingly large array of non-computer platforms (e.g. internet connected TVs and video game consoles) support Pandora Radio streaming.


Capital�Intensity The Internet Publishing and Broadcasting industry has a high level of capital intensity. For every $1 spent on labor, industry operators spent $0.48 on capital equipment. Capital equipment for this industry consists primarily of computers, generic office equipment and in some cases servers for web hosting. Employees are the primary value generators in this industry. Workers create the content, promote the website and maintain the website’s code and infrastructure. Workers in this industry earn an average wage of $47,000.

�Operating�ConditionsCapital�Intensity�� |�� Technology�&�Systems�� |�� Revenue�VolatilityRegulation�&�Policy�� |�� Industry�Assistance

Tools�of�the�Trade:�Growth�Strategies�for�Success


Labo

r�Int

ensi

veCapital�Intensive

Change�in�Share�of�the�Economy

New�Age�Economy

Recreation,�Personal�Services,�Health�and�Education. Firms benefi t from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labor skills are key to product differentiation.

Traditional�Service�Economy

Wholesale�and�Retail. Reliant on labor rather than capital to sell goods. Functions cannot be outsourced therefore fi rms must use new technology or improve staff training to increase revenue growth.

Old�Economy

Agriculture�and�Manufacturing.�Traded goods can be produced using cheap labor abroad. To expand fi rms must merge or acquire others to exploit economies of scale, or specialize in niche, high-value products.

Investment�Economy

Information,�Communications,�Mining,�Finance�and�Real�Estate.�To increase revenue fi rms need superior debt management, a stable macroeconomic environment and a sound investment plan.

E-Commerce�&�Online�AuctionsSoftware�Publishing

Movie�&�Video�Distribution

Data�Processing�&�Hosting�ServicesRadio�

Broadcasting


Capital intensity

0.5

0.0

0.1

0.2

0.3

0.4

SOURCE: WWW.IBISWORLD.COMDotted line shows a high level of capital intensity

Capital units per labor unit

Internet Publishing and Broadcasting

InformationEconomy

Level��The level of capital intensity required is High


Operating�Conditions

Revenue�Volatility The Internet Publishing and Broadcasting industry exhibits a moderate level of revenue volatility, but it is primarily due to its early stage of growth. As an early growth industry, revenue increases tend to be very high, but are also subject to

natural diminishing returns (i.e. exponential growth cannot continue forever). Revenue growth is expected to moderate during the next five years as ad-supported business models solidify their place as the industry norm.

Technology&�Systems

Technology changes very rapidly in the Internet Publishing and Broadcasting industry. Websites are published using several different suites of software and are supported by servers. Software suites are regularly updated for security purposes, to add features and to fix undetected programming bugs. Server computers are used to host websites and the data that is critical to their function. Companies typically employ a network administrator to make sure all of their software is running with current versions installed and to mitigate any damage caused by malicious software or user error.

Technology advances in the Computer Manufacturing and Consumer Electronics industries are also significant to this industry. Since 2007, internet-based content is becoming increasingly available to consumers away from their

computers. Mobile phones, tablet computers, TVs and video game platforms are all beginning to offer internet browsing capabilities. While this provides a tremendous leap in the availability of this industry to reach customers, it also poses significant challenges. The expansion of platforms to access the internet greatly increases the complexity required to properly display web pages and also forces companies to rethink the content displayed on different platforms. Different internet browsers and screen resolutions need to be supported in a websites code or else the website will display in an awkward and essentially unusable manner for alternative platforms. Similarly, an abundance of small text-based links is less user friendly on a mobile phone that it is on a dedicated computer.

Level��The level of Technology Change is High


Volatility�vs�Growth

Reve

nue�

vola

tility

*�(%

)�

1000

100

10

1

0.1

Five�year�annualized�revenue�growth�(%)�–30 –10 10 30 50 70

Hazardous

Stagnant

Rollercoaster

Blue�Chip

* Axis is in logarithmic scale


A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment.

When a fi rm makes poor investment decisions it may face underutilized capacity if demand suddenly falls, or capacity constraints if it rises quickly.

Level��The level of Volatility is Medium


Operating�Conditions

Industry�Assistance Internet publishers and broadcasters do not receive any kind of assistance from any level of government in the US.

Regulation�&�Policy Internet publishers and broadcasters are subject to few regulations. Copyright and intellectual property (IP) laws are perennial issues that can significantly interfere with businesses in this industry. Legal precedents for IP and copyrights as they relate to the internet are still evolving. On the one hand, there is precedent for stringent copyrights for techniques and patented features based on the software industry, but there is also a significant question of the limitations of “fair use” exemptions. Paul Allen, one of the cofounders of Microsoft, is currently in

litigation against major internet companies based on alleged IP violations relating to technologies developed by his (now defunct) think tank, Interval Research. The results of Paul Allen’s litigation moves will likely take years to sort out decisively, but the resolution is expected to clarify and solidify the boundaries of copyright and IP law for this industry.

Since 2001, industry operators have been subject to the Patriot Act, which requires websites to keep traffic data on hand for a specified period of time for the purposes of security investigators.

Level�&�Trend��The level of Regulation is Light and the trend is Steady

Level�&�Trend��The level of Industry Assistance is None and the trend is Steady


�Key�StatisticsRevenue�

($m)

Industry�Value�Added�

($m)Establish-

ments Enterprises Employment Exports ImportsWages�($m)

Domestic�Demand

Broadband�connections�

(Mil)2002 8,254.0 4,166.6 12,450 1,589 49,869 -- -- 3,383.7 N/A 18.02003 9,311.1 4,294.0 15,955 1,779 49,523 -- -- 3,546.0 N/A 25.92004 10,526.4 4,660.1 19,513 1,875 54,429 -- -- 3,889.8 N/A 35.22005 12,193.0 4,992.1 21,201 2,077 55,003 -- -- 4,044.6 N/A 46.72006 14,652.1 5,815.2 27,059 2,379 65,994 -- -- 4,233.4 N/A 73.82007 17,593.3 6,652.4 29,364 2,588 72,117 -- -- 4,255.3 N/A 111.12008 20,622.9 7,537.4 34,219 3,053 82,195 -- -- 4,436.3 N/A 116.82009 26,082.3 8,254.8 41,920 3,761 98,227 -- -- 4,701.9 N/A 123.42010 32,572.7 8,879.2 46,264 4,173 108,861 -- -- 5,172.6 N/A 128.12011 38,693.9 9,415.5 50,558 4,575 119,461 -- -- 5,619.8 N/A 132.92012 44,911.5 9,912.6 54,689 4,981 127,880 -- -- 5,977.0 N/A 137.22013 49,845.9 10,158.9 56,433 5,157 131,239 -- -- 6,112.8 N/A 140.32014 52,956.3 10,487.0 60,401 5,537 137,979 -- -- 6,353.4 N/A 142.92015 53,150.1 10,600.7 63,593 5,742 142,154 -- -- 6,451.9 N/A 145.12016 53,703.2 10,705.3 64,674 5,637 143,937 -- -- 6,513.4 N/A 146.6Sector�Rank 9/30 13/30 1/30 9/30 8/30 N/A N/A 12/30 N/A N/AEconomy�Rank 201/691 249/691 109/690 320/687 249/691 N/A N/A 206/690 N/A N/A

IVA/Revenue�(%)

Imports/Demand�

(%)Exports/Revenue�

(%)

Revenue�per�Employee�

($’000)Wages/Revenue�

(%)Employees�

per�Est.Average�Wage�

($)

Share�of�the�Economy�

(%)2002 50.48 N/A N/A 165.51 40.99 4.01 67,851.77 0.042003 46.12 N/A N/A 188.02 38.08 3.10 71,603.09 0.042004 44.27 N/A N/A 193.40 36.95 2.79 71,465.58 0.042005 40.94 N/A N/A 221.68 33.17 2.59 73,534.17 0.042006 39.69 N/A N/A 222.02 28.89 2.44 64,148.26 0.042007 37.81 N/A N/A 243.95 24.19 2.46 59,005.50 0.052008 36.55 N/A N/A 250.90 21.51 2.40 53,972.87 0.062009 31.65 N/A N/A 265.53 18.03 2.34 47,867.69 0.062010 27.26 N/A N/A 299.21 15.88 2.35 47,515.64 0.072011 24.33 N/A N/A 323.90 14.52 2.36 47,042.97 0.072012 22.07 N/A N/A 351.20 13.31 2.34 46,739.13 0.072013 20.38 N/A N/A 379.81 12.26 2.33 46,577.62 0.072014 19.80 N/A N/A 383.80 12.00 2.28 46,046.14 0.072015 19.94 N/A N/A 373.89 12.14 2.24 45,386.69 0.072016 19.93 N/A N/A 373.10 12.13 2.23 45,251.74 N/ASector�Rank 25/30 N/A N/A 17/30 22/30 28/30 25/30 13/30Economy�Rank 500/691 N/A N/A 259/691 417/690 606/690 299/690 249/691

Figures are inflation-adjusted 2011 dollars. Rank refers to 2011 data.

Revenue�(%)

Industry�Value�Added�

(%)

Establish-ments�

(%)Enterprises�

(%)Employment�

(%)Exports�

(%)Imports�

(%)Wages�

(%)

Domestic�Demand�

(%)

Broadband�connections�

(%)2003 12.8 3.1 28.2 12.0 -0.7 N/A N/A 4.8 N/A 43.92004 13.1 8.5 22.3 5.4 9.9 N/A N/A 9.7 N/A 35.92005 15.8 7.1 8.7 10.8 1.1 N/A N/A 4.0 N/A 32.72006 20.2 16.5 27.6 14.5 20.0 N/A N/A 4.7 N/A 58.02007 20.1 14.4 8.5 8.8 9.3 N/A N/A 0.5 N/A 50.52008 17.2 13.3 16.5 18.0 14.0 N/A N/A 4.3 N/A 5.12009 26.5 9.5 22.5 23.2 19.5 N/A N/A 6.0 N/A 5.72010 24.9 7.6 10.4 11.0 10.8 N/A N/A 10.0 N/A 3.82011 18.8 6.0 9.3 9.6 9.7 N/A N/A 8.6 N/A 3.72012 16.1 5.3 8.2 8.9 7.0 N/A N/A 6.4 N/A 3.22013 11.0 2.5 3.2 3.5 2.6 N/A N/A 2.3 N/A 2.32014 6.2 3.2 7.0 7.4 5.1 N/A N/A 3.9 N/A 1.92015 0.4 1.1 5.3 3.7 3.0 N/A N/A 1.6 N/A 1.52016 1.0 1.0 1.7 -1.8 1.3 N/A N/A 1.0 N/A 1.0Sector�Rank 1/30 10/30 2/30 1/30 2/30 N/A N/A 4/30 N/A N/AEconomy�Rank 6/691 153/691 5/690 4/687 8/691 N/A N/A 25/690 N/A N/A

Annual�Change

Key�Ratios

Industry�Data



Jargon�&�Glossary

BARRIERS�TO�ENTRY Barriers to entry can be High, Medium or Low. High means new companies struggle to enter an industry, while Low means it is easy for a firm to enter an industry.

CAPITAL/LABOR�INTENSITY An indicator of how much capital is used in production as opposed to labor. Level is stated as High, Medium or Low. High is a ratio of less than $3 of wage costs for every $1 of depreciation; Medium is $3 – $8 of wage costs to $1 of depreciation; Low is greater than $8 of wage costs for every $1 of depreciation.

DOMESTIC�DEMAND The use of goods and services within the US; the sum of imports and domestic production minus exports.

EARNINGS�BEFORE�INTEREST�AND�TAX�(EBIT)� IBISWorld uses EBIT as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding tax and interest.

EMPLOYMENT The number of working proprietors, partners, permanent, part-time, temporary and casual employees, and managerial and executive employees.

ENTERPRISE A division that is separately managed and keeps management accounts. The most relevant measure of the number of firms in an industry.

ESTABLISHMENT The smallest type of accounting unit within an Enterprise; usually consists of one or more locations in a state or territory of the country in which it operates.

EXPORTS The total sales and transfers of goods produced by an industry that are exported.

IMPORTS The value of goods and services imported with the amount payable to non-residents.

INDUSTRY�CONCENTRATION IBISWorld bases concentration on the top four firms. Concentration is identified as High, Medium or Low. High means the top four players account for over 70% of revenue; Medium is 40 –70% of revenue; Low is less than 40%.

INDUSTRY�REVENUE The total sales revenue of the industry, including sales (exclusive of excise and sales tax) of goods and services; plus transfers to other firms of the same business; plus subsidies on production; plus all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); plus capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.

INDUSTRY�VALUE�ADDED The market value of goods and services produced by an industry minus the cost of goods and services used in the production process, which leaves the gross product of the industry (also called its Value Added).

INTERNATIONAL�TRADE The level is determined by: Exports/Revenue: Low is 0 –5%; Medium is 5 –20%; High is over 20%. Imports/Domestic Demand: Low is 0 –5%; Medium is 5 –35%; and High is over 35%.

LIFE�CYCLE All industries go through periods of Growth, Maturity and Decline. An average life cycle lasts 70 years. Maturity is the longest stage at 40 years with Growth and Decline at 15 years each.

NON-EMPLOYING�ESTABLISHMENT Businesses with no paid employment and payroll are known as non-employing establishments. These are mostly set-up by self employed individuals.

VOLATILITY The level of volatility is determined by the percentage change in revenue over the past five years. Volatility levels: Very High is greater than ±20%; High Volatility is between ±10% and ±20%; Moderate Volatility is between ±3% and ±10%; and Low Volatility is less than ±3%.

WAGES The gross total wages and salaries of all employees of the establishment.

Industry�Jargon

IBISWorld�Glossary

BROADBAND Technically, internet connections with download speeds of at least 200 KB per second. Today, broadband connections have download speeds of at least 1.5 MB per second.

MP3 A popular file format for digital music. Similar competing formats include AAC, and WAV.

SEARCH�ENGINE�RESULT�PAGE�(SERP)� When a user enters a query on a search engine, the SERP is the next page the user sees, featuring links and ads related to the query.

SOCIAL�NETWORKING A category of website that is primarily used for communication and sharing with other members.

UNIQUE�VISITOR The number of website visits a site receives from unique IP addresses.

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