Hitwise Intelligence - LeeAnn Prescott - US
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January 19, 2007
2006 in Review - iMedia Connection Article
Yesterday my year-end wrap-up of 2006 online trends was published in iMedia Connection.
YouTube, "Lazy Sunday," Eepybird and more: Hitwise's research director explains why 2006 was the year for marketing and UGM.
2006 gave us LonelyGirl15, exploding bottles of Diet Coke and Mentos, movie character friends on MySpace and paparazzi photographs of Britney Spears that could never be shown in a reputable magazine. While seemingly trivial, these events were representative of a shift in the creation and consumption of media that finally hit the mainstream.
The cover story in the December 12, 2005 issue of Business Week was entitled "MySpace Generation," showing the business world that social networking and MySpace finally mattered. Throughout the following year, dozens of leading publications ran stories on the users as well as the founders of MySpace and YouTube, as well as other up-and-coming sites that featured user-generated content. Finally, in October 2006, Google purchased YouTube for $1.65 billion in stock, and in December 2006, Time Magazine named YOU the person of the year, namely, the you who is creating content on the internet.
One year ago I wrote a year-end wrap up of what I believed were the most significant trends in online user behavior in 2005. If 2005 was, as I stated "the year consumers took control of the internet," 2006 was the year that the disruptive effects of user-generated media were so great that the big media players took it seriously. There were three significant ways that user-generated content disrupted the consumption of media in 2006: online video, music and celebrity gossip.
Online video
YouTube was THE tech story of the year. The site emerged from relative obscurity in December 2005 when a Saturday Night Live skit called "Lazy Sunday" was posted to the site. During the next six months, as YouTube's traffic skyrocketed, MySpace launched its own video section and a host of YouTube wannabes emerged, but none came close to touching YouTube's dominance.
Television networks and movie studios debated whether they should sue YouTube for copyright violations or partner with the site. Data from the Hitwise sample of 10 million U.S. internet users show that the market share of U.S. visits to YouTube in December 2006 was five times greater than the share of visits going to the four broadcast network sites combined. In Fall 2006, each of the major television networks hosted streaming episodes of popular shows on their own websites, but users were more interested in going to YouTube to view highlight clips of their favorite shows, as well as news clips and user-created videos. The prospect of partnering with YouTube became more attractive, and currently CBS, NBC, Capitol Records and Sony Pictures Classics have YouTube channels which they use for promoting television shows, movies and music.
What seemed like a fad in the beginning of the year became a full-fledged trend and online video viewing became a leading internet activity. In December 2006, YouTube was the 16th most visited domain on the internet in the United States, and its user base was not just limited to teens. A comparison of Hitwise demographic data from December 2006 versus December 2005 reveals that visitors to YouTube's user base grew older as its traffic grew.
Online video will continue to shake out in 2006, but internet users have clearly become addicted to YouTube. Will Google's investment pay off as broadband adoption increases and more users come to the site, or will they become disillusioned with an increasing amount of commercially oriented content?
MySpace and music
In 2006 MySpace became the most trafficked internet site in the United States. In August, Google agreed to pay $900 million to be their preferred search partner. Hitwise Clickstream data show that in December 2006 nearly 12 percent of the clicks to Google came directly from MySpace, up from less than seven percent a year ago. While MySpace's effect on the social lives of its millions of users has not been debated, what about its effect on the music industry?
The RIAA (Recording Industry Association of America) reported declining CD sales in 2006, while digital music sales skyrocketed. MySpace and other social music websites like Last.fm and Pandora have changed the way people learn about and listen to music. In December 2006, MySpace Music comprised less than five percent of the visits to the Hitwise Music category. In six short months, MySpace Music quadrupled its share of visits to the category, and in December 2006 comprised nearly 23 percent of category visits. MySpace also had an increasing influence on traffic to band websites. Many bands maintain a MySpace page as well as a band website, but there is flow between the two, and Hitwise Clickstream data show that the share of traffic to the Music - Bands and Artists category coming directly from MySpace doubled in 2006-- from 3.7 percent in December 2005 to 7.8 percent in December 2006. MySpace and other social music sites will continue to usurp the recording studios' power to influence the music habits of millions of Americans.
Celebrity gossip blogs
Several blogs, with Perez Hilton leading the way, emerged out of near obscurity in 2006 and began to pose a threat to celebrity gossip magazines and their websites. While People.com showed strong growth in 2006, with its market share of visits increasing 176 percent from December 2005 to December 2006, the combined market share of visits to the top four celebrity gossip blogs (Perez Hilton, The Superficial, Egotastic, and Hollywood Tuna) increased by over 400 percent in the same period. The ability to break celebrity news on a daily and even hourly basis makes these sites hot destinations for celebrity watchers, and the irreverent attitude of the bloggers has become a refreshing change from the PR focused entertainment weeklies. Perez Hilton has become a celebrity in his own right, with multiple television appearances. AOL site TMZ has adopted a similar irreverent attitude and uses RSS feeds to distribute content, as does People.com. In 2006, the voyeuristic tendencies of internet users were fed by blogs, and life for celebrities will never be the same as the paparazzi have new outlets to post candid photos and videos.
2007- what's next?
If 2005 was the year that consumers took control of the internet, and 2006 was the year that media business took it seriously, then 2007 will be the year that user-generated content becomes a business in its own right. Look forward to more deals, more disruption and more internet celebrities!
Posted by LeeAnn Prescott at 03:43 PM
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