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A teenage hacker could end up working on the right side of the law after a run-in with the police.
 
Owen Walker from Whitianga was discharged without conviction for his part in an international cyber crime ring.

Police say they could use his talents.

The hapless hacker left court lucky after the judge decided Walker’s computer hacking skills were born out of curiosity, rather than criminal intent.

Inside court the 18-year-old, sandwiched between security guards, couldn’t help but smile when his computer mastery took centre stage.

Crown Prosecutor Ross Douch said Walker is considered to by e-crime investigators to be the most advanced bot programming encountered.

“He has got some ability which is quite unique. He is often described, and I would agree, by people around the world as among the top people who can write this kind of software,” said Martin Kleintjes, police e-crime manager.

Known by his cyber ID Akill, Walker was the mastermind of an international “botnet” group which infected tens of thousands of computers, including the collapse of a computer server at the University of Pennsylvania.

The group had been botnetting, using viruses, spam and corrupt software to ruin large computer systems. A botnet is a jargon term for a collection of software robots, or bots, which run autonomously and automatically. They run on groups of “zombie” computers.

A 20-year-old American student worked with Walker, known by his cyber ID Akill, and they called themselves the A Team, reportedly infecting 1.3 million computers and costing victims around $20 million.

His arrest followed an 18 month investigation by New Zealand, Dutch and American authorities.

The police say Walker put New Zealand on the world map for cyber crime. He is now being wooed by major computer companies overseas.

Lawyers told the court police are interested in using Walker’s talent, and Justice Potter discharged him without conviction, saying he was a young man with a potentially outstanding future.  He was ordered to pay costs and reparation for damage caused to Pennsylvania University in the US.

Outside court, Walker says he understands what he did was wrong. He says the police might offer him a job but they haven’t yet, adding he would be interested if they did.

His mother Shell Whyte hopes whatever he chooses to do, it’s on the right side of the law.

Internet safety group NetSafe says the case is a reminder that large scale cyber-based organised crime is not something that only happens “over there”.

By KELLY OLSEN

SEOUL, South Korea - Microsoft Chairman Bill Gates said there will be a vast shift in Internet technology over the next decade as he met Tuesday with South Korean President Lee Myung-bak.

“We’re approaching the second decade of (the) digital age,” the software mogul and philanthropist told Lee at the start of their meeting at the presidential Blue House, according to a media pool report.

“The Internet has been operating now for 10 years,” Gates said. “The second 10 years will be very different.”

Microsoft Corp., the South Korean government and South Korean companies are investing $313 million in information technology for vehicles, games and education, according to a Blue House statement.

Microsoft and automakers Hyundai Motor Inc. and Kia Motors Corp. announced earlier Tuesday a deal to use Microsoft’s in-car software, which allows people to control music and telephones with voice commands.

The company has a one-year exclusivity deal on the software with Ford Motor Co. in the U.S., but that expires in November. Fiat also has been selling cars with the software.

“We’re doing some very interesting work on automobile software,” Gates said after having dinner with Lee. “That’s a really wide open area where some very exiting things will come out of.”

Lee, a conservative former construction CEO, swept into office in February with a vow to boost economic growth through deregulation and increasing foreign investment.

In the Blue House statement, Gates was quoted as saying that new deals would boost South Korea’s economic growth by as much as $6.9 billion over the next five years.

Gates, at a later event sponsored by South Korean television network SBS, talked about the future of software and human interaction in the next decade.

“We can expect that the variety and quality of software will accelerate in the years ahead,” the Microsoft co-founder said.

Gates added that “natural interaction” between hardware and software was finally becoming possible, citing as an example speech commands to computers.

“The whole environment will be very, very different,” he said.

Microsoft also said Tuesday that it will invest $280 million to build a research and development center in China’s capital Beijing, and will double the number of its full-time research staff in China to 3,000 in three to five years.

By MICHAEL LIEDTKE, AP Business Writer

 Yahoo Inc. Chief Executive Jerry Yang has gotten what he wanted: a chance to prove his company is worth more than the $47.5 billion that Microsoft Corp. offered to buy the Internet pioneer.

It will be a daunting challenge, as Yang will be pointedly reminded Monday when investors are expected to show how little they think of Yahoo without a takeover bid on the table. Faced with resistance from Yang and the rest of Yahoo’s board, Microsoft withdrew its offer over the weekend.

Many analysts believe Yahoo’s stock price, which had climbed nearly 50 percent since Microsoft’s initial offer, will surrender most, if not all, of that gain, leaving the Sunnyvale-based company’s market value around $30 billion.

Disillusioned shareholders are bound to question whether the rejection of Microsoft’s sweetened $33-per-share offer was driven more by emotion and ego than sound business sense.

“Clearly there’s frustration,” said Darren Chervitz, co-manager of the Jacob Internet Fund, which owns Yahoo stock. “I am not even sure if Yahoo cares about its shareholders because they didn’t show much regard for shareholders’ best interests in this process.”

Despite such negative sentiment, Yahoo shares are unlikely to immediately fall back to their $19.18 pre-bid price, partly because some investors may still be holding out hope that the software maker will renew its takeover attempt if Yahoo continues to struggle.

Yahoo shares finished last week at $28.67, slightly below the $29.40 per share that Microsoft was offering before Chief Executive Steve Ballmer agreed to raise the offer to $33 per share in a last-ditch effort to get a deal done.

Accompanied by fellow Yahoo co-founder David Filo, Yang flew to Seattle Saturday to inform Ballmer that the company wouldn’t sell for less than $37 per share — a price that Yahoo’s stock hasn’t reached since January 2006.

Analysts and investors were left to wonder why the two sides couldn’t compromise at $35 per share.

“They really didn’t seem that far apart,” Chervitz said. “There is probably blame to go around on both sides, but I think most of it is in Yang’s hands.”

Monday’s anticipated shareholder backlash will put Yang on the hot seat as he tries to execute on a turnaround plan that he began drawing up nearly a year ago after he replaced Terry Semel as CEO amid shareholder angst about the company’s financial malaise.

“This squarely puts the pressure on Jerry Yang to deliver results and shareholder value,” Standard & Poor’s equity analyst Scott Kessler said. “You are going to see a lot of shareholders just throwing in the towel because they are going to realize it’s going to take awhile for the stock to get back to where it was Friday.”

Ballmer also will be under the gun to prove he can come up with another way to challenge Google Inc.’s dominance of the Internet’s lucrative search and advertising markets.

The unsolicited bid was widely seen as Ballmer’s admission that Microsoft needed Yahoo’s help to upgrade its unprofitable Internet division.

Analysts now expect Ballmer to use the money he had earmarked for the Yahoo acquisition to explore other possible deals with large Internet companies like Time Warner Inc.’s AOL and News Corp.’s MySpace and promising startups like Facebook Inc. and LinkedIn Corp. Microsoft already owns a 1.6 percent in Facebook, the second-largest social network behind MySpace.

But Ballmer is unlikely to be under as much duress as Yang because most analysts believe Microsoft’s stock price will rise Monday. The shares had declined 10 percent to $29.24 since Ballmer made the bid, reflecting concerns that the proposed marriage would turn into a complicated mess that would enable Google to grow even stronger.

Yang, 39, has promised that Yahoo’s development of a more sophisticated and far-flung Internet advertising platform will produce net revenue growth of at least 25 percent in 2009 and 2010. That would be a dramatic improvement, considering that Yahoo’s revenue rose by 12 percent last year and is expected to grow at about the same pace this year.

But analysts are skeptical about whether Yahoo will be able to hit those targets, raising the chances for a shareholder rebellion if the company stumbles during the next few months — a distinct possibility if advertisers curtail spending in a shaky U.S. economy, as many analysts fear.

As it is, Yang and the rest of Yahoo’s board almost certainly will face more lawsuits from incensed shareholders.

Even some of Yahoo’s own employees may be irritated because virtually all of them own stock options.

What’s more, Microsoft had planned to offer $1.5 billion in retention packages to the thousands of Yahoo employees it wanted to stay on after a takeover.

To help boost its short-term profits and its stock price, Yahoo is widely expected to form a long-term advertising partnership with Google.

Although the final details are still being ironed out, Yahoo wants to hire Google to place some of the text-based ads that appear alongside the search results on its Web site. It’s a task that Google already handles for scores of Web sites, including AOL and Ask.com.

Both Yahoo and Google have said they were encouraged with the results of a two-week trial run completed last month.

But turning to Google for help would be a humbling step for Yahoo after spending more than $2 billion to acquire and build its own technology.

An alliance between Google and Yahoo also would face antitrust hurdles because the two companies combined control more than 80 percent of the U.S. search advertising market.

Although Google’s superior technology would help boost Yahoo’s profits in the short term, some analysts worry it could be a mistake for Yahoo to surrender any control over such a lucrative piece of the online ad market.

Yahoo also has been exploring a possible merger with AOL’s Internet operations, but may now have to contend with a competing offer from Microsoft.

Yahoo also might attempt to placate shareholders by buying back stock.

Kessler believes Yang should use some of his estimated $1.9 billion fortune to personally buy more Yahoo stock even though he already owns 54.1 million shares, or 3.9 percent of the company.

“Jerry Yang really needs to put his money where his mouth is,” Kessler said. “If he really thinks Yahoo is worth $37 (per share), then he needs to step up and buy some shares when they are in the low $20.”

By Russ Britt

Is there a method to Microsoft Corp.’s madness? The answer most often is yes.

In the case of Microsoft’s to the tune of more than $40 billion, the software giant could reap huge benefits in plain, old display advertising on the Internet.

Market demand for such ads, Yahoo’s forte, are expected to grow sharply for several reasons. Faster broadband connections open up the potential for “rich” media — defined as video or anything other than just static display.

Further, companies that have resisted Internet marketing in the past have started to, sometimes grudgingly, warm to the medium. They’re often more comfortable with display or video advertising compared with search ads, which are links generated through Web searches. In many instances, companies find display advertising more conducive to their purposes. As a result, they’re likely to stick with that method as they make the shift to online campaigns.

“It could mean a renaissance of display ads,” said Karsten Weide, analyst at International Data Corp.

This means Yahoo could gain back some of its market share against search powerhouse Google Inc. which has made a fortune largely on the back of search ads. Microsoft stands to benefit, provided it can win over the hearts and minds of Yahoo directors and shareholders. Yet Microsoft may have to move fast, as Google’s pending acquisition of DoubleClick is expected to beef up the company’s display-ad business significantly.

The search ad has become the king of Internet-advertising media in short order. Carried largely on Google’s wings, search ads have grown from 1% of market share in 2000 to 41% today. Display ads now command 21% of all online market share, having lost the top spot five years ago, according to the Interactive Advertising Bureau.

To think that market ratio could be completely reversed is unrealistic, analysts say. But ads with video and other accoutrements, as well as some search-like improvements, could help put what some call a “stupid” marketing vehicle back in the minds of online advertisers and the buying public. It also could help display gain back some traction.

“You could get to a place where display ads are better than search ads,” Weide added.

Bread and butter

Display ads have been the bread and butter of print media for decades. Conventional promotions for automobiles, department stores, clothing or jewelry qualify under this category. They usually resemble small billboards, featuring still photography or artwork along with some text.

On the Web, so-called banner promotions across the top of pages or smaller, more modular ads down the sides also qualify as display. Advertisers are charged on the basis of page views; the more Web surfers load the page where the display ad appears, the more the advertiser pays. Fees can range from $2 to $100 per 1,000 page views.

Search ads are more targeted, and can be more promising to advertisers. The most common type is seen on a Web page for Google search results. For example, a search for Callaway golf clubs will yield a number of “sponsored links” atop the page and down the right side for online distributors of that company’s product. The ads usually do not feature any art or pictures seen in display ads — simply a link headline and text.

Advertisers pay by the click, since the Web searcher is sent away by clicking their links. If there are no clicks, the advertiser often pays nothing. Again, rates can vary widely, from 50 cents to $50 per click, depending on the items for sale.

The appeal of search ads is obvious; no results means little or no expense. Plus, advertisers hone in on their targets like never before and are able to target them again in the future. The accountability of search ads is what customers find appealing, according to Rob Norman, chairman of Group M Interactive, the display-advertising unit of Group M.

“As we know, it’s conversions that pay the bills, not inquiries,” he said. “But the display ad is incredibly robust online and will stay incredibly robust online.”

Ravenous appetites

Online-display revenue is multiplying as Internet appetites grow more ravenous.

Total Internet-ad spending was around $20 billion in 2007, and it’s expected to hit $60 billion by 2011, said Randall Rothenberg, chief executive of the Interactive Advertising Bureau. The industry should see 25% compounded annual growth for the foreseeable future, he added.

“I haven’t seen anybody back off the $60 billion figure,” Rothenberg commented. “Much of that growth is coming from, and will come from, display.”

For one, display ads are taking on more of the features employed by search ads, inviting surfers to drill deeper and do more with their products. Also, display is still seen as an effective way to build brands.

That may come in handy as the old-school companies that spend a small fraction of their advertising budgets online shift more dollars toward the Internet.

A prime example is the automotive industry, which devoted 7.5% of its ad budget to online promotions last year. Most other prominent consumer companies are in the same boat, now devoting only 3% to 4% of their budgets to online campaigns.

Meanwhile, consumers are spending 20% to 25% of their time online. “Already there’s a mismatch in that gap,” Rothenberg said.

Driving the business

Rothenberg sees that changing, at least in the auto industry, which has kept a number of newspapers alive for years. The percentage of total online ads oriented around automobiles currently is about 2.6%, he calculated. That should grow to about 6.9% by 2012.

“I won’t say that’s all going into video and display. But enormous chunks of it will,” Rothenberg said. “The reason [consumer companies have] held back is they’re vested in video.”

He cites figures that show 50.5 million households in the United States were wired for broadband in 2006, or about 60% of total online homes. By 2012, that should grow to 86.3 million homes, or 89% of all online households.

The number of total online-video streams served online is growing exponentially, according to Rothenberg. There were 18 billion streams in 2005, which more than doubled to 44 billion in 2006. By 2009, that will nearly double again to 83 billion streams.

Don’t assume that all new video business will fall under the display category — or will all end up in Yahoo’s lap, said IDC’s Weide. But it’s a good bet that the richer the media, the more it will end up in display ads.

“We think [display] market share has pretty much reached rock bottom,” the analyst added. “The question is who’s going to benefit from [rich-media ads]. No one has cornered that market yet.”

By SAUL HANSELL

CBS said Wednesday that it would expand its Internet music service, Last.fm, to allow users to listen to any song on their computers whenever they wanted, up to three times.

The move is expected to give a lift to the idea that music through the Internet can be similar to radio — free and supported by advertising — yet give users a choice of what they want to listen to.

Until now, Last.fm has offered what is known as Internet radio. Users could listen to a series of songs selected by the service on the basis of their musical tastes, but they could not choose individual songs. Under the new arrangement, users who visit the service’s Web site (www.last.fm) can search for and select any of 3.5 million songs to listen to on their computers through technology called streaming. There are limitations: any given song can only be played three times.

What is more, the free music cannot be downloaded to a portable player, like an iPod. Song downloads will be offered through a link to music stores, including Apple’s iTunes and Amazon.com.

Ultimately, Last.fm will offer users the chance to buy a monthly subscription that will allow them to listen to songs as many times as they want.

Quincy Smith, the president of CBS’s Interactive unit, said the company would prefer to offer more free music, but said there was a “healthy tension” over this with the music labels.

“They want a subscription-based service more and they want downloads,” Mr. Smith said. “I want to pay attention to the users, and the first thing the users want is free streaming.”

Indeed, music executives say they are skeptical that services like Last.fm will be a source of significant revenue. Greg Scholl, the chief executive of the Orchard, which handles digital sales for a independent record companies, said that Last.fm and other free services resemble radio, which offers promotion for music, except that the labels receive a small payment.

“In the long run, nominally paid promotion is not necessarily going to support artists and labels,” he said. “We are supporters of what they are doing, but we are watching it very carefully to see that it makes economic sense.”

CBS would not comment on the financial arrangements with the record companies. But people with knowledge of the transaction said the record companies would receive a part of the advertising revenue. Some record labels also received an upfront cash payment, subject to a minimum of a fraction of one cent a play.

Independent artists and labels can also upload their songs to Last.fm, and will receive a portion of the advertising revenue.

The music industry has struggled to find attractive alternatives to illegal music downloading, and some consider free ad-supported services as an answer. Real Networks’s Rhapsody service and Napster have both offered free music on their Web sites for several years, but they have mainly tried to attract customers for subscription services that charge $10 or $15 a month for unlimited listening.

“The challenge with the advertising supported models is driving a large enough audience to drive high adverting rates versus the high cost of the content,” said Chris Allen, the chief operating officer of Napster.

CBS will start promoting the Last.fm service on the Grammy awards program on Feb. 10.

CBS bought Last.fm, which is based in London, last May for $280 million. The service says it has 20 million users worldwide.

Forty-seven percent of internet users have searched for their own name online but few monitor their online presence with great regularity.

Fifty-three percent of internet users have searched online for information about personal and business contacts.

These findings represent a significant change from when the Pew Internet Project first reported on this activity in 2002, at which time 22% of internet users had searched online for their own name.

More powerful search engines have made it easier to find a match for a personal name search and the “participatory Web” has made it more interesting.

The explosion of blogs, YouTube, Flickr, and online profiles have increased the size of people’s digital footprints, but few adult internet users have made digital identity management a routine part of their online lives. Indeed, just looking at those who use social networking sites, a higher percentage of teens than adults are restricting access to their profiles.

“The cumulative traces of our online activity are more visible in the age of Web 2.0,” says Mary Madden, a co-author of the report. “The more content we voluntarily contribute to the public or semi-public corners of the Web, the more we become not only findable, but knowable.”

These are among the findings of the Pew Internet & American Life Project’s latest report on the internet’s impact on society, “Digital Footprints: Online identity management and search in the age of transparency.” The report is based on a December 2006 national telephone survey of 2,373 adults, of whom 1,623 are internet users. The margin of error for the portion of the survey dealing with internet users is plus or minus 3 percentage points.

Most internet users are unconcerned about the extent of the data available about them online:

• 60% of internet users say they are not worried about how much information is available about them online.
• 38% of internet users say they have taken steps to limit the amount of online information that is available about them.

But it could be that they are simply unaware:

• Roughly one third of internet users say the following pieces of information are available online: their email address, home address, home phone number or their employer.
• One quarter of internet users say a photo, names of groups they belong to, or things they have written that have their name on it appear online.
• Few internet users say their political affiliation, cell phone number, or video appear online.

In interviews with the Pew Internet Project, privacy advocates and professional researchers argued that many of these data points are indeed available about most people, either on the open Web or in select online databases.

When asked about eight different groups of people one might search for online—ranging from family and friends to romantic interests and business colleagues—53% of adult internet users said they had looked for information connected to at least one of these groups.

These searches for others are often focused on basic contact information, but can be wide-ranging:

• 72% of people searchers have sought contact information online.
• 37% of people searchers look to the Web for information about someone’s professional accomplishments or interests.
• 33% of people searchers have sought out someone’s profile on a social and professional networking site.
• 31% have searched for someone’s photo.
• 31% have searched for someone else’s public records, such as real estate transactions, divorce proceedings, bankruptcies, or other legal actions.
• 28% have searched for someone’s personal background information.

“Nostalgia seems to motivate quite a few internet users. The most popular search target is someone from the past – an old friend, an old flame, or a former colleague,” said Susannah Fox, a co-author of the report. “These findings provide powerful evidence of the internet’s capacity to reunite and reignite social connections.

One-third of internet users say they have searched for information about someone with whom they have lost touch. And one in five internet users say someone has reached out to reconnect with them after finding their contact information online.”

By Jeff Jarvis

But time may be running out. Now, for the first time, pure-play Web companies have the biggest share of the local online-ad market. In 2007, Internet companies had a 43.7% share of the $8.5 billion local online-ad market, while newspaper companies had a 33.4% share, according to the media research firm Borrell Associates. Just three years ago, newspapers had 44.1% of the local online-ad market. (Directories such as the Yellow Pages have 10.1%, and local television outlets 9.3%.)

Local media companies, because they are based in the communities they serve, would seem to have an edge over Internet sellers when it comes to persuading the diner or corner hardware store to take out an ad. But they have largely failed to convert that advantage into sales. Instead of tailoring their sales to local businesses, many newspaper companies initially focused on selling ads to bigger advertisers who were already buying space in their print products.

That Wall Street Journal story hits the coffin nail on the head. Newspapers are losing their own core market because they didn’t understand the scale of the internet. They still thought mass when they should have realized that small is the new big. That is, online, newspapers still threw their lot in with the big advertisers who had been the only ones who could afford their mass products. They didn’t see the mass of potential spending in a new population of small, local advertisers who never could afford to advertise in newspapers but who now could afford to buy targeted, efficient, inexpensive ads online. There’s growth — yes, growth — there. But newspapers ignored that — apart from some half-hearted attempts to come up with crappy online Yellow Pages — and handed what should be their local market over to Google and other online companies that set up efficient means to sell a lot of little ads, which equals big revenue.

I saw this first hand in many companies. Print sales teams didn’t know how to sell online. Oh, they’re trying to catch up now, but it’s often too late, for advertisers are already using their competitors; newspapers lost the opportunity to usher small advertisers onto the internet. Even the online sales teams at newspaper companies didn’t how now to sell small; they were — as I once put it in a meeting — putting all their effort into saving the old $100,000 advertiser and saw getting 1,000 $100 advertisers as a distraction. The new-media divisions had already become big and old. They weren’t nimble. They lost out.

If it’s not too late, here’s my long-standing (now free) advice: A newspaper (or, for that matter, TV or radio) company needs to set up a new, hyperlocal company that is designed to go after those 1,000 $100 ads. Let the big, old newspaper and online divisions keep serving and saving those big advertisers. Start a new company that makes small, local advertising its sole focus. That means they need to set up automated systems to accept and place highly targeted local ads and directories. That means they need to come up with new means of selling without on-the-street sales staffs: outbound phone sales, direct response, even local sales network (instead of citizen journalists, citizen sales people), making aggressive use of the promotional power of the newspaper while you still have it. That means they need to have lots of targeted local content without large editorial staffs. That means they need to set up networks with local bloggers and others and they need to encourage more people to join and the way they will do that is by sharing revenue and so these need to be both content and ad networks. This is unproven but I know that this won’t happen in the existing structure from print or even online staffs. It’s hard and its new but — as the Journal now well proves — if you newspapers don’t do it, your online competitors will.

Rather than creating new networks that serve new advertisers in new ways, though, the newspapers are trying to outsource this by joining big networks with the likes of Yahoo and Monster - which are just big, old media companies without the presses. As the Journal says, that’s no silver bullet:

Increasingly, newspapers are deciding to form deeper alliances with their main competition. More than a year ago, Yahoo struck a deal with about a half-dozen newspapers to create a national online-ad sales network. Since then, additional newspapers have signed up. In the coming year, papers in the alliance will start using Yahoo technology on their sites so that they can sell more-sophisticated ad offerings, such as behaviorally targeted ads. Separately, a group of 11 newspaper companies representing nearly 300 newspapers recently formed a partnership with real-estate site Zillow.com to tap into more real-estate classified ads.

Analysts say these kinds of steps will help but that none is a silver bullet. “Ultimately, it is going to take a lot of singles to really have a significant impact on the overall operations of the company,” says John Janedis, a publishing-industry analyst at Wachovia Securities.

The internet is an entirely new economy. It’s not built on big. It’s built on a mass of smalls. And newspapers think big. That’s their real challenge.

HOLLYWOOD, CA - Nielsen Analytics today released a new report revealing that advertisers and television programmers are finding new and more lucrative advertising opportunities with broadband video. The study also determined that the use of broadband video actually extends the reach of traditional TV, and that broadband consumers are young, affluent, highly educated, and tend to have high speed web access virtually 24/7, making it an integral part of their lifestyle.

The study, “Whatever, Whenever, Wherever: How Broadband is Redefining the Economics of Television”, is authored by industry analyst, Larry Gerbrandt, the head of Nielsen Analytics, and completed in partnership with Scarborough Research.
Editor’s Note: Broadband Video – also known as web video, Internet video or broadband
television – is streaming video fed from a web site.

“By researching controlled broadband access, this study concludes that programmers have the opportunity to create new revenue models to benefit content owners and their affiliated stations” said Larry Gerbrandt, general manager and senior vice president of Nielsen Analytics. “Such ad-supported models are uniquely adaptable to the broadband environment and are potentially superior to existing models because they can take full advantage of the digital environment. With broadband streams, for example, fast forwarding through commercials can be disabled making it more likely the consumers
will watch the spots and possibly interact with them.”

Despite growing numbers of prime time television shows being streamed (or pre-viewed) on network web sites, or the increasing popularity of user generated content (UGC), there has been no measurable negative impact on traditional television viewing. Video on PCs and iPods actually is expanding the audience of traditional TV programs, supported by the fact that total TV usage was at a record high in U.S. households at 8 hours, 14 minutes a day during the 2005-2006 TV season according to Nielsen Media Research data. Household viewing has risen more than an hour a dayover the past decade – or more than a half hour more per person.

“Advertisers and programmers using broadband have a unique advantage in the increasingly competitive advertising world,” continued Gerbrandt. “Ad models can be customized and managed in a broadband environment, and interactivity can be embedded into the program in such a way as to enhance engagement which does not take viewers away from the enjoyment of the program.”

Broadband Video Advertising Models
There is a general consensus that viewers prefer short web-served ads, though the market is split between 15-second and 30-second pre-rolls per program segment. Furthermore, because broadband video offers levels of interactivity and viewer engagement not possible in a traditional TV spot, that argues for a higher CPM.
But television – especially the ad-supported kind – works according to a very different revenue model, and systems such as broadband streaming and downloading, could represent a new frontier to be explored and exploited. However, the posting of copyrighted content to web sites still presents challenges that remain to be litigated.

About the Broadband Consumer
Broadband access across the U.S. has reached critical mass and is having a clear impact on user behavior.
• According to Scarborough Research, a local market consumer research company, broadband consumers tend to have high speed web access virtually 24/7 – at work, at home and increasingly across an array of portable devices such as laptops, PDAs and mobile phones.

While only about 9% of US adults report spending 20 hours or more a week on the Internet, this number nearly doubles, to 17%, among those with broadband access at home.

• There is a strong correlation between education and Internet access, and the same holds true for broadband connections. Of the roughly one-third (33 percent) of U.S. adults reside in households without any Internet connection, 69% have only a high school degree or less. The comparable percentage for those in broadband households is one-third or 33%. Of all US adults, almost a quarter (24 percent) have a college degree or greater. . This number increases to 35% among adults with broadband Internet access at home. Moreover, the overwhelming majority of those with post-graduate degrees have an Internet connection, and most of those have a broadband connection.
• Broadband consumers are upscale. According to Scarborough’s findings, 17% of consumers have an annual household income of $100,000 or more, compared to 28% of those with broadband connectivity. Less than a quarter (21 percent) of all consumers live in homes worth $300,000 or more; but the figure is 30% for those consumers with broadband in their household.
• There is a clear generational divide in broadband adoption. The 18-34 demographic
represents 34% of those with broadband connectivity in their household. Though consumers 55+ are less likely than their 18-34 or 35-54 year-old counterparts to be broadband customers, broadband penetration among this older age group will likely increase. The 35-54 demographic is currently most likely to have home broadband access (45 percent).