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News flash: Net is booming

Two studies show online subscriptions and advertising are growing, despite concerns to the contrary.

Surprise, surprise: The Net is booming.

Two studies released separately today that show continued growth in online subscriptions and advertising despite the well-publicized shutdowns of some Web sites and start-ups, as well as some concerns about softening demand for ad buys.

One study, the Electronic Information Report, says that online subscriptions topped 21.1 million last year, a 45 percent increase over 1995. Consumer services achieved the largest gain, increasing 51 percent to 17.1 million subscribers. Of those, America Online (AOL) widened the gap over rivals, largely due to its flat-rate pricing, the study said.

"The Internet continues to draw a flood of new consumer and business users, providing online services in both markets with a much larger audience pool than their proprietary platforms," said Lynn Dougherty, senior editor of Electronic Information Report, in a statement.

The report noted that companies such as Prodigy, Microsoft Network, Lexis-Nexis, and Dow Jones shifted to the Web last year.

Another study, by the Internet Advertising Bureau, said total ad spending on the Net totalled $267 million last year. It grew each quarter to a record $109.5 million in the fourth quarter from $29.9 million in the first. Computing products was the dominant ad category, accounting for 38 percent of ad revenue, followed by consumer-related products (20 percent), new media (17 percent), telecom (9 percent), and business services (6 percent).

"All indications are that we will continue to see significant growth throughout 1997," said Rich LeFurgy, chairman of the IAB Board.

The IAB survey, in which Web sites reported their ad revenues anonymously to Big Six accounting firm Coopers & Lybrand, also found that only three percent of reported revenues were in barters, ads that were run without cash payments. Many observers have speculated that barters ran far higher, as much as 20 percent of revenues.

The IAB figures are consistent with March 12 estimates from Jupiter Communications, which put online ad spending at $301 million in 1996, below Jupiter's earlier projection of $343 million in ad spending last year. Jupiter said its estimates run about 15 percent higher than reported ad revenues of most sites, putting them in line with the IAB numbers.