A crackdown on office Internet use could dent demand for online services. Farewell to streaming media, eBay and "The Sims"?
Before the consolidation, some units had allowed 9-to-5 access to the Web?s most popular diversions. Shortly after the company unveiled its new Ascent Media division, however, many staffers faced a new era of austerity: no more eBay, no more "Sims Online," no more Match.com.
"I think it was an issue of productivity--people were spending too much time on these sites," said Victor DeAnda, a DVD-menu designer at Ascent Media DVD who admitted to logging on to online dating sites at work a couple of times a week. "I know people who were bidding on eBay all day."
High-speed Net access at the office has long outstripped its reach at home, tempting workers to enjoy the benefits of broadband for personal as well as business pursuits. Now a broad corporate crackdown on office Net use may be looming, driven by cost-cutting efforts and increased scrutiny of workers' online activities.
Network management has risen to the top of the list of information technology concerns, as more and more workers visit streaming sites, send high-bandwidth photos to friends, and swap files using work networks. More recently, dating, gaming, instant messaging and software downloading are emerging as leading network sappers.
"People are taking control of their network, and a lot of that has to do with this nonbusiness-related traffic," said Todd Krautkremer, vice president of worldwide marketing at bandwidth management company Packeteer.
Bad news for some Web sites
The threat of a corporate crackdown looms over Net operations that are courting high-speed users at a time when few such connections reach into the home. Nearly 87 percent of people accessing the Net from work are using a broadband connection compared with about 28 percent from home, according to Net researcher ComScore Networks.
If corporate Web filtering of mainstream sites becomes widespread, it could cut into revenue or new subscription offerings at a time when many business models are finally finding solid ground.
Companies that stand to lose from corporate filtering include game sites like "The Sims," commerce hot spots like eBay, online dating sites like MatchMaker.com, and news and entertainment outlets focused on delivering in rich media formats such as video or audio--areas that largely rely on broadband access for speed and quality.
"Given that about 40 percent of the activity (in many of these areas) is coming from work, if (blocking) became a pervasive practice in the workplace, it would impact the business," said Jeff Fieler, a financial analyst at Bear Stearns. "That's a risk that's out there."
One network performance analyst at a Fortune 10 company estimated that 10 percent to 20 percent of all network traffic is nonwork-related. The analyst, who didn't want to be named, said that can add up quickly.
"If you're looking at a company with an $82 million IT budget, and 10 percent of the network is going to nonwork uses, you're saving $8 million if you can stop it," he said, adding that file-swapping, streaming news media, and gaming are among the most common activities.
The company, which uses network management software from Packeteer, already has cut off access to file-swapping services including Kazaa and multiplayer gaming site Kali.net. He said companies that pin their business models on a workplace audience need to watch their step, especially if Old Economy companies like his are jumping into the employee blocking fray.
"If I were them, I'd be concerned," he said.
Companies that seek to deliver digital content to audiences in large files like movies are in a particularly tight spot.
Hollywood-backed Movielink recently launched a movies-on-demand service targeted solely at broadband users. Jim Ramo, CEO of Movielink, said the company has not marketed its rental service to people at work, but it would welcome people watching movies during lunch hour.
"It's a public relations problem--many companies set up firewalls, so we didn't want to market to people in the workplace and have a potential user of ours be disappointed because they couldn't get a movie file," he said, adding that movie files are as big as half a gigabyte of data.
"It certainly limits the audience to broadband users at home," he added.
Another site that could feel the impact of increased corporate crackdowns is RealNetworks. RealOne, the company's media-streaming subscription service, sees its highest traffic during the late workday and into the evening, from 4 p.m. to 9 p.m. PST, and on weekends. The company would not break down whether consumers were coming from home or work connections.
But according to data from market researcher Nielsen/NetRatings, the company draws a large percentage of its audience from workplaces. In December, RealOne attracted 11.7 million unique visitors from work and 19.7 million from home.
Scott Ehrlich, vice president of media acquisition at RealNetworks, said he sees corporate filtering as a positive sign for the company and its roughly 850,000 subscribers.
"We believe there's an opportunity to create a product for the workplace," he said. "It's not as much about discontinuing access to services as much as it is about gating access to content that's appropriate and helpful to the workplace, such as news and information determined by the type of business."
Surf's up for shopping, news
Internet use during the workday is up in many areas, including online personals, shopping, and news and entertainment. In a study of online behavior from September to October, 43 percent of people take time from their day job to shop online, according to America Online and research group RoperASW. According to another study, people are also more likely to turn to the Web over other media when looking for breaking news during the workday, especially via streaming audio and video feeds through high-speed connections.
Personals, too, are riding high on workplace broadband access. About 46 percent of visitors to personals sites use a broadband connection, compared with 33 percent for the total Internet, according to a December 2002 study from ComScore. Personals was the largest paid-content category in the third quarter with more than $87 million in sales.
Network management company Websense found that employers most often reprimanded employees for visiting shopping and auction sites, followed by message boards, social organizations, and sports and hunting sites. The company estimates that $85 billion in productivity is lost annually to workers wasting time on the Net.
Still, there are signs that some employers may be willing to be flexible and allow some access to sites that may not strictly relate to work.
Kelly Haggerty, senior vice president of products at Web filtering company SurfControl, said that many companies are starting to regulate employees' Web use, allotting them a daily allowance of surf time. For example, one company might allow people to access online dating sites for a half an hour each day then cut them off. Another might be more flexible because its salaried employees work 14-hour days, she said.
"They're able to blow off steam for an hour looking at sport sites," said Haggerty, whose company has more than 20,000 corporate customers.
Bear Stearns' Fieler said that, if anything, Web operations targeting broadband users may undergo transitional growing pains during the time it takes people to adopt faster, bigger pipes at home, replacing their work Web usage for things like shopping. But for people who work long hours, companies aren't likely to block their access to Web sites for personal use.
For DeAnda, the actions of his current employer, which did not respond to calls for this story, pale in comparison to his previous job.
"When I worked at another film company, it got so bad that they blocked Internet usage altogether," he said. "That was ludicrous, especially in terms of e-mail. They only gave certain people Internet privileges after that time."