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Report: Four Web Sites Control Half of Surfing Time

By Keith Regan
Jun 4, 2001 10:13 AM PT

Offering further evidence that media companies and online portals will control the bulk of e-commerce traffic, four Web properties -- America Online (NYSE: AOL), Yahoo! (Nasdaq: YHOO), Microsoft (Nasdaq: MSFT) and Napster -- now account for more than half of all the time spent online by U.S. surfers, Jupiter Media Metrix (Nasdaq: JMXI) said Monday.

Report: Four Web Sites Control Half of Surfing Time

Jupiter's report found that the number of Web sites controling 50 percent of surfing time shrunk to four from 11 two years ago.

Moreover, 14 companies control 60 percent of online time, down from 110 Web sites in March 1999.

Jupiter said the data helps dispel the long-held myth that market dominance on the Web would be difficult to achieve.

Myth Shattered?

"The data show an irrefutable trend towards online media consolidation and indicate that the playing field is anything but even," said Jupiter senior analyst Aram Sinnreich.

According to Sinnreich, a major share of the market is being absorbed by a handful of companies, and those same companies are continuing to direct traffic across their own networks of sites.

What has changed, Jupiter said, is that marketing and advertising power has replaced infrastructure investment as the main barrier to entry and success on the Web. In other words, bigger is better.

Merger Mania

Jupiter said a spate of mergers, most notably the AOL-Time Warner marriage, has created more powerful companies, which have in turn been helped by the death of many smaller companies that did not have the funding power to survive the shakeout.

The top pure e-commerce site on the list was eBay (Nasdaq: EBAY), which controlled just under 2 percent of all surfing time.

However, Jupiter noted that all of the media and portal companies use their dominance in attracting Web traffic to generate e-commerce income.

Power Brokers

In fact, a study released in April by Forrester Research argued that portals are slowly morphing into e-commerce brokers.

Forrester analyst Carrie Johnson said at the time that the winners in that race will be the dominant sites in terms of Web traffic.

"Comparison-shopping engines, product-review sites and portal wannabes don't have what it takes, but affiliate programs and major portals like AOL, MSN and Yahoo! do," Johnson said.

Amazon the Portal?

Meanwhile, the Yankee Group said earlier this year that portals such as AOL and Yahoo! saw sales grow faster than traditional e-tail sites did during the 2000 holiday season.

In fact, some e-tail companies have begun to act more like portals and media sites. For instance, Amazon.com (Nasdaq: AMZN) last month unveiled its first non-retail offering when it launched a movie-listings site that will be supported solely by advertising revenue.

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