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New Media

I. Usage of New Media   [back to Table of contents]

    A. Canada and the Internet

• The longest running Internet host survey is one carried out every six months by the Internet Software Consortium (ISC), most recently in January 2000. For the purposes of the survey, the ISC defines a host as a domain name that has an Internet Protocol (IP) address record associated with it. This would be any computer system connected to the Internet, i.e. www.crtc.gc.ca. The results of this survey are as follows:

Table 1: The 12 most used top-level domain names

Note: The majority of generic domain names are used by U.S. hosts.
Source: ISC Internet domain survey, January 2000

• Top-level domain names come in two forms, those that have been assigned to particular countries (i.e. .ca for Canada, .fr for France) and generic names which are not country-specific (i.e. .com, .org). A web site with the .ca code is not necessarily run by a Canadian or located in Canada and Canadian web sites can, and many do, use a generic top-level domain name instead of .ca. Nevertheless, it is one of the best means available to estimate a country's Internet presence.
  
• The January 2000 survey counted 72,398,092 hosts over the entire Internet, of which 1,669,664 (2.3%) used a .ca top-level domain name.
  
• The fifth most popular country domain name is Canada's .ca, ranking Canada as one of the most Internet-developed countries in the world.
  
• In November 2000, the Canadian Internet Registration Authority (CIRA) will become the administrative authority for the .ca domain registry. CIRA has set out Canadian presence requirements for those wishing to register for a .ca domain name. Those who can apply are Canadian citizens, permanent residents or their legal representatives; federal, provincial, or territorial corporations, organizations, and institutions; and owners of a registration under the Trademarks Act of Canada or persons protected by that Act.¹ [Footnote: CIRA web site, September 17, 2000. "Canadian Presence Requirements for Registrants".]

    B. Characteristics of New Media services  [back to Table of contents]

        i. PC ownership in Canada

Table 2: PC ownership rates of Canadian households

Sources: Statistics Canada Daily, Dec. 13, 1999
¹Statistics Canada, Household Internet Use Survey 1999

• Computer ownership rate of Canadian households rose 5% from 1997 to 1998, and remained flat from 1998 to 1999 according to Statistics Canada surveys. In 1993, PC ownership rates in Canadian households were 23%. By comparison, ownership rates of most other household equipment measured by these surveys were stable.
  
• The other items of household equipment which demonstrated the most increased ownership rates were also related to new media:
     • cellular telephones, from 22% in 1997 to 26% in 1998.
     • modems, from 25% in 1997 to 32% in 1998.
  
• Income was a determining factor in computer ownership. In 1998, 74% of households in the highest income group owned computers while only 18% of households in the lowest income group owned computers.

        ii. Internet connectivity

• The large increases in computer and modem ownership have led to increasing household use of the Internet², [Footnote: The 1997 and 1998 Household Internet Use Survey measured computer communications use, which measured Internet use but also included workplace Intranet and dial-up banking use. For the purposes of this report, these figures will be used as indicators of Internet use.] such that home use has recently surpassed work use.
  
• Canadians are increasingly using the Internet from all major locations, home, work, school, and public libraries. As with computer ownership, Internet access is related to income. Other factors which affected Internet access were education, location, and age.

Chart 1: Proportion of all households using computer communications

Source: Statistics Canada -Service indicators, 1st quarter 1999
                                       -Household Internet use survey 1999

    C. Internet access   [back to Table of contents]

        1. Internet access and household income

• As household income increases so does Internet connectivity from all locations. Households in the top income quartile are almost five times more likely to have Internet access than those in the bottom quartile.

Table 3: Internet access by household income
(%)

Source: Statistics Canada - Service indicators, 1^st quarter 1999
                                       - 1999 household Internet use survey

• A small (1.9%) number of Canadian households no longer use the Internet on a regular basis. The main reason (34%) people stopped using the Internet was that they had no need of it. This was double the number of people (17%) who stopped using the Internet for reasons of cost, the second most important reason people stopped using the Internet.
  
• As noted in Table 3, Internet penetration rates at the workplace actually fell from 1998 to 1999. One reason for this could be the use of the Internet for non-work related activities during office hours.

        2. Internet access by education

• Given the strong positive relationship between education and income, it is not surprising to discover that they share similar patterns in Internet access. Households whose head has achieved a university degree are almost five times as likely to have access to the Internet than households whose head did not finish high school.

Table 4: Internet access by education level of head of household
(%)

Source: Statistics Canada -Service indicators, 1^st quarter 1999
                                       -Household Internet use survey 1999

        3. Internet access by location

• Urban households are more likely to have access to the Internet than rural households. Penetration rates for households living in Canada's 15 largest Census Metropolitan Areas (CMAs) were 46.5% in 1999, up from 40.4% in 1998. For those living in the rest of the country, penetration rates were 36.3% in 1999, compared with 30.1% in 1998.
  
• A comparison of the growth rates of rural and urban access indicates that the gap is narrowing. From 1997 to 1998, penetration rates increased more rapidly for those outside the 15 largest CMAs (28%) than those living in them (19%). A similar trend occurred in 1999, with penetration rates for those living outside the 15 largest CMAs growing by 21% and by 15% for those living in them.

Chart 2: Penetration rates by province (%)

Source: Statistics Canada -Service indicators, 1^st quarter 1999
                                       -Household Internet use survey 1999

• There are also different levels of Internet use by province. Alberta had the highest penetration rate, 51%. Quebec had the lowest, 33%.

        4. Internet access by age

• Younger Canadians are much more likely to have adopted the Internet than older Canadians. The age of the head of the household makes a significant difference in the probability of that household having Internet access.

Table 5: Internet penetration by age of household head

Source: Statistics Canada, Service indicators, 1st quarter 1999

• The 35-54 age group makes up the bulk (63%) of the top income quartile, the income quartile with the greatest access to Internet.

        5. Kinds of Internet access used at home

• In 1999, the vast majority of Canadians accessed the Internet from home through the telephone line, and virtually all used their computer to surf.

Table 6: Types of connections used by households to access the Internet

Source: Statistics Canada, Household Internet survey 1999

• The fastest growing connection type is high-speed access. From the end of 1999 to the end of June 2000, the number of residential high-speed Internet users increased from 566,000 to 850,000. This represents an increase of 67% in six months.
  
• Currently, high-speed access is dominated by cable connections. The high-speed Rogers@Home cable Internet service doubled its number of subscribers to 265,000 in one year (July 1999 to July 2000). In the three-month period ending July 2000, Rogers@Home added 50,000 subscribers. During fiscal 1999, Shaw's high-speed cable service, Shaw@Home, also grew significantly, adding almost 85,000 subscribers. As of June 22, 2000, Shaw@Home had 250,000 subscribers.³ [Footnote: Shaw web site, Shaw.ca]
  
• Telephone companies are also promoting their own high-speed access services. Bell Canada's Sympatico is the largest Internet service provider in Canada, with 800,000 subscribers. Of these, approximately 100,000 are high-speed users, and Bell predicts that over 70% of Ontario and Quebec homes will be able to access high-speed Internet through telephone lines by the end of year 2000.⁴ [Footnote: Toronto Star, July 24, 2000. "Internet Access Providers Slugging it Out".]

        6. How often and how long Canadians use the Internet from home

• In 1999, 28.7% of Canadian households were regularly using the Internet from home, up from 22.6% in 1998 and 16.0% in 1997. Of those households, 65% used it every day in 1999, up from 62.2% in 1998.
  
• Over two-thirds (67%) of households spent at least 10 hours on-line a month in 1999, up from 63.1% in 1998.

Table 7: Profile of regular Internet users

Source: Statistics Canada, Household Internet use survey 1999

        7. Internet access rates, Canada and the world

• Canada continues to enjoy some of the lowest Internet access rates in the world. Furthermore, only Canada, Australia, Mexico, New Zealand, the United Kingdom and the United States currently offer the possibility of Internet access where users are not charged according to the amount of time spent on-line.
  
• Internet users in Canada, Australia, Mexico, New Zealand and the United States have the additional advantage that local calls are based on a flat fee and do not depend on duration.
  
• The following charts demonstrate how Canadian rates compare favourably with those of other countries when all charges relating to Internet connectivity are included. This advantage increases dramatically as the amount of time spent on-line increases.

Chart 3: OECD Internet access basket for 20 hours at peak time
using discounted PSTN rates, 2000 in US$, including VAT

Notes: OECD = Organization for Economic Cooperation and Development; PSTN = public switch telephone network;
VAT = value-added taxes. PSTN fixed charges include monthly rental fee and additional monthly charges related to discount plans, if applicable. The basket includes 20 one-hour calls. In France and Luxembourg, ISP and PSTN usage charges are bundled and included under the ISP charge.
Source: OECD, http://www.oecd.org/dsti/sti/it/cm/

Chart 4: OECD Internet access basket for 40 hours at peak times
using discounted PSTN rates, 2000 in US$, including VAT

Notes: OECD = Organization for Economic Cooperation and Development; PSTN = public switch telephone network;
VAT = value-added taxes. PSTN fixed charges include monthly rental fee and additional monthly charges related to discount plans, if applicable. The basket includes 40 one-hour calls. In France and Luxembourg, ISP and PSTN usage charges are bundled and included under the ISP charge.
Source: OECD, http://www.oecd.org/dsti/sti/it/cm/

    D. Internet use by television viewers   [back to Table of contents]

• Studies^5,6 [Footnotes: ⁵ Nielsen Media Research, May 1999. "TV Viewing in Internet Households". ⁶ Round Table Group, April 2000.]conducted in the United States show that although the Internet has had an effect on household television viewing habits, it does not currently seem to be cannibalizing television usage. Internet homes watch 10-15% less television than non-Internet homes, but are also lighter television viewers to begin with.
  
• The Internet is increasingly the first choice for news and information for the young. Over two-thirds (68%) of Americans aged 18-24 gather key information on-line, compared to a national average of 46%. A majority of Americans aged 18-24 find the Internet a more useful source of information than newspapers (59%) or television (53%).
  
• The young are also much more likely to search for answers to specific questions on the Internet, consulting the Internet over a newspaper 68% of the time and over the television 67% of the time. This group also finds that the Internet is relevant to their work, with 73% having used the Internet to retrieve work-related information.
  
• Certain patterns of Internet use appear to have been transferred from television viewing habits. For example, Nielsen research demonstrated that Internet users tend to visit about 12 unique sites per month, very similar to the 13 channels that television households actually watch every month.
  
• The Internet also has a growing presence on television, as Internet companies are increasingly advertising their products and services on television.
  
• Conversely, there are many broadcast and cable networks that now produce Internet content. World-Wide Internet TV (www.wwitv.com) lists 309 Internet TV stations as of September 2000, which includes both traditional stations broadcasting their content on-line as well as Internet-only broadcasters.

    E. Uses of New Media   [back to Table of contents]

• The number of uses Canadians are finding for computer communications from the home is rapidly increasing. Only three uses were measured by Statistics Canada in 1997, 10 in 1998, and 14 in 1999. The additional categories relate to specific on-line activities.
  
• A regular user household is one in which any household member uses the Internet (from any location) in a typical month. In 1999, 42% of Canadian households were regular user households, compared with 35.9% in 1998 and 29.4% in 1997.

Table 8: Uses of New Media by Canadian households

Sources: Statistics Canada, Service indicators _ 1^st quarter 1999
Statistics Canada, Household Internet use survey 1999

• Web-radio.com lists over 4000 radio stations that are available on-line, including both traditional stations and Internet-only stations.

II. The Canadian Internet service provider (ISP) industry  [back to Table of contents]

• Industry Canada estimates that as of November 2000, there were as many as 1,000 ISPs operating in Canada. As ISP is defined as an organization that provides Internet access to the public.
  
• There was an estimated 700+ ISPs operating in Canada in October 1999.⁷ [Footnote: The Globe and Mail, October 7, 1999. "On your mark, get set, spend!"]
  
• The vast majority of ISPs are relatively small, with less than 5,000 subscribers each. The larger industry players, listed in teh following tables, have the bulk of the subscribers.

Table 9: Subscriber estimates for the largest paid ISPs, November 2000

Notes: *Unabel to differentiate between dial-up and high-speed. **Projections based on CRTC calculations.
Sources: Globe and Mail, Edmonton Journal, Vancouver Sun, Toronto Star, National Post, Commerce, www.shaw.ca, www.telus.ca, www.tvs.net, www.aol.com, www.look.ca, www.sprintcanada.ca, www.videotron.ca, www.attcanada.com, www.cybersurf.ca  

• While telephone companies are dominant in providing overall access, the cable companies currently lead in the number of high-speed subscribers.

Table 10: Subscriber estimates for free ISPs, November 2000

Source: Toronto Star, www.cybersurf.ca, www.1stUp.com 

• Free Internet access is relatively new in Canada and according to a recent press release 1stUp is the largest ISP providing the service in Canada. 1stUp also claims to have over 5.5 million subscribers in the United States.
  
• Netzero, another large American free ISP with 5.7 million users in the United States, just introduced its service in Canada in the fall of 2000. Cybersurf and Funcow are Canadian companies, their services are only offered in Canada.
  
• The free ISP business model is based on the idea of recouping access costs through advertising and sponsorship. The free ISP subscriber must use a special browser that is constantly displaying advertisement.

III. Language and the Internet  [back to Table of contents]

Chart 5: Breakdown of web pages by language

• Well over three-quarters of web pages are in English, according to an OECD survey. French is the fifth most popular language on the Internet, accounting for about 2% of all web pages. A lack of French content might be one factor explaining why Quebec continues to have the lowest Internet penetration rate of all the provinces.
  
• Approximately 15% of all .ca web pages are in French.

IV. Canadian presence in New Media  [back to Table of contents]

    A. Initiatives for Canadian New Media content

• There are numerous programs that make funds available to the Canadian multimedia industry. In addition to programs aimed mainly at the multimedia industry, many existing support programs for the development of cultural content now include support for multimedia projects.
  
• Canadian Heritage has compiled a non-exhaustive database of programs available to the Canadian multimedia industry as of June 2000. It lists 41 organizations that offer 75 programs across the country.

    B. Canadian multimedia industry   [back to Table of contents]

• In December 1999, AC Nielsen·DJC Research conducted a study on the Canadian multimedia industry for Canadian Heritage, Human Resources Development Canada, Industry Canada and Foreign Affairs and International Trade. AC Nielsen·DJC Research compiled a list comprising the entire universe of multimedia companies in Canada (1,080 organizations).
  
• Just over half (53%) of the 152 multimedia companies surveyed reported being profitable in the previous year. 47% of these companies derived all of their revenue from multimedia-related activities.
  
• The majority of multimedia firms that were not profitable at the time of the study expected to be profitable by the end of fiscal 2000. Over three-quarters (77%) of Canadian multimedia companies are small (less than 10 employees), and have revenues of less than $1 million. Only 19% reported revenues of $1 million or more.
  
• The industry is very optimistic concerning its future. Only 32% expected revenues to remain below $1 million by 2001.
  
• Difficulties in developing international markets, obtaining copyright clearance, finding suitable talent, and developing multimedia titles are all issues of concern to the industry.

 

V. New Media advertising trends   [back to Table of contents]

    i. Growth of New Media advertising

• Internet advertising revenue in the United States grew from US$2 billion in 1998 to US$2.6 billion in 1999, accounting for most of the US$3.3 billion in world-wide revenues in 1999.^8,9  [Footnotes: ⁸ Multimedia Strategy Group. "Canadian Internet Advertising 2000: A Message for the Medium". ⁹ Nielsen Media Research, May, 1999. "TV Viewing in Internet Households".]
  
• In Canada, Internet advertising in 1999 amounted to only $55.5 million, a figure which is expected to double in 2000. Internet advertising in French amounted to $7 million, or 14.5% of Canadian Internet advertising in 1999.

    ii. Streaming video

• One area where the Internet is moving into a broadcasting environment is streaming video, high quality video content being delivered through the Internet. It is also referred to as webcasting.
  
• In 1999, the top ten webcasts each attracted over half a million viewers. The biggest webcast of 1999, a Paul McCartney concert, was streamed to over 5 million viewers and would have translated to a Nielsen rating of 5.00 in the United States.¹⁰ [Footnote: ¹⁰ McKinsey Quarterly, 2000 Number 3. "The End of Broadcast?"] That is similar to a television show with a weekly ranking of 50th to 100th. Over 98 million people have downloaded RealNetworks, the most commonly used streaming video player.

VI. E-commerce   [back to Table of contents]

• Global Internet commerce amounted to US$111 billion in 1999, a figure which is projected to grow to US$1.9 trillion by 2003. Canadian Internet commerce for 1999 totalled CAN$11.02 billion and is projected to grow to CAN$93.67 billion by 2003. In Canada, 87% of Internet commerce in 1999 was business-to-business, with the remaining 13% being business-to-consumer.¹¹ [Footnote: Industry Canada, Task Force on Electronic Commerce.]Consumer retail on-line expenditures in Canada were $688 million in 1998, 0.28% of total retail spending.¹²  [Footnote: Multimedia Strategy Group. "Canadian Internet Advertising 2000: A Message for the Medium".]
  
• Fully one-quarter of Canadian home Internet users made an on-line purchase of goods or services in 1999, a significant increase over the 17% who did so in 1998. This is significantly less than the 42% of American home Internet users who shopped on-line in 1998.
  
• In 1999, 14% of Canadian companies were selling on-line, compared with 44% of U.S. companies.

Table 11: % of Canadian households making a purchase on-line

Source: AC Nielsen, The Canadian Internet Survey, 1996, 1997, 1998, 2000

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Published: 2000-11-13

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