Internet and cyber communications industry

Industry Snapshot

GENERAL INDUSTRY: Information Technology

CAREER CLUSTERS: Arts, A/V Technology, and Communication; Information Technology

SUBCATEGORY INDUSTRIES: Application Hosting; Custom Web Page Design Services; Internet Entertainment Sites; Internet Publishers; Internet Service Providers; Social Networking Sites; Video and Audio Streaming Services; Web Hosting; Web Search Portals

RELATED INDUSTRIES: Advertising and Marketing Industry; Broadcast Industry; Computer Hardware and Peripherals Industry; Computer Software Industry; Computer Systems Industry; Publishing and Information Industry; Telecommunications Equipment Industry; Telecommunications Infrastructure Industry

ANNUAL DOMESTIC REVENUES: $189.3 billion (Statista, 2021; for Internet advertising)

ANNUAL GLOBAL REVENUES: $566 billion (Statista, 2022; for Internet advertising)

NAICS NUMBERS: 518, 517919, 519130, 541511

Summary

From businesses and schools to individuals and governments, the rise of websites, e-commerce, e-mail, and social networking has changed how humankind interacts and communicates. The Internet offers businesses and individuals instant access to digital information. Employees and entrepreneurs working in this industry create the content that, as of January 2024, attracted more than 5.3 billion people worldwide to the Internet, according to Statista. The number will only rise as developing countries continue to gain an increasing online presence. Internet advertising, paid online services, and online database publishing represent the leading revenue streams for the Internet industry.

History of the Industry

The evolution of the Internet represented an incredible leap forward in human interconnectivity. When programmers took their first tentative steps toward the information network that would become the Internet, there were only ten thousand computers in the entire world. In 1962, J. C. R. Licklider, head of the new military computer research program at the Advanced Research Projects Agency (ARPA), first envisioned an “intergalactic network” that would give people instant access to digital information. He began collaborating with scientists and researchers across the country to investigate the possibility of forming new communication networks.

By 1963, the National Aeronautics and Space Administration (NASA) had launched its first communications satellite. The development of communications satellites, first proposed by science-fiction author Arthur C. Clarke, played an important role in the development of the Internet. Meanwhile, scientists at the Massachusetts Institute of Technology (MIT), the RAND Corporation, and the National Physical Laboratory began researching ways to allow computers to exchange information in small units known as packets. This technology was called packet switching, and it remains the basis for most modern Internet communications.

By 1965, ARPA researchers were able to connect a computer in Massachusetts to a computer in California using a telephone line. This connection constituted the world’s first wide-area network. Former NASA scientist Bob Taylor became head of ARPA’s computer research department in 1966, and he quickly began working with researchers around the world to develop a communications network utilizing packet-switching technology. This network became ARPANET, the first real precursor to the modern Internet.

After years of experimentation, scientists at the University of California, Los Angeles (UCLA), ARPA, Stanford University, and the University of California, Santa Barbara, successfully connected to the ARPANET for the first time in 1969, and the Internet was born. Scientists quickly began to connect via the ARPANET, and by 1970, the network was growing by one new computer system, or “node,” per month. As the ARPANET grew, researchers continued to experiment with new ways of exchanging information through the network. In 1972, Ray Tomlinson, a researcher at BBN Technologies, created the world’s first e-mail program.

After years of testing and development, scientists unveiled the ARPANET at the 1972 International Conference on Computer Communication (ICCC). They attracted the attention of even more scientists, and by 1973, thirty nodes were connected via the ARPANET. New networks were also created, including Packet Radio, which utilized radio waves to connect seven computer systems in Hawaii. In Europe, scientists used satellite communication systems to connect two computers in Norway and the United Kingdom.

By 1977, ARPA had become absorbed into the U.S. Department of Defense and was renamed the Defense Advanced Research Projects Agency (DARPA). Vint Cerf and Bob Kahn, two researchers working for DARPA, become the first scientists to send information across multiple networks utilizing the APRANET, Packet Radio, and satellite communications. They called the process “internetting.” This was an important precursor to the modern Internet, in which computers and digital devices are able to connect through telephone lines, mobile broadband networks, wireless access points, and satellite Internet services.

Once the ARPANET experiment was officially concluded in 1978, researchers at various universities continued to experiment with networking. By 1979, Steve Bellovin, a scientist at the University of North Carolina, developed USENET in an attempt to share information with his fellow researchers at Duke University. USENET allowed users to exchange e-mail, files, news, and information and attracted many new online visitors.

At this time, the burgeoning growth of the earliest modern personal computers, led by Apple and International Business Machines (IBM), led to a revolution in computer technology. Governments, companies, universities, organizations, and individuals soon recognized the usefulness of connecting computers through a stable network, and the International Organization for Standards (ISO) created a universal standard for exchanging information over the Internet in 1982.

By 1984, universal standard domains such as .com, .org, .gov, .edu, and .net were adopted. However, it was not until Internet pioneer Tim Berners-Lee developed hypertext in 1989 that computers running different operating systems were able to connect easily via the World Wide Web. Working alongside collaborator Robert Cailliau, Berners-Lee created the world’s first browser and developed the Hyper Text Markup Language (HTML), which is still used by millions of websites around the world.

Between 1962 and 1992, available network bandwidth increased by a factor of more than 20 million. By 2004, more than 873 million users were online, and by 2008 there were more than 80 million websites. Instant access to news, entertainment, and personal information has proven an extremely valuable commodity to people and organizations across the world. The Internet has created a robust and growing online economy, and low start-up costs have allowed savvy entrepreneurs to form many successful businesses. The Internet and cyber communications industry employs countless people worldwide, including webmasters, graphic designers, and software engineers. Many others use the Internet to earn a second income, often through blogging, e-commerce, or running their own websites devoted to their personal interests and hobbies.

The Industry Today

Throughout the 1990s and into the early twenty-first century, the rapid rise of the Internet economy created a massive speculative bubble. The skyrocketing growth of Internet users led to a rush of new dot-com companies hoping to attract customers, with venture capitalists investing an estimated $106 billion in start-up Internet firms by 2000. By 2001, the bubble burst, as investors and shareholders rushed to abandon tech companies, many of which had never realized a profit. The collapse of the dot-com bubble left many thousands of people unemployed and many investors with significant—often devastating—losses.

Despite these challenges, some companies founded during the 1990s survived. These included eBay, Amazon, and Yahoo!. In addition, the Internet infrastructure set up during the dot-com bubble opened up web access on a global scale, making it possible for the next generation of Internet companies to prosper. Internet companies formed after the dot-com bubble are usually founded with much more modest budgets, but many have been able to attract users and become profitable.

Many websites, including such well-known sites as X (formerly Twitter) and Facebook, can take years to earn a profit. However, Internet advertising can help bring in valuable revenues right from the start. Websites can earn advertising revenues through several different methods. Google, for example, allows advertisers to bid for the right to appear in a box labeled “Sponsored Links” that appears alongside certain search results. Thus, when users search for “sneakers,” for instance, they see a selection of shoe stores and department stores beside their search results. Advertisers are charged every time a user clicks on a link. Sites can also earn revenues by selling banner ads. A website focusing on political news and commentary, for example, might sell banner ads to politicians running for office. Such sites may charge advertisers a flat rate or charge a fee every time a user clicks on an ad, a practice known as click-thru advertising.

Internet advertising has proven a reliable profit stream for many established websites, including Google, which made more than US$237 billion in profits in 2023. Some websites also charge users a premium to use certain services, while others collect donations and sell merchandise to offset costs.

There are many different ways websites attract visitors. Many new websites allow people to create their own content—a phenomenon known as “Web 2.0.” YouTube and TikTok have gained significant followings by allowing users to post their own videos. Social networking websites such as Facebook and Instagram take this concept a step further, allowing users to share not just photos and videos, but also personal information about their lives. Other websites offer original content produced by employees, while some, such as Pinterest, succeed by allowing users to collate and rank web pages, providing users with centralized access to information, pictures, and videos that might interest them. Sites may also provide travel services, such as discounted airline tickets, car rentals, or hotel reservation rates, while others offer reviews of local businesses, including restaurants, repair shops, and doctors’ offices.

Websites such as Amazon and eBay have grown into thriving e-commerce companies with tens of thousands of employees. Meanwhile, hosting companies such as DreamHost or Squarespace offer customers easy, inexpensive ways to publish their websites online. In addition, there are many web-based companies that focus exclusively on the business and financial needs of their customers, offering job postings, stock trading, accounting, or database services. In fact, most businesses, large or small, have their own websites and social networking accounts. Many outsource their Internet needs to web designers and consulting firms, while others hire part-time or full-time employees to handle their online presence.

A new development in the Internet and cyber communications industry is the growth of cloud computing. Companies such as Apple, Microsoft, and Google all offer robust cloud computing services that allow businesses and individuals to access programs and documents from a decentralized system of servers. By dispersing data off-site, users can securely back up their data and easily collaborate across long distances. Businesses can also cut costs by outsourcing expensive server operations.

Start-up costs for websites have become extremely low in recent years, in part because of the popularity of free open-source software. Entrepreneurs working from home have founded many successful Internet businesses. For example, Mark Zuckerberg launched Facebook from his dorm room while a sophomore at Harvard. First started as a hobby, Facebook has grown into one of the most popular sites on the Internet, with more than 3 billion monthly active users worldwide in February 2024.

Industry Outlook

Overview

Since the first researchers successfully connected two computers together through a simple phone line in 1965, the Internet has grown into a constantly evolving communications medium that continues rapidly to integrate countless aspects of society. As increasing numbers of people use the Internet as their primary source for information, older forms of media, including television, films, newspapers, and radio, are rushing to get their products online. This trend will only continue as the number of people with Internet access skyrockets on a global scale. As of 2020, there are twice as many Internet users in Asia as in North America.

By 2022, the total number of Internet users worldwide reached more than 5 billion, with about 20 percent—or 1 billion people—of all users located in China. Despite those impressive figures, less than 50 percent of the Chinese population has access to the Internet, compared with more than 85 percent in the U.S. population. Such disparities are part of the reason that future overseas Internet growth is expected to far surpass domestic trends. Both Yahoo! and Google have launched many new services that allow overseas users to access the Internet in their native languages. Domain names featuring non-Latin characters, in such languages as Arabic and Japanese, were approved for the first time in 2010 by the Internet Corporation for Assigned Names and Numbers (ICANN), the main regulator of Internet protocols.

Internet access through smartphones, tablets, and other mobile devices has become much more commonplace. Smartphones such as Apple’s iPhone and Motorola’s Droid, which features an operating system designed by Google, revolutionized the way customers use cell phones. The growth of reliable cellular broadband services and wireless Internet allows customers to access the Internet while away from their computers. Many mobile phones even allow users to connect their computers to the Internet wirelessly via their phones, a process known as “tethering.” Internet use on mobile devices has grown exponentially in the United States. According to Pew Research Center, 90 percent of the population owned a smartphone in 2023. Of those cell phone owners, 15 percent of adults accessed the Internet exclusively on a phone.

The growth in the number of wireless access points at businesses, homes, schools, libraries, government facilities, and even entire cities and neighborhoods has made high-speed broadband freely available to more people than ever before. Hospitals, schools, and governments are all expanding their online services, allowing users easily to access medical records, school records, and government documents. These developments have helped exponentially grow the number of Internet users, creating many new opportunities for entrepreneurs to launch new businesses. Meanwhile, the growth of cloud computing allows businesses and individual users to archive digital information such as pictures, documents, music, and programs online, often for backup purposes but also to gain access to these files from multiple computers or other devices capable of accessing the Internet.

Criminal activity on the Internet has also grown. In 2022, the US government's Small Business Innovation Research and Small Business Technology Transfer programs estimated that cybercrime has a $445 billion impact on the global economy each year. Businesses, schools, governments, and individual users must focus on Internet safety as they become more dependent on the web for their daily information needs.

The Internet is a constantly evolving marketplace of ideas and information, and this fluid environment allows users to create their own environments and communities online. Social movements have started through social media sites such as Twitter and Facebook. Communities with shared interests exist solely on the Internet through websites such as Tumblr and Reddit. Websites (particularly online retailers) have become more customizable for their customers. Amazon, for example, allows users to create their own public online wish lists and write their own reviews for the products they own, and Facebook allows users to review and comment on all major proposed privacy changes before they are implemented. Meanwhile, websites such as Second Life allow users to create their own virtual online worlds, complete with financial transactions and commercial property purchased by advertisers.

More people are launching their own websites than at any time in the past. While some of these are founded for business purposes, many more are launched to share information with family and friends or to support hobbies and connect with like-minded individuals. As people establish online identities, the amount of information exchanged through the Internet will continue to grow. This trend has helped raise demand for web hosting services, software programmers, and web designers.

Web pioneers with unique ideas have rapidly grown companies from start-ups to large, established businesses worth millions of dollars. Because of free open-source software, decreasing costs for computer hardware, and the rise of affordable web hosting services, any idea has the potential to gain a strong following and, eventually, commercial success.

Employment Advantages

Internet usage has continued to expand, drive industries, and create numerous opportunities for job growth. In addition, established businesses in every industry have increased their use of the Internet. From local businesses hiring webmasters to build and maintain their sites to large, established companies hiring consulting firms to increase their web presence, the future of businesses is on the Internet.

The Bureau of Labor Statistics (BLS) expects employment for web developers to grow by 16 percent between 2022 and 2032, which is much faster than the national average for growth in other industries. Database administrator jobs are expected to grow by 8 percent over the same period. On the other hand, employment for computer programmers is expected to decline by 11 percent, due to the availability of cheaper labor abroad in these jobs. Significant competition for work in this field is expected. Prospective candidates should expect to earn a bachelor’s or master’s degree, depending on the position the are seeking. Since much of the growth of the Internet is expected to take place overseas, employees who speak other languages will also gain a considerable advantage.

Annual Earnings

As the number of Internet users grows, the amount of money exchanged through Internet transactions will continue to grow dramatically. Consumers spent $1.5 trillion via the Internet commerce industry, with transactions increasingly performed through mobile devices and applications in the 2010s and 2020s. The COVID-19 pandemic prompted many people to purchase groceries, food order deliveries, and more through online transactions.

Internet traffic is expected to continue its exponential growth, with experts from the Cisco Visual Networking Index registering that global users exchanged more than 1 trillion gigabytes (or a zettabyte) of information through the web for the first time in 2016—dubbing this landmark the start of the Zettabyte Era. In addition, the cloud computing industry has become an important facet of the global technology market, with companies such as Apple, Microsoft, and Google at the center of the field. The global industry market for cloud computing was worth more than $483 billion in 2022.

As the Internet continues to become more fully integrated into daily life, it will continue to evolve and expand. The tremendous expected growth of the Internet and cyber communications industry will give future entrepreneurs many opportunities to launch new businesses and will also allow many established Internet firms to continue to attract new customers and advertising partners.

Bibliography

Aspray, William, and Paul E. Ceruzzi, eds. The Internet and American Business. Cambridge, Mass.: MIT Press, 2008.

Campbell-Kelly, Martin, and William Aspray. Computer: A History of the Information Machine. 3rd ed. Boulder, Colo.: Westview Press, 2015.

Computer History Museum. “Internet History.” www.computerhistory.org/internet‗history.

Discovery Institute. “U.S. Internet Traffic Projected to Grow Fifty-fold over Next Five Years.” January 29, 2008. www.discovery.org/a/4444.

Lacy, Sarah. Once You’re Lucky, Twice You’re Good: The Rebirth of Silicon Valley and the Rise of Web 2.0. New York: Gotham Books, 2008.

"Online Advertising Revenue in the United States from 2000 to 2022." Statista, 2023, www.statista.com/statistics/183816/us-online-advertising-revenue-since-2000/. Accessed 25 Mar. 2024.

"Mobile Fact Sheet." Pew Research Center, 31 Jan. 2024, www.pewresearch.org/internet/fact-sheet/mobile/. Accessed 25 Mar. 2024.

"Occupational Projections and Worker Characteristics." Bureau of Labor Statistics, 2022, www.bls.gov/emp/tables/occupational-projections-and-characteristics.htm. Accessed 4 Oct. 2022.

Singel, Ryan. “Google Profits up 27 Percent in Q3.” Wired, October 15, 2009. www.wired.com/epicenter/2009/10/google-profits-up-3q-200.

Sorid, Daniel. “Writing the Web’s Future in Numerous Languages.” The New York Times, December 30, 2009.

Stibel, Jeffrey M. Wired for Thought: How the Brain Is Shaping the Future of the Internet. Boston: Harvard Business Press, 2009.

Warman, Matt. “Macworld 2009: Apple’s Cloud Computing Plans Will Threaten Google and Microsoft.” The Telegraph, January 7, 2009. www.telegraph.co.uk/technology/apple/4160043/Macworld-2009-Apples-cloudcomputing-plans-will-threaten-Google-and-Microsoft.html.