Is the Internet Immune to an Economic Downturn?

Our economy has been on a real rollercoaster ride this year. Most every day brings new stories of bank failures. Stock market troubles. Mortgages gone wild. Fluctuating oil prices. The National Debt that even the famous Times Square “counter” can’t keep up with. And then there’s the $700 billion bailout (ahem…rescue plan). Add to this volatile mix, pundits consulting their crystal balls, comparing our current economic crisis to the Great Depression, and telling us the obvious – that the institutions we’ve traditionally trusted have failed us. Our domestic woes are now impacting the world and, oh by the way, we might be in a recession. Bad news withstanding, the Internet seems to be thriving. And no wonder…

According to a May 2008 survey by Pew, 73 percent of American adults are Internet users. And in this age of Google, iTunes, eBay and cars.com, users are spending money, and lots of it. Forrester Research shows online sales, excluding travel, reached $175 billion in 2007. And Forrester expects the figure to hit $204 billion this year, despite the economic slump.

Online content consumption is also on the rise. In June 2008, Cisco reported global Internet traffic will grow at a compound annual rate of 46 percent from 2007 to 2012. And the company believes Internet videos will account for 50 percent of consumer traffic in 2012.

But, back to the question of whether the Internet is immune to an economic downturn. The Internet is certainly well-insulated because of high demand for its offerings and affordable delivery. Likewise, its worldwide audience, innovation-friendly environment, and seemingly unlimited expansion potential offer some additional warm-and-fuzzy buffers. On the other hand, though, Internet content and usage is influenced by our needs and wants, and our relationship to the prevailing economy shapes those needs and wants. So, can there really be a definitive yes or no answer to the question? What do you think?