Industry Background - Sample Business Plan Private Communications Corporation (pcc)

Starting in 1995, Internet usage began its rapid ascent in popularity, due in part to the introduction of user-friendly browsers—such as Netscape's Navigator software—which made accessing the World Wide Web (the "Web") easy and inexpensive. Other factors fueling the rapid growth in Web usage included the large and growing installed base of PCs, advances in the performance of PCs and modems, and improvements in network infrastructure. Web usage had grown from 1 million users in late 1994 to between 19 million and 38 million users by the end of 1996. This rapid pace of growth was expected to continue, with projections ranging from 100 million to 170 million users by 2000.1
Chat rooms were one of the earliest applications on the Web to gain popularity. Chat rooms were virtual communities where people could hold anonymous conversations with other participants by typing out their comments on their computer keyboards. Some sites were totally dedicated to chat, such as www.talkcity.com, while others offered separate chat rooms as part of their sites.
For example, the ESPN Web site offered a number of different chat rooms where participants could discuss specific sports-related topics with players or game analysts. Yahoo!, the Web's most widely used search engine, offered users the opportunity to chat about a number of general topics at any time, in addition to offering scheduled discussions with soap stars, authors, and other celebrities.
Many chat rooms also allowed users to move into "private chat rooms" to hold more private conversations. America Online (AOL), the largest online service, hosted more than 1 million hours of chat per day through some 14,000 chat rooms.2
Many Web sites were adding chat rooms in an effort to build a sense of community around their sites, which in turn was believed to be a key driver behind generating traffic at a site. In fact, studies demonstrated that adding a chat room to a Web site could boost traffic by as much as 50%, and users of chat rooms stayed on a site for over four times as long as non-chat room users.3 Many industry analysts projected that chat room usage could grow even faster than Internet usage. One leading analyst projected that there would be 7.9 billion hours of online chat by the year 2000.4
In addition to chat rooms, online match services had also become quite popular. These services enabled participants to submit personal profiles and search a site's database for the personal profiles of other participants to find potentially interesting partners. Some sites, such as www.match.com, were entirely dedicated to online match-making, whereas other sites offered match services as just one of many options, such as AOL's love@aol.com and Yahoo!'s "perfect match" personal classified service. PCC estimated that there were well over 200,000 users of online match services in 1997.
As interest in chat rooms and match services grew, so too did concerns over personal privacy. Databases housing confidential personal information stored on computer networks could sometimes be accessed using only a person's social security number or telephone number. As concern increased, a number of companies had emerged to sell products to improve computer and telecommunications security.
1 International Data Corporation.
2 Business Week, May 5, 1997.
3 Business Week, May 5, 1997.
4 Advertising Age, August 5, 1996.
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