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LONDON - The rising popularity of social networking sites is putting more pressure on the business models of companies in the television and radio sectors, with internet usage eating into consumption of traditional media for the first time.
UK citizens spend over 50 hours a week on the phone, surfing the internet, watching the television or listening to the radio, according to Ofcom's annual Communications Market Report.
Yet while internet and mobile phone usage continues to grow, the average amount of time consumers spend watching the television has fallen 4 per cent since 2002, while radio listening has declined 2 per cent.
Even more dramatic was the 8 per cent decline in the amount of time spent using fixed-line telephony compared with five years ago.
internet advertising revenue rose 47 per cent to over £2bn in 2006 - more than ITV1 and Channel 4's combined advertising revenue.
The surge in the popularity of social networking sites has led more people to spend increasing amounts of their spare time online.
This is particularly the case among young people but has also resulted in more women and even older people - or "silver surfers" - spending more time online.
This has had a knock-on effect in the television sector.
Ofcom said that advertising revenue fell nearly 3 per cent, with a sharp decline in sales at the flagship terrestrial stations ITV1, Channel 4 and Channel 5 offsetting a 21 per cent rise in revenue across digital channels.
However the decline in advertising sales was offset by higher subscription revenue, which broke through the £4bn mark for the first time.
James Thickett, director of research at Ofcom, warned that the television industry's reliance on advertising revenue could come under further pressure with the rising penetration of digital video recorders across UK households allowing viewers to fast forward through advertisements.
Up to 78 per cent of digital video recorder users claim to fast forward through advertisements, said Ofcom.
"This may force broadcast advertisers to change their models.
The challenge is to find new kinds of advertising that engage people," Mr Thickett said.
Ofcom said that radio advertising fell over 14 per cent between 2001 and 2006.
This reflects a decline in listening hours over the past few years, with Ofcom reporting that the number of children listening to the radio has halved between 2005 and 2007.
However with digital radio listening on the increase, Ofcom was confident that the radio industry can cope with changing consumption habits.
Peter Phillips, a partner at Ofcom, said: "To paint a picture of catastrophic decline would be wrong."
- INDEPENDENT
