The Internet Economy grew 68 percent from the first quarter of 1998 to the first quarter of 1999 and now accounts for 2.3 million jobs, according to the University of Texas’ Center for Research in Electronic Commerce.

These figures - the Internet Economy Revenues Indicator(tm) (IERI), the Internet Economy Jobs Indicator(tm) (IEJI) and the growth rate - are the principal findings of the second report on measuring the Internet Economy commissioned by Cisco Systems.

The University of Texas projects the Internet Economy to grow to $507 billion this year.

This research updates the first Internet Indicators report released in June that found that the Internet Economy generated $301.4 billion in revenue in 1998. That means the Internet Economy grew at an astounding rate.

Revenues and jobs were measured using a four-layer structure developed by the researchers. The component indicators in each level were added, with some adjustment, to make up the larger Revenues Indicator and Jobs Indicator.

While economic activity was strong in all four layers, the research indicates that E-commerce exploded in Q1 1999. Online sales increased 127 percent to $37.5 billion from the first quarter of 1998 to the first quarter of 1999. Projected over the year, that would be an estimated $176.4 billion in E-commerce in 1999. In addition, the number of jobs dedicated to online sales increased to 900,882, a 78 percent increase from Q1 1998.

E - commerce is not the only segment prospering. The other layers of the Internet Economy are growing at a high rate. The Internet Infrastructure layer grew 50 percent to $40.1 billion for the first quarter of 1999.

The Application layer grew 61 percent to $22.5 billion and Intermediaries grew 52 percent to $16.7 billion.

Businesses in the Internet Economy are adding people at a faster rate than the economy as a whole, but this investment has been offset by Internet revenue growing at a 68 percent rate from Q1 1998 to Q1 1999. In fact, this report found that the number of Internet-related jobs was underreported in 1998 by the companies studied. The new figures reflect a growing awareness among companies of the impact of the Internet on their business and the number of workers participating in Internet-related jobs.

The research also shows that the Internet Economy has led to extensive company growth. One in three of the 3,400 companies surveyed for this report did not even exist prior to 1996. In addition, 2,000 new secure We b sites are added to the Web each month, reflecting the creation of new companies and shifting of existing businesses to the Internet.

What is clear from this data is that the Internet Economy is an economic phenomenon never seen before . Everyone from the Federal Reserve Chairman to world leaders to corporate CEOs is grappling to grasp its d i rection and impact.

The ultimate goal of this study is to lay the all important ground work necessary for understanding the truly incredible impact the Internet is having on the U.S. and global economy. Our hope is that this study will inspire continued investments in similar or tangential research that helps the world understand how the Internet is reshaping businesses and society as a whole.