On the east coast of the U.S. in Greenwich Village, young counterculture advocates were named hips. At that time, to be hip meant to be "in the know" or "cool", as opposed to being called a stodgy "square". Disaffected youth from the suburbs of New York City flocked to Village coffeehouses in their oldest clothes to fit into the counterculture. On 5 September 1965, the first use of the word hippie appeared in print. In an article entitled "A New Haven for Beatniks," San Francisco journalist Michael Fallon wrote about the Blue Unicorn coffeehouse, using the term hippie to refer to the new generation of beatniks who had moved from North Beach into the Haight. Fallon reportedly came up with the name by condensing Norman Mailer's use of the word, "hipster" into "hippie".The name did not catch on in the mass media until almost two years later, after San Francisco Chronicle columnist Herb Caen began using the term hippies in his daily columns.

The term was used differently throughout times. In the 1950s -in jazz slang meaning 'a person who is, or who attempts to be, hip'. In the 1960s -'a young, longhaired person of the 1960s who dressed unconventionally, held various antiestablishment attitudes and beliefs, and typically advocated communal living, free love, pacifist or radical politics, and the use of hallucinogenic drugs'. Rock on tigahs! *Info from http://www.randomhouse.com/wotd/index.pperl?date=19980521

The term hippie is derived from "hip" or "hipster" used by the Beats to describe someone who was part of their scene. It literally means to know, so someone who's "hip" is "in the know", or wise. Hippies never adopted this term for themselves. They preferred to be called the "beautiful people". However the media played up "hippy" as the catch-all phrase to describe the masses of young people growing their hair long, listening to rock music, doing drugs, practicing free love, going to various gatherings and concerts, demonstrating and rejecting the popular culture of the early 60s. The first recorded use of the word hippie was on Sept 5, 1965. San Francisco writer Michael Fallon used the term "hippie" while referring to the SF counterculture in an article about the Blue Unicorn coffeehouse where LEMAR (Legalize Marijuana) & the Sexual Freedom League met, and in reference to hippie houses. During the Summer of Love, in 1967, the media played up the phenomenon in San Francisco, using the term "hippies" to describe the people who were flocking there. As the hippy scene progressed, and the media started reporting the negative side of hippy poverty, living in the streets, drug overdoses, teen pregnancies, and the antiwar movement that split the country, hippie came to mean something negative to a great many Americans. as provided by www.hippy.com/php/index.php

c.1965, Amer.Eng. (Haight-Ashbury slang), from earlier hippie, 1953, usually a disparaging variant of hipster (1941) "person who is keenly aware of the new and stylish," from hip "up-to-date" http://www.etymonline.com/index.php?term=hippie According to lexicographer Jesse Sheidlower, the principal American editor of the Oxford English Dictionary, the terms hipster and hippie derive from the word hip, whose origins remain unknown. The words "hip" and "hep" first surfaced around the beginning of the 20th century and spread quickly, making their first appearance in the Oxford English Dictionary in 1904. At the time, the words were used to mean "aware" and "in the know." (more......) http://www.answers.com/topic/hippie-etymology http://www.answers.com/topic/hippie