Who's Buying Household Furnishings, Services, and Supplies

New Strategist

3

rd

EDITION

Information Products and Services

THE฀WHO’S฀BUYING฀SERIES BY฀THE฀NEW฀STRATEGIST฀EDITORS

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Information Products and Services 2nd฀EDITION 3rd฀EDITION

New Strategist Publications, Inc. P.O. Box 242, Ithaca, New York 14851 800/848-0842; 607/273-0913 www.newstrategist.com

Copyright 2006. NEW STRATEGIST PUBLICATIONS, INC.

All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilming, recording, or otherwise without written permission from the Publisher.

ISBN 978-1-933588-16-2 Printed in the United States of America

Contents About the Data in “Who’s Buying Information Products and Services” ...............................................................................5 1.

Percent Reporting Expenditure and Amount Spent, Average Quarter 2004 ..............................9

Household Spending Trends: 2000 to 2004 .................................................................................................................10 2.

Household Spending Trends, 2000 to 2004 .................................................................................... 11

Household Spending on Information Products and Services, 2004 ...................................................................................14 3.

Information Products and Services Spending, 2000 to 2004 .......................................................16

Household Spending on Information Products and Services by Demographic Characteristic, 2004 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31.

Information Products and Services: Average Spending by Age, 2004 .......................................17 Information Products and Services: Indexed Spending by Age, 2004 .......................................18 Information Products and Services: Total Spending by Age, 2004 .............................................19 Information Products and Services: Market Shares by Age, 2004 ..............................................20 Information Products and Services: Average Spending by Income, 2004 .................................21 Information Products and Services: Indexed Spending by Income, 2004 .................................22 Information Products and Services: Total Spending by Income, 2004 .......................................23 Information Products and Services: Market Shares by Income, 2004 ........................................24 Information Products and Services: Average Spending by High-Income Consumer Units, 2004 .........................................................................................25 Information Products and Services: Indexed Spending by High-Income Consumer Units, 2004 .........................................................................................26 Information Products and Services: Total Spending by High-Income Consumer Units, 2004 .........................................................................................27 Information Products and Services: Market Shares by High-Income Consumer Units, 2004 .........................................................................................28 Information Products and Services: Average Spending by Household Type, 2004 .................29 Information Products and Services: Indexed Spending by Household Type, 2004 .................30 Information Products and Services: Total Spending by Household Type, 2004 ......................31 Information Products and Services: Market Shares by Household Type, 2004 ........................32 Information Products and Services: Average Spending by Race and Hispanic Origin, 2004 .................................................................................................33 Information Products and Services: Indexed Spending by Race and Hispanic Origin, 2004 .................................................................................................34 Information Products and Services: Total Spending by Race and Hispanic Origin, 2004 ......35 Information Products and Services: Market Shares by Race and Hispanic Origin, 2004 .......36 Information Products and Services: Average Spending by Region, 2004 .................................37 Information Products and Services: Indexed Spending by Region, 2004 .................................38 Information Products and Services: Total Spending by Region, 2004 .......................................39 Information Products and Services: Market Shares by Region, 2004 ........................................40 Information Products and Services: Average Spending by Education, 2004 ............................41 Information Products and Services: Indexed Spending by Education, 2004 ............................42 Information Products and Services: Total Spending by Education, 2004 ..................................43 Information Products and Services: Market Shares by Education, 2004 ...................................44

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 3

Household Spending on Information Products and Services by Product Category, 2004 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46.

Books (except Book Clubs) ...............................................................................................................46 Books Purchased through Book Clubs ...........................................................................................48 Cable Service and Community Antenna........................................................................................50 Cellular Phone Service ......................................................................................................................52 Computers and Computer Hardware for Nonbusiness Use .....................................................54 Computer Information Services .....................................................................................................56 Computer Software and Accessories for Nonbusiness Use .......................................................58 Magazines, Nonsubscription ..........................................................................................................60 Magazine Subscriptions ..................................................................................................................62 Newspapers, Nonsubscription .......................................................................................................64 Newspaper Subscriptions ...............................................................................................................66 Phone Cards ......................................................................................................................................68 Residential Telephone Service and Pay Phones ...........................................................................70 Telephones, Answering Machines, and Accessories ...................................................................72 Televison Sets ....................................................................................................................................74

Appendix: Spending by Product and Service Ranked by Amount Spent, 2004.......................................................................76 Glossary ............................................................................................................................................................82

4 WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

About the Data in “Who’s Buying Information Products and Services” Introduction The spending data in Who’s Buying Information Products and Services are based on the Bureau of Labor Statistics’ Consumer Expenditure Survey, an ongoing, nationwide survey of household spending. The Consumer Expenditure Survey is a complete accounting of household expenditures, including everything from big-ticket items such as homes and cars, to small purchases like laundry detergent and videos. The survey does not include expenditures by government, business, or institutions. The lag time between data collection and dissemination is about two years. The data in this report are from the 2004 Consumer Expenditure Survey, unless otherwise noted. To produce this report, New Strategist Publications analyzed the Consumer Expenditure Survey’s average household spending data in a variety of ways, calculating household spending indexes, aggregate (or total) household spending, and market shares. Spending data by age, household income, household type, race, Hispanic origin, region of residence, and education are shown in this report. These analyses are presented in two formats—for all product categories by demographic characteristic and for all demographic characteristics by product category.

Definition of consumer unit The Consumer Expenditure Survey uses consumer unit rather than household as the sampling unit. The term “household” is used interchangeably with the term “consumer unit” in this report for convenience, although they are not exactly the same. Some households contain more than one consumer unit. The Bureau of Labor Statistics defines consumer unit as either: (1) members of a household who are related by blood, marriage, adoption, or other legal arrangements; (2) a person living alone or sharing a household with others or living as a roomer in a private home or lodging house or in permanent living quarters in a hotel or motel, but who is financially independent; or (3) two or more persons living together who pool their income to make joint expenditure decisions. The bureau defines financial independence in terms of “the three major expenses categories: housing, food, and other living expenses. To be considered financially independent, at least two of the three major expense categories have to be provided by the respondent.” The Census Bureau uses household as its sampling unit in the decennial census and in the monthly Current Population Survey. The Census Bureau’s household “consists of all persons who occupy a housing unit. A house, an apartment or other groups of rooms, or a single room is regarded as a housing unit when it is occupied or intended for occupancy as separate living quarters; that is, when the occupants do not live and eat with any other persons in the structure and there is direct access from the outside or through a common hall.” The definition goes on to specify that “a household includes the related family members and all the unrelated persons, if any, such as lodgers, foster children, wards, or employees who share the housing unit. A person living alone in a housing unit or a group of unrelated persons sharing a housing unit as partners is also counted as a household. The count of households excludes group quarters.” Because there can be more than one consumer unit in a household, consumer units outnumber households by several million. Young adults under age 25 head most of the additional consumer units.

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 5

How to use the tables in this report The starting point for all calculations are the unpublished, detailed average household spending data collected by the Consumer Expenditure Survey. These numbers are shown on the report’s average spending tables and on each of the product-specific tables. New Strategist’s editors calculated the other figures in the report based on the average figures. The indexed spending tables and the indexed spending column (Best Customers) on the product-specific tables reveal whether spending by households in a given segment is above or below the average for all households and by how much. The total (or aggregate) spending tables show the overall size of the market. The market share tables and market share column (Biggest Customers) on the product-specific tables reveal how much spending each household segment controls. These analyses are described in detail below. • Average Spending The average spending figures show the average annual spending of households on information products and services in 2004. The Consumer Expenditure Survey produces average spending data for all households in a segment, e.g., all households with a householder aged 25 to 34, not just for those purchasing an item. When examining spending data, it is important to remember that by including both purchasers and nonpurchasers in the calculation, the average is less than the amount spent on the item by buyers. (See Table 1 for the percentage of households spending on information products and services in 2004 and how much the purchasers spent.) Because average spending figures include both buyers and nonbuyers, they reveal spending patterns by demographic characteristic. By knowing who is most likely to spend on an item, marketers can target their advertising and promotions more efficiently, and businesses can determine the market potential of a product or service in a city or neighborhood. By multiplying the average amount households spend on computer information services by the number of households in an area, for example, an Internet service provider can estimate the potential size of the local market for online services. • Indexed Spending (Best Customers) The indexed spending figures compare the spending of each household segment with that of the average household. To compute the indexes, New Strategist divides the average amount each household segment spends on an item by average household spending, and multiplies the resulting figure by 100. An index of 100 is the average for all households. An index of 125 means the spending of a household segment is 25 percent above average (100 plus 25). An index of 75 indicates spending that is 25 percent below the average for all households (100 minus 25). Indexed spending figures identify the best customers for a product or service. Households with an index of 178 for cell phone service, for example, are a strong market for this service. Those with an index below 100 are either a weak or an underserved market. Spending indexes can reveal hidden markets—household segments with a high propensity to buy a particular product or service but which are overshadowed by household segments that account for a larger share of the market. Householders aged 35 to 44, for example, account for 18 percent of the magazine subscription market—larger than the 13 percent share controlled by householders aged 65 to 74. But a look at the indexed spending figures reveals that, in fact, the older householders are the best customers. Householder aged 65 to 74 spend 39 percent more than the average household on magazine subscriptions, while those aged 35 to 44 spend 15 percent less than average. Magazine publishers can use this information to target their best customers. Note that because of sampling errors, small differences in index values may not be significant. But the broader patterns revealed by indexes can guide marketers to the best customers.

6 WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

• Total (Aggregate) Spending To produce the total (aggregate) spending figures, New Strategist multiplies average spending by the number of households in a segment. The result is the dollar size of the total household market and of each market segment. All totals are shown in thousands of dollars. To convert the numbers in the total spending tables to dollars, you must append “000” to the number. For example, households headed by people aged 35 to 44 spent more than $10 billion ($10,861,106,000) on cell phone service in 2004. When comparing the total spending figures in this report with total spending estimates from the Bureau of Economic Analysis, other government agencies, or trade associations, keep in mind that the Consumer Expenditure Survey includes only household spending, not spending by businesses or institutions. Sales data also will differ from household spending totals because sales figures for consumer products include the value of goods sold to industries, government, and foreign markets, which may be a significant proportion of sales. • Market Shares (Biggest Customers) New Strategist produces market share figures by converting total (aggregate) spending data into percentages. To calculate the percentage of total spending on an item that is controlled by each demographic segment—i.e., its market share—each segment’s total spending on an item is divided by aggregate household spending on the item. Market shares reveal the biggest customers—the demographic segments that account for the largest share of spending on a particular product or service. In 2004, for example, householders aged 55 or older accounted for 57 percent of spending on newspaper subscriptions. By targeting only older householders, newspaper publishers could reach the majority of their customers. There is a danger here, however. By single-mindedly targeting the biggest customers, businesses cannot nurture potential growth markets. With competition for customers more heated than ever, targeting potential markets is increasingly important to business survival. • Product-Specific Tables The product-specific tables reveal at a glance the demographic characteristics of spending by individual product category. These tables show average spending, indexed spending (Best Customers), and market shares (Biggest Customers) by age, income, household type, race and Hispanic origin, region of residence, and education. If you want to see the spending pattern for an individual product at a glance, these are the tables for you.

History and methodology of the Consumer Expenditure Survey The Consumer Expenditure Survey is an ongoing study of the day-to-day spending of American households. In taking the survey, government interviewers collect spending data on products and services as well as the amount and sources of household income, changes in savings and debt, and demographic and economic characteristics of household members. The Bureau of the Census collects data for the CEX under contract with the Bureau of Labor Statistics, which is responsible for analysis and release of the survey data. Since the late nineteenth century, the federal government has conducted expenditure surveys about every ten years. Although the results have been used for a variety of purposes, their primary application is to track consumer prices. In 1980 the CEX became a continuous survey with annual release of data (with a lag time of about two years between data collection and release). The survey is used to update prices for the market basket of products and services used in calculating the Consumer Price Index. The CEX consists of two separate surveys: an interview survey and a diary survey. In the interview portion of the survey, respondents are asked each quarter for five consecutive quarters to report their expenditures for the previous three months. The purchase of big-ticket items such as houses, cars, and major

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 7

appliances, or recurring expenses such as insurance premiums, utility payments, and rent are recorded by the interview survey. The interview component covers about 95 percent of all expenditures. Expenditures on small, frequently purchased items are recorded during a two-week period by the diary survey. These detailed records include expenses for food and beverages purchased in grocery stores and at restaurants, as well as other items such as tobacco, housekeeping supplies, nonprescription drugs, and personal care products and services. The diary survey is intended to capture expenditures respondents are likely to forget or recall incorrectly over longer periods of time. Two separate, nationally representative samples are used for the interview and diary surveys. For the interview survey, about 7,500 consumer units are interviewed on a rotating panel basis each quarter for five consecutive quarters. Another 7,500 consumer units keep weekly diaries of spending for two consecutive weeks. Data collection is carried out in 105 areas of the country. The Bureau of Labor Statistics reviews, audits, and cleans the data, and then weights them to reflect the number and characteristics of all U.S. consumer units. Like any sample survey, the CEX is subject to two major types of error. Nonsampling error occurs when respondents misinterpret questions or interviewers are inconsistent in the way they ask questions or record answers. Respondents may forget items, recall expenses incorrectly, or deliberately give wrong answers. A respondent may remember how much he or she spent at the grocery store but forget the items picked up at a local convenience store. Nonsampling error can also be caused by mistakes during the various stages of data processing and refinement. Sampling error occurs when a sample does not accurately represent the population it is supposed to represent. This kind of error is present in every sample-based survey and is minimized by using a proper sampling procedure. Standard error tables documenting the extent of sampling error in the CEX are available from the Bureau of Labor Statistics at http://www.bls.gov/cex/csxstnderror.htm. Although the CEX is the best source of information about the spending behavior of American households, it should be treated with caution because of the above problems.

For more information To find out more about the CEX, contact the specialists at the Bureau of Labor Statistics at (202) 6916900, or visit the Consumer Expenditure Survey home page at http://www.bls.gov/cex/. The web site includes news releases, technical documentation, and current and historical summary-level CEX data. The detailed average spending data shown in this report are available from the Bureau of Labor Statistics only by special request. For a comprehensive look at detailed household spending data for all products and services, see the 11th edition of Household Spending: Who Spends How Much on What. To see the best and biggest customers for the complete array of products and services examined by the CEX, see the fourth edition of Best Customers: Demographics of Consumer Demand. To download spending reports for individual product and service categories, visit nSpend, the instant-answer service, at http://www.nspend.com. New Strategist’s books are available in hardcopy or as downloads by visiting http://www .newstrategist.com or by calling 1-800-848-0842.

8 WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

Table 1. Percent Reporting Expenditure and Amount Spent,

Average Quarter 2004 (percent฀of฀consumer฀units฀reporting฀expenditure฀and฀amount฀spent฀by฀purchasers฀during฀ an฀average฀quarter,฀2004) average quarter percent reporting expenditure

amount spent by purchasers

Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use

45.1% 4.7 4.2

Reading material Newspaper subscriptions Books (except those purchased through book clubs) Newspapers, nonsubscription Magazines, nonsubscription Magazine subscriptions Books purchased through book clubs

21.9 19.7 13.6 10.2 8.4 2.2

47.63 63.15 17.37 20.49 44.50 63.66

Telephone Residential telephone service and pay phones Cellular phone service Phone cards Telephones and accessories

87.4 46.0 9.1 4.4

169.37 205.87 50.96 81.38

Television Cable service and community antenna Televisions (table model) Televisions (console)

71.2 2.6 1.0

165.48 385.66 1,380.53

$77.32 723.49 114.82

Note:฀Expenditures฀shown฀are฀total฀net฀outlays฀at฀the฀time฀of฀purchase,฀whether฀or฀not฀the฀ item฀was฀financed. Source:฀Calculations฀by฀New฀Strategist฀based฀on฀the฀2004฀Consumer฀Expenditure฀Survey

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 9

Household Spending Trends: 2000 to 2004 Between 2000 and 2004, spending by the average household rose 4 percent, to $43,395, after adjusting for inflation. At the same time, average household income grew by a larger 11 percent. The considerable gap between income growth and spending growth reveals consumer caution, despite the improving economy. The pundits might accuse Americans of spending beyond their means, but in fact the steady rise in consumer spending at the national level primarily is the result of demographic change—population growth and the aging of the baby-boom generation into the peak earning and spending years. Much of the growth in household spending between 2000 and 2004 was involuntary, brought about by the ever-larger claim of necessities on the household budget. After adjusting for inflation, the average household spent 11 percent more on property taxes in 2004 than in 2000. Spending on gasoline rose 13 percent during those years. Spending on vehicle insurance also grew 13 percent. Out-of-pocket spending on health insurance increased by an enormous 24 percent. Spending on education rose an even greater 31 percent. Declines in discretionary spending are evident in the 2000 to 2004 trends. Spending on “other lodging,” a category that includes hotel and motel expenses, fell 10 percent, after adjusting for inflation. Spending on furniture declined 3 percent, women’s apparel fell 5 percent, and shoes lost an even larger 13 percent. Spending on public transportation (a category dominated by airline fares) declined 6 percent. Households cut their spending on fees and admissions to entertainment events by 7 percent and reading material by 19 percent. Contrary to popular perception, Americans are cautious spenders at the individual household level. The recession of 2001 followed by the lackluster recovery forced households to spend less on many discretionary items to make ends meet. Rapidly rising energy costs are now reducing discretionary spending even further. With the aging baby-boom generation entering its sixties and leaving the peak spending years behind, average household spending is not likely to grow much in the years ahead. American businesses will have to adapt to a new economic landscape, one in which affluence is becoming less common and the middle class is struggling to stay afloat. The globalization of the workforce coupled with rising energy prices and an increasingly troubled health insurance system will make our future very different from our past.

10 WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

Table 2. Household Spending Trends, 2000 to 2004 (average฀annual฀spending฀of฀total฀consumer฀units,฀2000฀and฀2004;฀percent฀change,฀ 2000–04;฀in฀2004฀dollars)฀ ฀ ฀ percent change 2000–04

2004

2000

116,282 $54,453

109,367 $48,975

6.3% 11.2

43,395

41,731

4.0

FOOD Food at home Cereals and bakery products Cereals and cereal products Bakery products Meats, poultry, fish, and eggs Beef Pork Other meats Poultry Fish and seafood Eggs Dairy products Fresh milk and cream Other dairy products Fruits and vegetables Fresh fruits Fresh vegetables Processed fruits Processed vegetables Other food at home Sugar and other sweets Fats and oils Miscellaneous foods Nonalcoholic beverages Food prepared by consumer unit on trips

5,781 3,347 461 154 307 880 265 181 108 156 128 42 371 144 226 561 187 183 110 82 1,075 128 89 527 290 41

5,658 3,314 497 171 326 872 261 183 111 159 121 37 356 144 212 571 179 174 126 92 1,017 128 91 479 274 44

2.2 1.0 –7.2 –10.0 –5.8 0.9 1.5 –1.2 –2.5 –1.9 6.1 12.6 4.1 0.2 6.8 –1.8 4.6 4.9 –12.8 –11.0 5.7 –0.3 –2.2 9.9 5.8 –6.6

Food away from home

2,434

2,344

3.8

Number of consumer units (in 000s) Average before-tax income Average annual spending

ALCOHOLIC BEVERAGES HOUSING Shelter Owned dwellings Mortgage interest and charges Property taxes Maintenance, repair, insurance, other expenses Rented dwellings Other lodging Utilities, fuels, and public services Natural gas Electricity

459

408

12.5

13,918 7,998 5,324 2,936 1,391

13,513 7,803 5,048 2,895 1,249

3.0 2.5 5.5 1.4 11.3

997 2,201 473

905 2,231 524

10.2 –1.3 –9.8

2,927 424 1,064

2,730 337 999

7.2 25.9 6.5

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 11

percent change 2000–04

2004

2000

Fuel oil and other fuels Telephone Water and other public services Household services Personal services Other household services

$121 990 327 753 300 453

$106 962 325 750 358 393

13.7% 2.9 0.7 0.4 –16.1 15.4

Housekeeping supplies Laundry and cleaning supplies Other household products Postage and stationery

594 149 290 155

529 144 248 138

12.4 3.7 17.0 12.1

Household furnishings and equipment 1,646 Household textiles 158 Furniture 417 Floor coverings 52 Major appliances 204 Small appliances, miscellaneous housewares 105 Miscellaneous household equipment 711

1,699 116 429 48 207 95 802

–3.1 35.9 –2.8 7.7 –1.6 10.0 –11.3

APPAREL AND RELATED SERVICES Men and boys Men, aged 16 or older Boys, aged 2 to 15

1,816 406 317 89

2,036 483 377 105

–10.8 –15.9 –16.0 –15.5

739 631 108

795 666 129

–7.1 –5.2 –16.6

79

90

–12.2

Footwear

329

376

–12.6

Other apparel products and services

264

292

–9.5

TRANSPORTATION Vehicle purchases Cars and trucks, new Cars and trucks, used

7,801 3,397 1,748 1,582

8,136 3,749 1,761 1,941

–4.1 –9.4 –0.7 –18.5

Gasoline and motor oil

1,598

1,416

12.8

Other vehicle expenses 2,365 Vehicle finance charges 323 Maintenance and repairs 652 Vehicle insurance 964 Vehicle rentals, leases, licenses, other charges 426

2,502 360 684 853 604

–5.5 –10.2 –4.7 13.0 –29.5

441

468

–5.8

HEALTH CARE Health insurance Medical services Drugs Medical supplies

2,574 1,332 648 480 114

2,266 1,078 623 456 109

13.6 23.5 4.0 5.2 5.0

ENTERTAINMENT Fees and admissions Television, radio, and sound equipment Pets, toys, and playground equipment Other entertainment products and services

2,218 528 788 381 522

2,044 565 682 366 431

8.5 –6.5 15.5 4.0 21.1

Women and girls Women, aged 16 or older Girls, aged 2 to 15 Children under age 2

Public transportation

12 WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

PERSONAL CARE PRODUCTS AND SERVICES

2004

2000

percent change 2000–04

$581

$619

READING

130

160

–18.8

EDUCATION

905

693

30.5

TOBACCO PRODUCTS AND SMOKING SUPPLIES

288

350

–17.7

MISCELLANEOUS

–6.1%

690

851

–18.9

CASH CONTRIBUTIONS

1,408

1,307

7.7

PERSONAL INSURANCE AND PENSIONS Life and other personal insurance Pensions and Social Security

4,823 390 4,433

3,691 438 3,253

30.7 –10.9 36.3

PERSONAL TAXES Federal income taxes State and local income taxes Other taxes

2,166 1,519 472 175

3,419 2,642 616 160

–36.6 –42.5 –23.4 9.3

GIFTS FOR NONHOUSEHOLD MEMBERS

1,215

1,188

2.3

Note:฀Average฀spending฀is฀rounded฀to฀the฀nearest฀dollar.฀The฀percent฀change฀calculation฀is฀ based฀on฀unrounded฀figures.฀The฀Bureau฀of฀Labor฀Statistics฀uses฀consumer฀unit฀rather฀than฀ household฀as฀the฀sampling฀unit฀in฀the฀Consumer฀Expenditure฀Survey.฀฀ For฀ the฀ definition฀ of฀ consumer฀unit,฀see฀the฀glossary.฀Spending฀on฀gifts฀is฀also฀included฀in฀the฀preceding฀product฀ and฀service฀categories.฀ ฀ ฀ Source:฀Bureau฀of฀Labor฀Statistics,฀2000฀and฀2004฀Consumer฀Expenditure฀Surveys,฀Internet฀ site฀http://www.bls.gov/cex/;฀calculations฀by฀New฀Strategist฀฀ ฀

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 13

Household Spending on Information Products and Services, 2004 Between 2000 and 2004, average household spending on information products and services (computers, telephones, television, and reading material) rose 7 percent, to $2,007, after adjusting for inflation. This relatively small increase in spending masks sweeping changes in the way households allocate their dollars within the broad information product and service category. Average household spending on reading material fell a steep 19 percent between 2000 and 2004, while spending on television (primarily cable service) rose 33 percent. Spending on telephone products and services climbed just 2 percent, while spending on computers essentially held steady, with a 0.5 percent rise. A closer look at spending within each major category reveals how households are responding to far-reaching technological change. The average household nearly tripled its spending on cellular phone service during the four-year period, after adjusting for inflation. Spending on computer information services (Internet) more than doubled. But spending on residential phone service fell 29 percent, spending on computer hardware decreased 35 percent, and spending on computer software diminished 0.7 percent. Spending on reading material dropped in every individual category. Book spending experienced the smallest decline, with average household spending on books falling 9 percent between 2000 and 2004, after adjusting for inflation. Spending on newspaper subscriptions decreased 20 percent, and spending on magazine subscriptions lost a substantial 29 percent. In 2004 as in 2000, the average household devoted the largest share of its information spending to residential phone service. Residential telephone service accounted for 29.5 percent of information spending, down sharply from the 44 percent share it held in 2000. Cable service ranked second in both years, but cable’s share rose from 19 to 23.5 percent between 2000 and 2004. Cellular phone service ranked third in 2004, up from fourth in 2000, its share rising from 7 to 19 percent. Computer information service ranked sixth in 2000 and fourth in 2004, its share rising from 4 to 7 percent during those years. Books almost held their ground, with a 2.5 percent share in 2004, down from 2.9 percent in 2000. Every type of reading material lost market share during those years. By 2004, reading material accounted for just 6.5 percent of household spending on information products and services, down from 9 percent in 2000. Important shifts are taking place within information product and service categories. The average household now spends more on computer information services than on computer hardware or software. In 2000, cellular phone service accounted for just 13 percent of telephone spending. By 2004, the share had climbed to 37 percent. Spending on cellular service could overtake residential phone service in the years ahead as cell phones become the norm.

Spending by age Householders aged 45 to 54 spend the most on information products and services—$2,431 in 2004, or 21 percent more than the average household. A look at spending by detailed category reveals sharp differences in spending patterns by age. Spending on computer information services peaks in the 35-to-54 age group, at 23 to 28 percent above average. Spending on cell phone service skews younger, with spending 19 to 27 percent above average in the 25 to 54 age groups. Older householders dominate spending on reading material. Households headed by people aged 55 or older control 57 percent of spending on newspaper subscriptions. Householders aged 55 to 74 spend 37 to 39 percent more than average on magazine subscriptions, while householders under age 45 spend well below average on this item. These differences in spending by age suggest more change lies ahead as younger Internet and cell phone users replace older print aficionados. 14 WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

Spending by household income Not surprisingly, spending on information products and services rises with income in most, but not all, categories. Spending on phone cards is above average for many lower-income households. Spending on computer system repair bumps up at the $40,000 to $49,999 income level. Many of these householders are older, and because they do not have a teenager in the house they depend on commercial repair services to keep their computer system up and running. Spending on magazine subscriptions also rises above average in the $40,000 to $49,999 income group, again because retirees are the best customers. Income makes a big difference on book spending. Households with incomes of $100,000 or more spend more than twice the average on books, accounting for 33 percent of household spending on this item—a much greater percentage than their 13 percent share of households.

Spending by household type Married couples with school-aged or older children at home devote the largest amount of money to information products and services, spending 29 to 50 percent more than average. Couples with children aged 18 or older at home are the best customers of cell phone service, spending 75 percent more than the average household on this item. Married couples with school-aged or older children at home spend 45 to 56 percent more than average on computer information services. Those without children at home (most of them empty-nesters) spend the most on reading material, particularly newspaper and magazine subscriptions (spending 73 and 68 percent more than average, respectively).

Spending by race and Hispanic origin Blacks and Hispanics spend slightly less than average on information products and services overall, while Asians and non-Hispanic whites spend an average amount. Black and Hispanic spending is well above average on a few items, however. Blacks spend 16 percent more than the average household on residential phone service. Hispanics spend three times the average on phone cards. Asians, too, spend nearly three times the average on phone cards. Asians spend more on computers than any other racial or ethnic group.

Spending by region Spending on information products and services overall does not vary much by region. But by individual category there are some important regional differences. Average household spending on computers is 29 percent above average in the West and 14 percent below average in the South. Spending on reading material is above average in every region except the South, where it is 25 percent below average.

Spending by education College graduates spend 27 percent more than the average household on information products and services. On some items, however, their spending is not far above average. College graduates spend only 13 percent more than the average household on cable service and only 12 percent more on residential phone service. They spend 10 percent less than average on phone cards. Book spending shows the biggest difference by education. College graduates spend more than twice the average on books and control 60 percent of the book market. They spend 51 percent more than average on computer information services and 29 percent more than average on cell phone service.

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 15

Table 3. Information Products and Services Spending, 2000 to 2004 (average฀annual฀and฀percent฀distribution฀of฀household฀spending฀on฀information฀products฀and฀services,฀2000฀to฀2004;฀percent฀change฀in฀spending,฀2000–04;฀ in฀2004฀dollars)฀ ฀ ฀ ฀ ฀ 2004 average household spending INFORMATION SPENDING Telephone Television Computer Reading material INFORMATION SPENDING Residential telephone service and pay phones Cable service and community antenna Cellular phone service Computer information services Computers and computer hardware, nonbusiness use Televisions Books (except book clubs) Newspaper subscriptions Telephones and answering machines Computer software and accessories, nonbusiness use Phone cards Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs Repair of computer systems for nonbusiness use

$2,007.43 1,016.63 563.27 297.12 130.41 2,007.43 592.31 471.01 378.39 139.46 134.57 92.26 49.69 41.76 27.42 19.06 18.51 14.88 9.44 8.36 5.50 4.03

2000 percent distribution 100.0% 50.6 28.1 14.8 6.5 100.0 29.5 23.5 18.8 6.9 6.7 4.6 2.5 2.1 1.4 0.9 0.9 0.7 0.5 0.4 0.3 0.2

average household spending (in 2004$) $1,876.17 995.96 423.97 295.56 160.68 1,876.17 830.70 352.33 131.08 67.31 206.05 71.64 54.32 52.03 34.18 19.19 – 20.95 13.45 10.42 8.81 2.94

Note:฀Numbers฀will฀not฀add฀to฀total฀because฀not฀all฀categories฀are฀shown.฀“–”฀means฀data฀are฀not฀available.฀ ฀ Source:฀Bureau฀of฀Labor฀Statistics,฀2000฀and฀2004฀Consumer฀Expenditure฀Surveys;฀calculations฀by฀New฀Strategist฀

16 WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

percent distribution

฀ ฀

percent change 2000–04

100.0% 53.1 22.6 15.8 8.6

7.0% 2.1 32.9 0.5 –18.8

100.0 44.3 18.8 7.0 3.6 11.0 3.8 2.9 2.8 1.8 1.0 – 1.1 0.7 0.6 0.5 0.2

7.0 –28.7 33.7 188.7 107.2 –34.7 28.8 –8.5 –19.7 –19.8 –0.7 – –29.0 –29.8 –19.8 –37.6 37.1

฀ ฀

Table 4. Information Products and Services: Average spending by age, 2004 (average฀annual฀spending฀of฀consumer฀units฀(CU)฀on฀information฀products฀and฀services,฀by฀age฀of฀consumer฀unit฀reference฀person,฀2004)

Number of consumer units (in 000s) Number of persons per CU Average before-tax income of CU Average spending of CU, total INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards Television Cable service and community antenna Television sets

total consumer units 116,282 2.5 $54,453.00 43,394.87

under 25 8,817 1.9 $22,840.00 24,534.56

25 to 34 19,439 2.9 $52,484.00 42,700.54

35 to 44 24,070 3.2 $65,515.00 50,401.62

45 to 54 23,712 2.7 $70,434.00 52,764.36

55 to 64 17,479 2.1 $61,031.00 47,298.58

65 to 74 11,230 1.9 $42,137.00 36,511.98

75+ 11,536 1.5 $28,028.00 25,763.32

2,007.46 297.12 139.46

1,211.52 218.39 69.60

1,987.48 300.36 145.35

2,266.89 356.15 171.48

2,430.96 405.09 178.25

2,201.01 306.72 152.11

1,705.05 192.09 105.73

1,240.19 94.31 50.05

134.57

134.64

134.35

158.03

189.90

130.88

73.63

37.06

19.06

12.05

18.84

22.64

30.73

17.95

9.81

4.00

4.03

2.10

1.82

4.00

6.21

5.78

2.92

3.20

130.41

50.75

93.51

122.61

148.60

177.07

157.68

135.25

49.69 41.76 14.88 9.44 8.36 5.50

26.31 3.70 6.18 4.95 8.51 1.06

46.75 13.94 9.69 7.97 10.13 4.31

55.81 28.50 12.68 9.86 9.77 5.81

59.45 46.06 16.60 10.92 8.95 6.52

65.43 59.95 20.33 11.59 8.85 7.57

44.66 69.43 20.68 11.05 4.95 6.84

20.73 82.06 17.42 6.65 3.65 3.75

1,016.66 592.31 378.39 27.45 18.51

652.63 245.25 371.32 10.68 25.38

1,037.64 536.85 464.67 11.30 24.82

1,169.43 664.51 451.23 25.66 28.03

1,236.14 681.74 479.39 59.12 15.89

1,071.22 673.33 353.38 32.23 12.28

827.98 596.40 207.65 13.20 10.73

592.04 489.82 82.91 14.12 5.19

563.27 471.01 92.26

289.75 215.60 74.15

555.97 443.50 112.47

618.70 513.74 104.96

641.13 543.40 97.73

646.00 537.61 108.39

527.30 473.76 53.54

418.59 371.08 47.51

Note:฀Numbers฀will฀not฀add฀to฀total฀because฀not฀all฀categories฀are฀shown. Source:฀Bureau฀of฀Labor฀Statistics,฀unpublished฀tables฀from฀the฀2004฀Consumer฀Expenditure฀Survey฀ ฀ ฀

฀

฀

฀

฀

฀

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 17

Table 5. Information Products and Services: Indexed spending by age, 2004 (indexed฀average฀annual฀spending฀of฀consumer฀units฀(CU)฀on฀information฀products฀and฀services฀by฀age฀of฀consumer฀unit฀reference฀person,฀2004;฀index฀ definition:฀an฀index฀of฀100฀is฀the฀average฀for฀all฀consumer฀units;฀an฀index฀of฀132฀means฀that฀spending฀by฀consumer฀units฀in฀that฀group฀is฀32฀percent฀above฀ the฀average฀for฀all฀consumer฀units;฀an฀index฀of฀68฀indicates฀spending฀that฀is฀32฀percent฀below฀the฀average฀for฀all฀consumer฀units) total consumer units $43,395 100

under 25 $24,535 57

25 to 34 $42,701 98

35 to 44 $50,402 116

45 to 54 $52,764 122

55 to 64 $47,299 109

65 to 74 $36,512 84

75+ $25,763 59

INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use

100 100 100

60 74 50

99 101 104

113 120 123

121 136 128

110 103 109

85 65 76

62 32 36

100

100

100

117

141

97

55

28

100

63

99

119

161

94

51

21

100

52

45

99

154

143

72

79

Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs

100

39

72

94

114

136

121

104

100 100 100 100 100 100

53 9 42 52 102 19

94 33 65 84 121 78

112 68 85 104 117 106

120 110 112 116 107 119

132 144 137 123 106 138

90 166 139 117 59 124

42 197 117 70 44 68

Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards

100 100 100 100 100

64 41 98 39 137

102 91 123 41 134

115 112 119 93 151

122 115 127 215 86

105 114 93 117 66

81 101 55 48 58

58 83 22 51 28

Television Cable service and community antenna Television sets

100 100 100

51 46 80

99 94 122

110 109 114

114 115 106

115 114 117

94 101 58

74 79 51

Average spending of CU, total Average spending of CU, index

Source:฀Calculations฀by฀New฀Strategist฀based฀on฀the฀Bureau฀of฀Labor฀Statistics฀2004฀Consumer฀Expenditure฀Survey฀ ฀ ฀ ฀ ฀ ฀

18฀ WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

฀

฀

฀

Table 6. Information Products and Services: Total spending by age, 2004 (total฀annual฀spending฀on฀information฀products฀and฀services,฀by฀consumer฀unit฀(CU)฀age฀groups,฀2004;฀consumer฀units฀and฀dollars฀in฀thousands) total consumer units 116,282 $5,046,042,273

under 25 8,817 $216,321,216

INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use

233,431,464 34,549,708 16,216,688

10,681,972 1,925,545 613,663

38,634,624 5,838,698 2,825,459

54,564,042 8,572,531 4,127,524

15,648,069

1,187,121

2,611,630

2,216,335

106,245

366,231

468,616

18,516

35,379

96,280

147,252

101,029

32,792

36,915

Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs

15,164,336

447,463

1,817,741

2,951,223

3,523,603

3,095,007

1,770,746

1,560,244

5,778,053 4,855,936 1,730,276 1,097,702 972,118 639,551

231,975 32,623 54,489 43,644 75,033 9,346

908,773 270,980 188,364 154,929 196,917 83,782

1,343,347 685,995 305,208 237,330 235,164 139,847

1,409,678 1,092,175 393,619 258,935 212,222 154,602

1,143,651 1,047,866 355,348 202,582 154,689 132,316

501,532 779,699 232,236 124,092 55,589 76,813

239,141 946,644 200,957 76,714 42,106 43,260

Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards

118,219,258

5,754,239

20,170,684

28,148,180

29,311,352

18,723,854

9,298,215

6,829,773

68,874,991 43,999,946 3,191,941 2,152,380

2,162,369 3,273,928 94,166 223,775

10,435,827 9,032,720 219,661 482,476

15,994,756 10,861,106 617,636 674,682

16,165,419 11,367,296 1,401,853 376,784

11,769,135 6,176,729 563,348 214,642

6,697,572 2,331,910 148,236 120,498

5,650,564 956,450 162,888 59,872

65,498,162 54,769,985 10,728,177

2,554,726 1,900,945 653,781

10,807,501 8,621,197 2,186,304

14,892,109 12,365,722 2,526,387

15,202,475 12,885,101 2,317,374

11,291,434 9,396,885 1,894,549

5,921,579 5,320,325 601,254

4,828,854 4,280,779 548,075

Number of consumer units Total spending of all CUs

Television Cable service and community antenna Television sets

25 to 34 35 to 44 45 to 54 19,439 24,070 23,712 $830,055,797 $1,213,166,993 $1,251,148,504

55 to 64 17,479 $826,731,880

65 to 74 11,230 $410,029,535

75+ 11,536 $297,205,660

57,642,924 9,605,494 4,226,664

38,471,454 5,361,159 2,658,731

19,147,712 2,157,171 1,187,348

14,306,832 1,087,960 577,377

3,803,782

4,502,909

2,287,652

826,865

427,524

544,945

728,670

313,748

110,166

46,144

Note:฀Numbers฀will฀not฀add฀to฀total฀because฀not฀all฀categories฀are฀shown฀and฀because฀of฀rounding.฀ Source:฀Calculations฀by฀New฀Strategist฀based฀on฀the฀Bureau฀of฀Labor฀Statistics฀2004฀Consumer฀Expenditure฀Survey

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 19

Table 7. Information Products and Services: Market shares by age, 2004 (percentage฀of฀total฀annual฀spending฀on฀information฀products฀and฀services฀accounted฀for฀by฀consumer฀unit฀age฀groups,฀2004)

Share of total consumer units Share of total before-tax income Share of total spending

total consumer units 100.0% 100.0 100.0

under 25 7.6% 3.2 4.3

25 to 34 16.7% 16.1 16.4

35 to 44 20.7% 24.9 24.0

45 to 54 20.4% 26.4 24.8

55 to 64 15.0% 16.8 16.4

65 to 74 9.7% 7.5 8.1

75+ 9.9% 5.1 5.9

INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use

100.0 100.0 100.0

4.6 5.6 3.8

16.6 16.9 17.4

23.4 24.8 25.5

24.7 27.8 26.1

16.5 15.5 16.4

8.2 6.2 7.3

6.1 3.1 3.6

100.0

7.6

16.7

24.3

28.8

14.6

5.3

2.7

100.0

4.8

16.5

24.6

32.9

14.2

5.0

2.1

100.0

4.0

7.5

20.5

31.4

21.6

7.0

7.9

Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs

100.0

3.0

12.0

19.5

23.2

20.4

11.7

10.3

100.0 100.0 100.0 100.0 100.0 100.0

4.0 0.7 3.1 4.0 7.7 1.5

15.7 5.6 10.9 14.1 20.3 13.1

23.2 14.1 17.6 21.6 24.2 21.9

24.4 22.5 22.7 23.6 21.8 24.2

19.8 21.6 20.5 18.5 15.9 20.7

8.7 16.1 13.4 11.3 5.7 12.0

4.1 19.5 11.6 7.0 4.3 6.8

Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards

100.0 100.0 100.0 100.0 100.0

4.9 3.1 7.4 3.0 10.4

17.1 15.2 20.5 6.9 22.4

23.8 23.2 24.7 19.3 31.3

24.8 23.5 25.8 43.9 17.5

15.8 17.1 14.0 17.6 10.0

7.9 9.7 5.3 4.6 5.6

5.8 8.2 2.2 5.1 2.8

Television Cable service and community antenna Television sets

100.0 100.0 100.0

3.9 3.5 6.1

16.5 15.7 20.4

22.7 22.6 23.5

23.2 23.5 21.6

17.2 17.2 17.7

9.0 9.7 5.6

7.4 7.8 5.1

Note:฀Numbers฀may฀not฀add฀to฀total฀because฀of฀rounding.฀ Source:฀Calculations฀by฀New฀Strategist฀based฀on฀the฀Bureau฀of฀Labor฀Statistics฀2004฀Consumer฀Expenditure฀Survey฀ ฀ ฀ ฀ ฀

20฀ WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

฀

฀

฀

Table 8. Information Products and Services: Average spending by income, 2004 (average฀annual฀spending฀on฀information฀products฀and฀services,฀by฀before-tax฀income฀of฀consumer฀units฀(CU),฀2004)฀

Number of consumer units (in 000s) Number of persons per CU Average before-tax income of CU Average spending of CU, total INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards Television Cable service and community antenna Television sets

total consumer units 116,282 2.5 $54,453.00 43,394.87

under $20,000 28,898 1.8 $10,923.47 18,865.37

$20,000– $39,999 27,297 2.3 $29,561.76 30,400.94

$40,000– $49,999 11,374 2.6 $44,645.00 38,204.07

$50,000– $69,999 18,069 2.8 $59,259.00 47,750.13

$70,000– $79,999 6,461 3.0 $74,437.00 55,012.03

$80,000– $99,999 9,246 3.1 $88,811.00 65,446.39

$100,000 or more 14,937 3.2 $155,901.00 93,525.67

2,007.46 297.12 139.46

1,080.77 109.82 49.35

1,593.26 183.75 95.69

1,939.73 271.34 133.84

2,309.85 343.82 174.61

2,556.95 413.66 207.42

2,928.30 507.75 228.39

3,429.73 648.94 271.08

134.57

54.05

71.46

120.25

144.05

179.95

235.88

322.75

19.06

5.09

13.47

12.53

22.50

21.56

35.49

45.87

4.03

1.34

3.13

4.72

2.66

4.73

7.99

9.24

130.41

60.31

88.61

118.49

137.24

159.13

196.58

289.77

49.69 41.76 14.88 9.44 8.36 5.50

17.32 23.83 5.84 5.70 3.96 2.59

29.11 30.38 10.22 9.66 6.15 2.91

38.65 37.35 16.67 11.22 8.66 5.89

52.09 43.10 15.27 9.65 8.60 7.70

61.85 49.55 18.53 13.64 9.89 5.68

83.37 56.62 23.77 12.76 12.86 6.82

129.31 86.41 31.98 10.82 16.92 12.03

1,016.66 592.31 378.39 27.45 18.51

593.41 411.43 160.32 5.38 16.28

856.23 541.84 278.60 16.08 19.71

1,010.59 613.05 350.25 27.34 19.95

1,167.40 654.90 468.69 21.16 22.65

1,277.30 693.55 545.87 25.84 12.04

1,420.51 729.83 616.27 52.65 21.76

1,582.77 814.07 675.13 78.20 15.37

563.27 471.01 92.26

317.24 283.26 33.98

464.66 409.03 55.64

539.31 475.56 63.75

661.39 543.18 118.21

706.86 593.79 113.07

803.46 634.57 168.89

908.25 702.44 205.81

Note:฀Numbers฀will฀not฀add฀to฀total฀because฀not฀all฀categories฀are฀shown. Source:฀Bureau฀of฀Labor฀Statistics,฀unpublished฀tables฀from฀the฀2004฀Consumer฀Expenditure฀Survey;฀calculations฀by฀New฀Strategist฀ ฀ ฀ ฀ ฀ ฀

฀

฀

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 21

Table 9. Information Products and Services: Indexed spending by income, 2004 (indexed฀average฀annual฀spending฀of฀consumer฀units฀(CU)฀on฀information฀products฀and฀services฀by฀before-tax฀income฀of฀consumer฀unit,฀2004;฀index฀definition:฀an฀index฀of฀100฀is฀the฀average฀for฀all฀consumer฀units;฀an฀index฀of฀132฀means฀that฀spending฀by฀consumer฀units฀in฀that฀group฀is฀32฀percent฀above฀the฀ average฀for฀all฀consumer฀units;฀an฀index฀of฀68฀indicates฀spending฀that฀is฀32฀percent฀below฀the฀average฀for฀all฀consumer฀units) total consumer units $43,395 100

under $20,000 $18,865 43

$20,000– $39,999 $30,401 70

$40,000– $49,999 $38,204 88

$50,000– $69,999 $47,750 110

$70,000– $79,999 $55,012 127

$80,000– $99,999 $65,446 151

$100,000 or more $93,526 216

INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use

100 100 100

54 37 35

79 62 69

97 91 96

115 116 125

127 139 149

146 171 164

171 218 194

100

40

53

89

107

134

175

240

100

27

71

66

118

113

186

241

100

33

78

117

66

117

198

229

Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs

100

46

68

91

105

122

151

222

100 100 100 100 100 100

35 57 39 60 47 47

59 73 69 102 74 53

78 89 112 119 104 107

105 103 103 102 103 140

124 119 125 144 118 103

168 136 160 135 154 124

260 207 215 115 202 219

Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards

100 100 100 100 100

58 69 42 20 88

84 91 74 59 106

99 104 93 100 108

115 111 124 77 122

126 117 144 94 65

140 123 163 192 118

156 137 178 285 83

Television Cable service and community antenna Television sets

100 100 100

56 60 37

82 87 60

96 101 69

117 115 128

125 126 123

143 135 183

161 149 223

Average spending of CU, total Average spending of CU, index

Source:฀Calculations฀by฀New฀Strategist฀based฀on฀the฀Bureau฀of฀Labor฀Statistics฀2004฀Consumer฀Expenditure฀Survey฀ ฀ ฀ ฀ ฀ ฀

22฀ WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

฀

฀

฀

Table 10. Information Products and Services: Total spending by income, 2004 (total฀annual฀spending฀on฀information฀products฀and฀services,฀by฀before-tax฀income฀group฀of฀consumer฀units฀(CU),฀2004;฀consumer฀units฀and฀dollars฀in฀ thousands) total consumer units 116,282 $5,046,042,273

under $20,000 28,898 $545,171,431

$20,000– $39,999 27,297 $829,854,379

$40,000– $49,999 11,374 $434,533,092

$50,000– $69,999 18,069 $862,797,099

$70,000– $79,999 6,461 $355,432,726

INFORMATION SPENDING 233,431,464 Computer 34,549,708 Computer information services 16,216,688 Computers and computer hardware, nonbusiness use 15,648,069 Computer software and accessories, nonbusiness use 2,216,335 Repair of computer systems for nonbusiness use 468,616

31,232,190 3,173,571 1,426,124

43,491,164 5,015,803 2,612,028

22,062,489 3,086,221 1,522,296

41,736,680 6,212,484 3,155,028

16,520,454 2,672,657 1,340,141

27,075,062 4,694,657 2,111,694

51,229,877 9,693,217 4,049,122

1,561,857

1,950,618

1,367,724

2,602,839

1,162,657

2,180,946

4,820,917

146,975 38,616

367,690 85,467

142,516 53,685

406,553 48,064

139,299 30,561

328,141 73,876

685,160 138,018

Number of consumer units Total spending of all CUs

$80,000– $100,000 $99,999 or more 9,246 14,937 $605,117,322 $1,396,992,933

Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs

15,164,336

1,742,829

2,418,883

1,347,705

2,479,790

1,028,139

1,817,579

4,328,294

5,778,053 4,855,936 1,730,276 1,097,702 972,118 639,551

500,480 688,768 168,689 164,848 114,432 74,884

794,667 829,262 278,925 263,648 167,905 79,358

439,605 424,819 189,605 127,616 98,499 66,993

941,214 778,774 275,914 174,366 155,393 139,131

399,613 320,143 119,722 88,128 63,899 36,698

770,839 523,509 219,777 117,979 118,904 63,058

1,931,503 1,290,706 477,685 161,618 252,734 179,692

Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards

118,219,258

17,148,243

23,372,567

11,494,451

21,093,751

8,252,635

13,134,035

23,641,835

68,874,991 43,999,946 3,191,941 2,152,380

11,889,386 4,633,058 155,431 470,367

14,790,672 7,604,976 438,987 537,932

6,972,831 3,983,744 310,965 226,911

11,833,388 8,468,760 382,340 409,263

4,481,027 3,526,866 166,952 77,790

6,748,008 5,698,032 486,802 201,193

12,159,764 10,084,417 1,168,073 229,582

65,498,162 54,769,985 10,728,177

9,167,547 8,185,583 981,964

12,683,910 11,165,195 1,518,715

6,134,112 5,409,019 725,093

11,950,656 9,814,719 2,135,936

4,567,022 3,836,477 730,545

7,428,791 5,867,234 1,561,557

13,566,530 10,492,346 3,074,184

Television Cable service and community antenna Television sets

Note:฀Numbers฀will฀not฀add฀to฀total฀because฀not฀all฀categories฀are฀shown฀and฀because฀of฀rounding.฀ Source:฀Calculations฀by฀New฀Strategist฀based฀on฀the฀Bureau฀of฀Labor฀Statistics฀2004฀Consumer฀Expenditure฀Survey

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 23

Table 11. Information Products and Services: Market shares by income, 2004 (percentage฀of฀total฀annual฀spending฀on฀information฀products฀and฀services฀accounted฀for฀by฀before-tax฀income฀group฀of฀consumer฀units,฀2004)฀

Share of total consumer units Share of total before-tax income Share of total spending

total consumer units 100.0% 100.0 100.0

under $20,000 24.9% 5.0 10.8

$20,000– $39,999 23.5% 12.7 16.4

$40,000– $49,999 9.8% 8.0 8.6

$50,000– $69,999 15.5% 16.9 17.1

$70,000– $79,999 5.6% 7.6 7.0

$80,000– $99,999 8.0% 13.0 12.0

$100,000 or more 12.8% 36.8 27.7

INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use

100.0 100.0 100.0

13.4 9.2 8.8

18.6 14.5 16.1

9.5 8.9 9.4

17.9 18.0 19.5

7.1 7.7 8.3

11.6 13.6 13.0

21.9 28.1 25.0

100.0

10.0

12.5

8.7

16.6

7.4

13.9

30.8

100.0

6.6

16.6

6.4

18.3

6.3

14.8

30.9

100.0

8.2

18.2

11.5

10.3

6.5

15.8

29.5

Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs

100.0

11.5

16.0

8.9

16.4

6.8

12.0

28.5

100.0 100.0 100.0 100.0 100.0 100.0

8.7 14.2 9.7 15.0 11.8 11.7

13.8 17.1 16.1 24.0 17.3 12.4

7.6 8.7 11.0 11.6 10.1 10.5

16.3 16.0 15.9 15.9 16.0 21.8

6.9 6.6 6.9 8.0 6.6 5.7

13.3 10.8 12.7 10.7 12.2 9.9

33.4 26.6 27.6 14.7 26.0 28.1

Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards

100.0 100.0 100.0 100.0 100.0

14.5 17.3 10.5 4.9 21.9

19.8 21.5 17.3 13.8 25.0

9.7 10.1 9.1 9.7 10.5

17.8 17.2 19.2 12.0 19.0

7.0 6.5 8.0 5.2 3.6

11.1 9.8 13.0 15.3 9.3

20.0 17.7 22.9 36.6 10.7

Television Cable service and community antenna Television sets

100.0 100.0 100.0

14.0 14.9 9.2

19.4 20.4 14.2

9.4 9.9 6.8

18.2 17.9 19.9

7.0 7.0 6.8

11.3 10.7 14.6

20.7 19.2 28.7

Note:฀Numbers฀may฀not฀add฀to฀total฀because฀of฀rounding.฀ Source:฀Calculations฀by฀New฀Strategist฀based฀on฀the฀Bureau฀of฀Labor฀Statistics฀2004฀Consumer฀Expenditure฀Survey฀ ฀ ฀ ฀ ฀

24฀ WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

฀

฀

฀

Table 12. Information Products and Services: Average spending by high-income consumer units, 2004 (average฀annual฀spending฀on฀information฀products฀and฀services,฀by฀before-tax฀income฀of฀consumer฀units฀(CU)฀with฀high฀incomes,฀2004)฀

Number of consumer units (in 000s) Number of persons per CU Average before-tax income of CU Average spending of CU, total INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards Television Cable service and community antenna Television sets

total consumer units 116,282 2.5 $54,453.00 43,394.87

$100,000 or more 14,937 3.2 $155,901.00 93,525.67

$100,000– $119,999 5,625 3.1 $108,751.00 75,213.14

$120,000– $149,999 4,245 3.3 $132,292.00 87,298.57

$150,000 or more 5,067 3.2 $228,021.00 119,448.79

2,007.46 297.12 139.46 134.57 19.06 4.03

3,429.73 648.94 271.08 322.75 45.87 9.24

3,039.58 551.20 237.53 273.03 35.12 5.52

3,351.08 631.80 270.69 295.02 55.11 10.98

3,936.56 771.77 308.64 401.18 50.05 11.90

130.41 49.69 41.76 14.88 9.44 8.36 5.50

289.77 129.31 86.41 31.98 10.82 16.92 12.03

227.43 95.45 70.68 24.51 12.65 15.73 8.34

297.77 138.67 90.77 32.71 8.83 14.57 11.67

352.86 159.05 100.21 39.66 10.46 20.23 16.42

1,016.66 592.31 378.39 27.45 18.51

1,582.77 814.07 675.13 78.20 15.37

1,465.18 729.10 656.23 63.13 16.72

1,538.49 797.57 680.12 44.98 15.82

1,757.71 922.21 691.93 130.08 13.49

563.27 471.01 92.26

908.25 702.44 205.81

795.77 645.16 150.61

883.02 707.30 175.72

1,054.22 761.94 292.28

Note:฀Numbers฀will฀not฀add฀to฀total฀because฀not฀all฀categories฀are฀shown.฀ Source:฀Bureau฀of฀Labor฀Statistics,฀unpublished฀tables฀from฀the฀2004฀Consumer฀Expenditure฀Survey฀

฀

฀

฀

฀

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 25

Table 13. Information Products and Services: Indexed spending by high-income consumer units, 2004 (indexed฀average฀annual฀spending฀of฀consumer฀units฀(CU)฀with฀high฀incomes฀on฀information฀products฀and฀services,฀by฀before-tax฀income฀of฀consumer฀unit,฀ 2004;฀index฀definition:฀an฀index฀of฀100฀is฀the฀average฀for฀all฀consumer฀units;฀an฀index฀of฀132฀means฀that฀spending฀by฀consumer฀units฀in฀that฀group฀is฀32฀ percent฀above฀the฀average฀for฀all฀consumer฀units;฀an฀index฀of฀68฀indicates฀spending฀that฀is฀32฀percent฀below฀the฀average฀for฀all฀consumer฀units) total consumer units $43,395 100

$100,000 or more $93,526 216

$100,000– $119,999 $75,213 173

$120,000– $149,999 $87,299 201

$150,000 or more $119,449 275

INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use

100 100 100 100 100 100

171 218 194 240 241 229

151 186 170 203 184 137

167 213 194 219 289 272

196 260 221 298 263 295

Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs

100 100 100 100 100 100 100

222 260 207 215 115 202 219

174 192 169 165 134 188 152

228 279 217 220 94 174 212

271 320 240 267 111 242 299

Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards

100 100 100 100 100

156 137 178 285 83

144 123 173 230 90

151 135 180 164 85

173 156 183 474 73

Television Cable service and community antenna Television sets

100 100 100

161 149 223

141 137 163

157 150 190

187 162 317

Average spending of CU, total Average spending of CU, index

Source:฀Calculations฀by฀New฀Strategist฀based฀on฀the฀Bureau฀of฀Labor฀Statistics฀2004฀Consumer฀Expenditure฀Survey฀ ฀ ฀ ฀ ฀

26฀ WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

฀

฀

฀

Table 14. Information Products and Services: Total spending by high-income consumer units, 2004 (total฀annual฀spending฀on฀information฀products฀and฀services,฀by฀before-tax฀income฀group฀of฀consumer฀units฀(CU)฀with฀high฀incomes,฀2004;฀consumer฀units฀ and฀dollars฀in฀thousands)฀ total consumer units 116,282 $5,046,042,273

$100,000 or more 14,937 $1,396,992,933

$100,000– $119,999 5,625 $423,073,913

$120,000– $149,999 4,245 $370,582,430

$150,000 or more 5,067 $605,247,019

INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use

233,431,464 34,549,708 16,216,688 15,648,069 2,216,335 468,616

51,229,877 9,693,217 4,049,122 4,820,917 685,160 138,018

17,097,638 3,100,500 1,336,106 1,535,794 197,550 31,050

14,225,335 2,681,991 1,149,079 1,252,360 233,942 46,610

19,946,550 3,910,559 1,563,879 2,032,779 253,603 60,297

Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs

15,164,336 5,778,053 4,855,936 1,730,276 1,097,702 972,118 639,551

4,328,294 1,931,503 1,290,706 477,685 161,618 252,734 179,692

1,279,294 536,906 397,575 137,869 71,156 88,481 46,913

1,264,034 588,654 385,319 138,854 37,483 61,850 49,539

1,787,942 805,906 507,764 200,957 53,001 102,505 83,200

118,219,258 68,874,991 43,999,946 3,191,941 2,152,380

23,641,835 12,159,764 10,084,417 1,168,073 229,582

8,241,638 4,101,188 3,691,294 355,106 94,050

6,530,890 3,385,685 2,887,109 190,940 67,156

8,906,317 4,672,838 3,506,009 659,115 68,354

65,498,162 54,769,985 10,728,177

13,566,530 10,492,346 3,074,184

4,476,206 3,629,025 847,181

3,748,420 3,002,489 745,931

5,341,733 3,860,750 1,480,983

Number of consumer units Total spending of all CUs

Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards Television Cable service and community antenna Television sets

Note:฀Numbers฀will฀not฀add฀to฀total฀because฀not฀all฀categories฀are฀shown฀and฀because฀of฀rounding. Source:฀Calculations฀by฀New฀Strategist฀based฀on฀the฀Bureau฀of฀Labor฀Statistics฀2004฀Consumer฀Expenditure฀Survey

WHO’S BUYING INFORMATION PRODUCTS AND SERVICES 27

Table 15. Information Products and Services: Market shares by high-income consumer units, 2004 (percentage฀of฀total฀annual฀spending฀on฀information฀products฀and฀services฀accounted฀for฀by฀before-tax฀income฀group฀of฀consumer฀units฀with฀high฀incomes,฀ 2004)฀

Share of total consumer units Share of total before-tax income Share of total spending

total consumer units 100.0% 100.0 100.0

$100,000 or more 12.8% 36.8 27.7

$100,000– $119,999 4.8% 9.7 8.4

$120,000– $149,999 3.7% 8.9 7.3

$150,000 or more 4.4% 18.2 12.0

INFORMATION SPENDING Computer Computer information services Computers and computer hardware, nonbusiness use Computer software and accessories, nonbusiness use Repair of computer systems for nonbusiness use

100.0 100.0 100.0 100.0 100.0 100.0

21.9 28.1 25.0 30.8 30.9 29.5

7.3 9.0 8.2 9.8 8.9 6.6

6.1 7.8 7.1 8.0 10.6 9.9

8.5 11.3 9.6 13.0 11.4 12.9

Reading material Books (except those purchased through book clubs) Newspaper subscriptions Magazine subscriptions Newspapers, nonsubscription Magazines, nonsubscription Books purchased through book clubs

100.0 100.0 100.0 100.0 100.0 100.0 100.0

28.5 33.4 26.6 27.6 14.7 26.0 28.1

8.4 9.3 8.2 8.0 6.5 9.1 7.3

8.3 10.2 7.9 8.0 3.4 6.4 7.7

11.8 13.9 10.5 11.6 4.8 10.5 13.0

Telephone Residential telephone service and pay phones Cellular phone service Telephones and answering machines Phone cards

100.0 100.0 100.0 100.0 100.0

20.0 17.7 22.9 36.6 10.7

7.0 6.0 8.4 11.1 4.4

5.5 4.9 6.6 6.0 3.1

7.5 6.8 8.0 20.6 3.2

Television Cable service and community antenna Television sets

100.0 100.0 100.0

20.7 19.2 28.7

6.8 6.6 7.9

5.7 5.5 7.0

8.2 7.0 13.8

Note:฀Numbers฀may฀not฀add฀to฀total฀because฀of฀rounding.฀ Source:฀Calculations฀by฀New฀Strategist฀based฀on฀the฀Bureau฀of฀Labor฀Statistics฀2004฀Consumer฀Expenditure฀Survey

28฀ WHO’S BUYING INFORMATION PRODUCTS AND SERVICES

Table 16. Information Products and Services: Average spending by household type, 2004 (average฀annual฀spending฀of฀consumer฀units฀(CU)฀on฀information฀products฀and฀services,฀by฀type฀of฀consumer฀unit,฀2004)฀

Number of consumer units (in 000s) Number of persons per CU Average before-tax income of CU Average spending of CU, total

total 29,279 3.9 $79,764.00 60,660.88

oldest child 6 to 17 15,376 4.1 $78,508.00 60,577.88

oldest child 18 or older 8,300 3.9 $85,109.00 64,161.69

single parent, at least one child