November 23, 2003

Consumption of Information Goods and Services in the U.S.

Part 2. Information Products and Services: An Overview

For most Americans, multiple information services and gadgets are usually nearby.

Penetration of devices and services nears or surpasses 60% or more in four of the ten technologies categories we queried. As the table shows, Americans approach or top the 60% mark for the Internet, computer use, cable subscription, and cell phones – a first in 2002. Since then, Internet penetration has risen to 63% of all Americans, according to the Pew Internet Project’s July 2003 survey.

For many of these technologies and services, growth has been rapid since 1996. The Internet tends to get most of the cultural buzz, but growth has been equally rapid for cell phones and, very recently, for DVD players. There are also technologies that are in the early adoption phase (e.g., DVRs), and some that are maturing, such as cable TV, home computers, and the Internet. The PDA may be experiencing a plateau or even decline in adoption, even though its penetration rate is not high.7

Some technologies are maturing, such as the cable, computers, and Internet.

There are eight distinct categories of Americans

There is wide variation in the nature and intensity of people’s technology use. We used a statistical technique called cluster analysis to place respondents into distinct categories based on their technology use and socioeconomic characteristics. This yields eight separate categories of users of information technology goods and services. This section describes the categories, proceeding from the most tech-intensive people to the least.8 Penetration Rates of Personal Information Technologies

A large part of the analysis in this report focuses on the three most tech-intensive groups, what we call the Young Tech Elites, the Wired GenXers, and the Older Wired Baby Boomers.9 These high-end users are worthy of scrutiny by virtue of the intensity with which they crave information technology and exchange information with others. These are the true leaders when it comes to technology adoption. Independent from their levels of income and education (which are above average), these groups of Americans are bigger spenders on technology goods and services and more ardent information consumers. As the table below shows, these three segments make up about one-third of the population. The remaining two-thirds of the population are less intense in their use of technology for a variety of reasons (e.g., lack of time, lack of experience, relatively low levels of interest in information goods and services).

The Young Tech Elites, Wired GenXers, and Older Wired Baby Boomers crave information technology and are the true leaders when it comes to technology adoption.

Leaders in Technology Adoption

1. Young Tech Elites — artistic, urban, wired, and mobile

This group makes up just 6% of the entire sample, but it is the most technologically sophisticated of any group. Fully 100% of this group has Internet access, and they far exceed the national average in other ways, with 80% having cell phones and 82% having DVD players at home. They are more than twice as likely than the average American to have PDAs (26% do), and are even more likely to have a declining technology service, the pager, than average (18% to 13%). As for TV, 69% have cable TV, slightly more than the norm, 25% have a satellite dish (compared with the 21% average), and 51% subscribe to some premium TV channel, which exceeds the national average of 35%.

Demographically, this group is young – the average age is 22 – and predominantly male (57%). As a group, they are well-educated or on their way to being so; 32% have college degrees (versus 25% of the general population) and 48% are students (versus 14% of the all Americans age 18 and over). Even though they are just embarking on their careers, this group does fairly well financially, having household incomes that are a bit above the national average.10 Finally, this youthful group has a creative bent and prefers to live in cities. About one-third (34%) say they practice an artistic activity of some sort, about double the national average of 17%. Nearly half (43%) live in urban areas compared with 27% of all Americans.

A closer look at how this group uses technology shows the breadth of its engagement with information technology. Of the 10 information goods and services about which we queried, this group has or subscribes to an average of 5.9 of them, which is above the national average of about 4.3. Of the 13 online activities we asked about in our October 2002 survey, members of this group had tried 7.0 of them, above the average of 5.1 for all Internet users.11 A large share goes online using high-speed connections at home (39% versus 21% of all users on October 2002), making it easy for many in this group to go online several times a day (41%, compared with 23% for all Internet users). And they have a wealth of online experience; on average they have been online for about 7.0 years, well above the 5.2 years of Internet experience of the average user.

Members of this group are the most active Internet surfers in a number of categories. Most notable is this group’s predilection to download information from the Internet and post it online, which suggests a depth of technology engagement. Two-thirds of this group (69%) has downloaded music from the Internet, more than twice the average (32%) for all users. For streaming audio or video clips, 82% have done this compared with 53% for all users. About one-third (35%) have gone to an online group, which is twice the average for Internet users, and 44% have created content for the Internet compared with 19% for all Internet users. This group also goes online for news. On the average day, 39% of these users get news online (versus 26% for all users), which approaches the frequency with which they read the newspaper on the typical day; 45% of this group reads the paper on the average day which is about the national average of 41%.

Some of these users also exhibit cutting-edge online behaviors, suggesting a willingness to continue to fold technology into their lives. One in six (17%) have gone online using a wireless connection (only 6% of all Internet users have done this) and 16% have placed a phone call online (compared with 8% of all users). And some of these users are starting to pay for content on the Internet; 13% have done this versus the 8% average.

Not surprisingly, this group spends more on a monthly basis for communications goods and services than average. Taking together respondents’ estimates for their monthly spending on telephone service (including long distance), cell phone service, Internet access (including, where applicable, broadband), cable TV (including, where applicable, premium channels), and online content, the Young Tech Elites spent $161 on average. This is about 30% more than the average for all Americans, which is $122.

2. Older Wired Baby Boomers – well-to-do empty nesters

This group makes up 6% of Americans. They are essentially yesterday’s technological elites who have maintained their sophistication over time. Thirty years ago, they might have been the first in their neighborhood to have cable TV, or they might have been barking “breaker, breaker” into the CB radios in their cars. They are a generation older than the first group (the average age is 52) and, like that group, dominated by males (60%). In a number of ways, their technology use mirrors that of the young sophisticates. All of them (100%) use the Internet, 82% have cell phones, 68% subscribe to cable, 67% have DVD players (fewer than the young group but well above the national average), and 42% pay for at least one premium TV channel. Like the first group, 28% have PDAs and 25% are still hanging on to their pagers.

Demographically, this is a well-off suburban or urban crowd. Three in five live in households with annual incomes exceeding $75,000, three times the national average of households in that category. More than half (57%) live in suburban areas (compared with 50% nationally) and 28% in cities (versus 27% nationally). Most are married (69%) and employed (81%), which contrasts with the national averages of 54% and 61% respectively. One-quarter (30%) have children under age 18 living at home, which is below the national average of 36% and lower than several similar groups to be discussed later. Finally, this is a highly educated group; 56% have at least a college degree in contrast to 25% of all Americans.

The demographic portrait suggests that these are people who are financially secure, technologically literate, and, with kids out of the house or soon to be, able to enjoy a variety of information goods and services. Like the Young Tech Elites, people in this group on average have 5.9 of the 10 information goods and services we asked about. They have tried, on average, 5.9 different Internet activities out of the 13 we queried, and they have been online for an average of 8.8 years. Many have switched to broadband at home (26%), and three in eight (38%) log on several times a day.

Looking specifically at this group’s online activities, there is an emphasis on information gathering and evidence of less wide-ranging experimentation online in comparison with the Young Tech Elites. Fully 88% have gone online to get news and 49% do so on a typical day, well above the average of 26% of Internet users who get news online on a normal day. Three in five (57%) read the newspaper on the average day, half again above the national average. Three-quarters of this group (76%) check email on the average day, in contrast to 50% for all users. This group is also the most likely to have bought something online (79% have versus 61% of all online users) and to have done workrelated research online (72% have versus the 51% average). However, they do not download music in large numbers (26% versus 32% for all users), and they are at about the average for all Internet users when it comes to creating content, streaming audio or video, placing a call on the Internet, paying for online content, or going online wirelessly.

With ample disposable income to purchase information goods and services, it is no surprise that this group has the highest monthly outlays for these things. On average, this group pays $175 per month for various information services, which is 43% greater than the average for all Americans.

3. Wired GenXers — busy lives, gadgets, and information help

This group makes up the largest share of the tech elite, with about 18% of the total U.S. population and three-fifths of the tech elite. This is a group of people in their mid 30’s – the average age is 36 – and, like others this age, they have a lot going on in their lives. Two-thirds (66%) are parents, 71% are married, and 82% are employed – all figures that exceed the national averages. A distinctive demographic trait in this group is gender. Whereas other tech-intensive groups are dominated by males, this one is essentially split 50-50 between men and women; 51% of this group are male. This group is also predominantly white (85% are) and, like Older Wired Baby Boomers, likely to live in the suburbs.

With their busy lives comes a reliance on technology. All GenXers use the Internet, and many of them (27%) have high-speed connections at home, above the 21% average when this survey was conducted. Four out of five (82%) have cell phones, two-thirds (66%) subscribe to cable and are well plugged into the DVD trend (64%), and one-quarter (25%) use PDAs. This is also the most contented group of all; 56% are satisfied with the direction the country is heading, versus the 40% average at the time of the survey.

Perhaps because of their busy lives, Wired GenXers are a little less engaged with technology than the other two tech elite groups. Out of the ten communication goods and service about which we asked, this group has 5.6 of them, compared with 5.9 for the other tech elite groups. Out of 13 Internet activities, members of this group on average have tried 5.9 of them, versus 7 for the Young Tech Elites.

The Internet usage patterns for Wired GenXers suggest that the online world offers them a way to get things done. Fully 77% have bought something online, 67% have done work-related research on the Internet, and 42% have done banking online, all figures substantially above the average. Wired GenXers are also willing to pay for content online; 13% have done this, which mirrors the Young Tech Elites. Relative to the other two tech elite groups, however, the Wired GenXers are less intense in Internet use. Fully 42% of the Young Tech Elites and Older Wired Baby Boomers log on to the Internet several times a day versus 29% for Wired GenXers. And although most (79%) Wired GenXers have gone online for news, only one-third do so on the typical day, which is above average for all Internet users (26%), but below the average for Older Wired Baby Boomers (49%) and the Young Tech Elites (39%). Still, Wired GenXers are spenders when it comes to technology; their average monthly expenditure for information goods and services is $169.

4. Wired Senior Men – the ardent, aging news hounds

Internet adoption is low among senior citizens (those over age 65), with only 16% of older Americans online, and adoption of many modern information goods and services is low in this age group. However, there is a very small cluster of senior citizens – two-thirds of them are men – who have embraced these technologies. This cluster makes up just 1% of the sample, which makes broad statistical statements difficult. But nearly all of these wired seniors have Internet access at home (mostly using dial-up connections) and a large majority has cell phones, cable TV, and premium channels. Demographically, this group tends to be white, more likely to live in rural areas, retired, well educated, and financially comfortable.

With respect to their Internet use, this group has a wealth of online experience – these users have been online for about 10 years – and online activities tend toward simply getting information online. They are frequent news gatherers online and surfers for political news. They also will do transactions online, whether that means buying products over the Internet or doing banking online. They rate low when it comes to some of the more au courant Internet activities, such as music downloading, content creation, and purchasing online content. And their monthly spending on communications goods and services is only on par with the national average of $124. All in all, this small group of older Americans belies the notion that senior citizens are a monolithic group who are indifferent to new information goods and services.

5. Young Marrieds – less disposable income for technology

This group is the non-tech counterpart to the very highly wired Young Tech Elites. The group, at 15% of the population, is about twice as large as the Young Tech Elites group and roughly the same age; the average age for this group is 24. However, about 66% use the Internet, about average in the sample, but below the average of 76% for the 18 to 24 age cohort. Similarly for cell phones: 56% of this group has cell phones, somewhat below the average and 8 percentage points less than the 18 to 24 age group. The story is much the same for cable TV and satellite TV, with this group all lagging the national average with penetration rates of 54% and 20%, respectively. This group is slightly more likely to subscribe to premium TV channels; 40% do.

Two socioeconomic factors are likely at play in the lower use of information goods and services within this group: lower levels of educational attainment, and lower-thanaverage incomes. Only 12% of this group has college degrees and just 40% classify themselves as students; the figures for the Young Tech Elites are much higher at 30% and 61%, respectively. It is thus not too surprising that income levels are low for this group, with 28% having household incomes below $20,000 per year, greater than the national average of 19%.

Additionally, several other demographic facts stand out for this group. First, it is racially diverse. One in five (22%) are Latino (versus 10% among Young Tech Elites) and 16% are African American, compared with 13% for Young Tech Elites. Second, two in five (34%) are married, significantly higher than the rate for the Young Tech Elites (20%) and 38% are parents, far greater than the 13% of Young Tech Elites with children. Finally, it is equally divided between men and women. Although this reflects the general population, the tech elite groups tend to include more men than women.

All these factors translate into low-intensity use of information goods and services among members of this group. The scope of use is not great; this group has 4.2 of the 10 information goods inquired about, roughly the national average of 4.3 and below that of the Young Tech Elites, who have nearly 6 on average. They have tried only 4.1 out of the 13 Internet activities, much lower than the 7.0 attempted by Young Tech Elites. Looking at specific activities, this group lags in most categories, from information gathering to transactions. Only half (51%) have gone online for news (versus the 68% average) and 30% for work-related research (versus the 51% average). About three in eight (38%) have bought something online and 21% have done banking online, both well below average. Only in entertainment activities does this group measure up or exceed the norm; 44% have downloaded music (32% of all Internet users have) and 54% have streamed an audio or video clip (53% of all Internet users have done this).

Much of this modest Internet usage is attributable to their relative online inexperience. On average these users have been online for 3.2 years; the average for all Internet users is 5.2 years and the average for the Young Tech Elites is 6.7 years. Overall, this group does not spend much more monthly than the national average on information services; the group’s spending comes to $127 per month while the average is $122.

6. Low-Tech Older Baby Boomers – cell phones and cable TV, but lower Internet penetration

Just as the Young Marrieds represent a natural contrast to the Young Tech Elites, this group readily contrasts with the Older Wired Baby Boomers, the 50-ish group of mostly males who consume a wide range of information goods and services. The average age for the “unwired” middle-aged boomers is 54, but they are mostly women (56%) and they make up about 21% of the general population. Half (51%) are Internet users, which lags the average by about 9 percentage points. About 60% of Low-Tech Older Baby Boomers have cell phones, 61% subscribe to cable, one-quarter has satellite dishes, and 25% purchase a premium TV channel. Only 5% have PDAs, and this group trails in home DVD players (37%) but are right there with the early adopters of digital video recorders (8% in this group have one versus the national average of 7%).

Relative to their mostly male, 50-ish counterparts among the Older Wired Baby Boomers, 59% of whom graduated from college, this group has a low level of educational attainment. Only 22% have college degrees. This group is less likely to be married than their male counterparts (63% versus 71%) and is more likely to have children under 18 at home (33% do versus 24% in the heavily male group). There is a sharp difference in income levels, with only 23% of this group having household incomes over $75,000 annually compared with 60% of the Older Wired Baby Boomers. That said, this group of 50-ish women have household incomes just slightly below the national average. Finally, this group is heavily rural relative to the Older Wired Baby Boomers; 26% of this group lives in rural areas compared with 15% of males in the late boomer cluster.

As for intensity of technology use, this group is not unlike the Young Unwired Baby Boomers (see below). They have tried 4.1 out of the 10 information goods and services we queried and have tried an average of 3.9 of the 13 Internet activities as opposed to 4.0 for the prior group. The slightly smaller scope of Internet activities (relative to the prior group) is due to this group’s indifference toward entertainment activities such as music and audio and video streaming. This cluster has only 3.7 years of Internet experience, below the national average of 5.2 years. Their monthly spending on communications goods and services is right at the national average of $124.

7. Unwired Young Baby Boomers — communications and entertain devices, but not Internet

This group forms the less tech-intensive counterpart to the Wired GenXers, although the typical member of this group, whose average age is 39, is at the very youngest end of the baby boom generation. With 17% of the U.S. population, it is a group that is more racially diverse than Wired GenXers (14% of this group is black and 13% is Hispanic compared with 7% and 10% respectively for Wired GenXers). But this group has lower educational levels (15% have college degrees or more) and lower incomes than Wired GenXers and the national average. Unwired Young Baby Boomers are also a bit more likely to be women (53% are).

As for technology use, this group lags when it comes to the Internet, but matches or exceeds the average for several communications and entertainment devices. Only 45% of this group has Internet access, but Unwired Young Baby Boomers come in at the average for cable subscription rates (62%) and DVD players at home (47%) and above average for premium TV channels (26%) and cell phone use (69%). Overall, they are close to the average of information goods and services purchased out of the 10 we asked about; this group has 4.1 on average versus 4.3 for all Americans. Their average monthly spending on information goods and services is $124.

This group’s Internet usage patterns are tepid. Only a quarter (27%) check email on the average day, which is about half the national average, and just 9% check news online on the average day, which is one-third the national rate. For other Internet activities – such as purchasing products online, work-related research, or getting political news – members of this group significantly lag the average for all Internet users. Lack of online experience is one reason; the average person in this group has been online for 2.9 years, which is about half the tenure for Wired GenXers. And nearly all of Unwired Young Baby Boomers connect to the Internet by dial-up modem, which inhibits extensive online use.

8. Low-Tech Elderly – old media

This final group – about 16% of the population – is a group of older and mostly female Americans who rely on old media for communications and information. The mean age for this cluster is 73 and most (58%) are women. But only one in eight (12%) has Internet access and just 39% have cell phones. Yet this group rates fairly well when looking at traditional communications media. Fully 68% subscribe to cable TV (above average), although only 14% buy premium channels (well below average) and few have embraced DVD players (only 17% have them). They are at the norm on the diffusion curve for home digital video recorders, with 8%. Nearly four out of five (78%) watch TV news on the average day, and 57% read the newspaper, figures which exceed the national average.

With the fairly traditional media use profile, it is not too surprising that the small share of Internet users in this group gravitates toward basic information gathering online. Members of this group are about as likely as the average Internet user to check email or go to an online news site on the typical day. They seem particularly interested in politics and public affairs, with 54% having gone online for information about this, which is above the average (45%) for all Internet users. In activities that require greater technical competence, such as downloading music files, creating content, and even doing online transactions, this group lags substantially behind the average for all Internet users.

Overall, this group does not demonstrate a high level of interest in purchasing and using information goods and services. The average monthly bill for communications goods and services comes to only $82 for this group, which goes hand-in-hand with the group’s low income level. Fully 40% live in households with annual incomes under $20,000, more than twice the national average. And of the 10 communications goods and services we ask about, the average member of this group has 2.7 – below the average of 4.3. When it comes to Internet activities, the small percentage that have access have not ventured too far on the Internet; the average number of Internet activities is 3.2, well below the national average of 5.1 for the 13 activities we queried. Relative lack of online experience is the likely reason; the average member of this group has been online for 3.0 years, well below the average.

Wired women like tools to communicate, not gadgets to show off.

In the groups discussed above, the groups that are mostly male tend to be the ardent technophiles, while those that are mostly female use technology less intensively. This elides the fact that substantial numbers of women in the United States are active and enthusiastic consumers of information goods and services. In fact, 46% of the tech elite are women – whether among the Young Tech Elites, Wired GenXers, or Older Wired Baby Boomers. Comparing tech elite women to their male counterparts reveals some interesting contrasts within this most tech-oriented segment of the population. In very broad terms, tech elite women seem more enthused about the information technologies that enable communication and perhaps less enthralled with the latest hardware.

Techie women are more likely than techie men to say that it would be very hard to give up email, by a 52% to 44% margin. By contrast, when asked whether it would be very hard to do without the Internet, 49% of techie women say this, while 60% of their male counterparts do. For phone calling, cell or wireline, there are some cross currents. Fully 70% of tech women said it would be very hard to do without a telephone compared with 56% of tech men. For cell phones, half of tech men say it would be very hard to do without one while 46% of tech women said this. Techie men and techie women are about as likely to have cells phones (82% and 81%, respectively). Techie women are less likely to have the hardware gadgets that one might clip to the belt (excepting cell phones), than techie men. One-quarter of techie men have pagers, versus 16% of techie women, and about one-third (31%) of techie men have PDAs compared to 15% of their female counterparts.

As for intensity of technology use, tech elite women, by several measures, also appear to be less intensive users of information technologies than their male counterparts. Tech women have tried 5.8 out of the 13 Internet activities in our survey, while tech men have attempted 6.6. Tech men purchase on average 5.9 of the 10 information goods and services we asked about, while tech women come in at 5.6. These differences show up in monthly spending on communications goods and services; tech elite men spend $177 per month on average while tech elite women spend $158. There are also differences in Internet connection speed; techie men are more likely than techie women to have broadband Internet connections at home, by a 34% to 23% margin.

  1. See The Economist “PDA, RIP: The next big thing that wasn’t, or was it?” October 16, 2003.
  2. The appendix to this report provides detailed information on technology use by the eight categories described, as well as by other demographic characteristics.
  3. “GenXer” refers to people who were born between 1965 and 1980 and who are commonly known as members of Generation X. The analysis excludes Older Wired Men because, as noted, the number of respondents in this category makes meaningful statistical discussion difficult.
  4. The anomaly of this group of young people having incomes greater than average is due possibly to some members of this group still living with their parents and others living in group-housing situations. In both instances, the total household income may reflect more than respondents’ individual incomes.
  5. The Internet activities for this analysis are: email, news, music downloading, online purchases content creation, online banking, streaming an audio or video clip, getting political news online, work-related research, making an Internet phone call, going to an adult Web site, and paying for online content.