Month: August 2007
COB-14: advancing progress forward
OECD broadband rankings have become a leading indicator of progress in communications development. Broadband subscribers per 100 inhabitants for the United Kingdom, France, Japan, the United States, and Germany are 21.6, 20.3, 20.2, 19.6, and 17.1 (Dec. 2006 figures). These statistics depend on reporting from a large number of bureaucrats in private telecommunications companies. For private sector statistical reporting, 90% accuracy is typically good enough, and 95% accuracy usually is not cost effective. That means that true broadband subscribership per capita figures for France, Japan, and the U.S. probably fall within the same range of reasonable possibilities, while the U.K. may be slightly higher and Germany slightly lower. Some much smaller-sized economies have perhaps 50% greater broadband subscribers per capita.
In the U.S., many persons are obsessed with being number 1. Here at the Carnival of the Bureaucrats, we applaud popular enthusiasm for being a number. But bureaucrats are capable of producing many numbers, each unique and special. What’s important is not what number you are, but what that number actually means. We are concerned that some persons may believe that, because they don’t get a particular number, it’s game over. The game will surely continue.
An important measure of progress is broadband service for persons in rural areas. Bureaucrats in many countries are concerned to cover their digital divides. A recent Pew Internet release, “U.S. Lags behind: Why it will Be Hard to Close the Broadband Divide,” observed:
To reach the underserved, policymakers might consider more aggressive and targeted outreach efforts that educate hard-to-reach populations about the benefits of online connectivity.
This month’s Carnival of the Bureaucrats features the efforts of an off-duty government bureaucrat to do just that (see video below).
Paul Conley discusses upgrading essential IT support services for organizational excellence, employee training programs, and learning-organization initiatives:
A few months ago I asked the managing editor of an email newsletter company what her newsletters looked like on a Blackberry. She didn’t know, she said, because the company didn’t provide her with a Blackberry. That, in a nutshell, is everything that can possibly go wrong with a journalist. Her curiosity, her pride, her tenacity and her common sense had all disappeared. Don’t let that happen to you. If you don’t have a Blackberry, borrow one for a minute and check out your publication. If your company won’t give you a gorgeous and expensive SLR digital camera, then get yourself a cheap little one that fits in your pocket. If your company won’t pay for someone to train you, then teach yourself.
Don’t forget to get certification that you’ve completed that course.
Mr. Juggles at Long or Short Capital describes a Regulatory Efficiency Theorem. This theorem shows that investments in regulatory action have a multiplier effect on economic activity through stimulating further investments in merger and acquisition specialists, lawyers, and lobbyists.
Alvaro Fernandez at the Brain Fitness Blog discusses the importance of cognitive training for an aging workforce. Many companies now advise desk-bound employees to do simple exercise to avoid office-related physical injuries. Companies should also care about keeping their employees’ brains working well. A Brain Fitness training program would be one way to do that. Having interesting, challenging work would be another. That latter option, however, may not be feasible in many circumstances.
That concludes this month’s Carnival of the Bureaucrats. Submit your blog article to the next edition using our Carnival submission form. Submissions should conform to the Carnival regulations. Past posts and future hosts can be found on the Carnival index page.
television serves couch potatoes
Most television watching is best modeled as a two-stage decision process. First, a person decides to watch television. That means the person sits on a couch and stares vacantly at a large screen a few yards away. Then the person decides what to watch. That means choosing among current, salient video programming offerings. These two decisions are very loosely connected.
The behavior of persons who own a digital video recorder (DVR) is consistent with this decision model. In the U.S., households with a DVR use it for at most 25% of their television viewing time.[1] In the UK, households with a DVR use it even less — about 14% of television viewing time.[2] Most of the time, persons can’t be bothered to record and watch programs pre-selected from the huge universe of programs available to be recorded.
Persons don’t even bother to record programs so that they can skip advertising. When UK DVR owners were asked about how they use their DVR, 40% reported regularly fast-forwarding through adverts, while 42% reported never fast-forwarding through adverts. When specifically asked, 78% claimed to always or almost always fast-forward through adverts when using the DVR.[3] Evidently persons can’t remember well their immediate viewing behavior with respect to adverts. More significantly, persons who aren’t using their DVR surely aren’t fast-forwarding through adverts.
Average time spent watching television is likely to change neither quickly nor by a large amount in response to changes in the relative value of media use opportunities. Differences in video programming have little effect on aggregate television viewing time. New services offered on computer screens and mobile screens — video sharing, social networking, community news and information, in-depth learning opportunities — are similarly likely to have little effect on aggregate television view time. The amount of leisure time available (total working hours, weekday versus weekend) and socio-economic characteristics affecting broad patterns of life — educational attainment, employment status, presence of children at home — largely control television viewing time.
A recent IBM-sponsored survey has media pundits discussing the decline or explosion of television, but the survey actually provides rather weak evidence. The survey was an Internet-based survey, not a random sample of some relevant universe. Persons who respond to an Internet-based survey are likely to use the Internet more than average adults. U.S. respondents to the survey were 71% women and 27% persons ages 18-24, while U.S. adults (persons 18 and over) are 51% women and 13% ages 18-24.[4] Thus the survey demographics highly over-represent women and young adults.
Most significantly, persons who have commented on the results of the survey generally don’t seem to understand what was reported. The press release for the survey reported that “personal Internet time rivals TV time.” In the survey, “personal Internet time” meant Internet use at home and on “personal time at work.”[5] A survey in 2002 of a representative sample of U.S. adults found that employees with web access spent 3.7 hours per week in personal use of the Internet at work, and 5.9 hours per week using the Internet for work-related purposes at home. Both these time uses apparently count as “personal Internet use” in the IBM survey. Television isn’t a feasible alternative for either of those time uses. Most workers in the cushy private sector don’t have televisions in their offices, and watching television is almost never a work-related activity at home.
The challenge for traditional television isn’t that television viewing time will decline rapidly. The challenge is that traditional television advertising, compared to personalized, action-oriented, performance-measurable advertising, will decline rapidly in market value.
Notes:
[1] Reporting on a telephone survey, June-July 2007, of a random sample of 1,800 adults in households with a TV (and a telephone), Leichtman Research Group stated that “over one in every five households” had a DVR and estimated that “95% of all TV viewing in the U.S. is still of live TV.” These data imply that no less than 75% of DVR owners’ TV viewing time is live viewing, i.e. distributor-scheduled programming. The extent to which persons record and watch television programs on analog videocassette recorders raises the estimated DVR owners’ live TV viewing time. So does the extent to which DVR ownership is over 20%. An IBM-sponsored Internet survey found 24% of persons in the U.S. owned a DVR in April, 2007. See U.S. findings, p. 9. As discussed subsequently above, this sample isn’t representative of the U.S. adult population.
[2] Spring, 2006 BARB measurements in households with Sky+ DVR.
[3] Ofcom, The Communications Market 2007, Section 1 Converging communications markets, p. 85. In Q1 2007, 15% of UK homes had DVRs, almost double the 2006 figure. See id. p. 69.
[4] See U.S. study findings, p. 4, compared to U.S. census data.
[5] U.S. study findings, p. 7, comparing “Daily Personal Internet Usage; Home and Personal Time at Work” to “Daily Television Viewing.”
Wednesday's flowers
public libraries outperformed video rental businesses
From 1985 to 2004, video rentals from U.S. public libraries grew 340%. Over the same period, video rentals from U.S. commercial rental businesses grew 140%. Public libraries’ video rental activity did grow from a smaller base: 70 million videos loaned in 1985 (6% of the number of videos commercial outfits turned in that year), to 300 million videos loaned in 2004 (12% of the number of videos rented commercially). The growth of video lending from public libraries has been amazing, and largely unnoticed.
Pricing is probably a large part of the explanation for this performance differential. The average price for commercially renting a video in 1985 was $2.38. The average price for borrowing a video from a public library in 1987 was $0.39 (30.4% of libraries charged for borrowing video, and those libraries charged an average of $1.29). In 2004, the average price for commercially renting a video was $3.43. The average price for borrowing a video from a library was then approximately zero. Lower price induces greater demand, and free (zero price) is a highly appealing price.
This video example does not depend on some of the factors thought to be producing the death of paid text content. From 1985 to 2004, there wasn’t a proliferation of free video content on the web. I would guess that, overall, commercial video rental stores have a video inventory that most persons would value more highly than the video inventory of a library. Consumer may like free content. But video is quite expensive to consume. Given that the average video takes perhaps an hour and a half to watch, the higher inventory value of commercial video rental firms might have easily outweighed the lower video rental price from libraries. But it didn’t.
Persons seem to have a high time-discount rate in content choices. The benefit of watching a relatively good video comes later than the cost of paying the rental fee. A high discount rate lowers the importance of the former, and raises the importance of the later. So perhaps a significant part of the challenge of making a paid content model work is delivering benefits soon relative to payments.
* * *
The table below summarizes the facts. Subsequent notes describe the sources and estimates.
| 1985 | 2004 | % inc. | |
| total public library circulation | 1150 | 2010 | 75% |
| video share of library circulation | 6% | 15% | |
| video borrowing price from libraries | $0.50 | 0 | |
| videos borrowed from libraries | 69 | 302 | 337% |
| video rental price from video stores | $2.38 | $3.43 | |
| videos rented from video stores | 1100 | 2592 | 136% |
| All counts in millions. Video includes Betamax, VHS, and DVDs. | |||
Update: A better estimate of video share of U.S. library circulation in 2004 is 2o%. That video circulation share implies that, from 1985 to 2004, video circulation from public libraries grew 9.2% a year, while video rentals from commercial outlets grew 4.4% per year.
Sources
Public library circulation: For 1985, interpolated from figures for 1983 (Goldhor (1995)) and 1990 (NCES/ALA). The Goldhor figures are given in Galbi (2007a). For 2004, figure from NCES.
Video share of public library circulation: Dewing (1988) presents results from a survey in early 1987 of about 3000 public libraries having video cassette collections. The survey received 841 valid responses. Id. p. 69, Table 6.19, gives average tapes loaned, by size of the community the public library served. The survey did not include data on total library circulation. Using NCES Public Library Statistics for 1987, I calculated average circulation per week for the four community size categories used in reporting the video survey results (less than 20,000; 20,001 to 50,000; 50,001 to 100,000; greater than 100,000). Average videos loaned were 18%, 7.5%, 7.7%, and 7.4% of average library circulation for the four community size categories, respectively. Responses in the smallest community size category may not have been representative of all small libraries in that category. Since the video survey addressed only public libraries having a video collection, the survey doesn’t account for the zero circulation share in libraries that didn’t have a video collection. For a conservative estimate of the growth rate, I estimate the 1985 video circulation share to be 6%. One small additional piece of evidence: In West Virginia about 1984, the Morgantown Public Library reported that video circulation accounted for more than 6% of annual circulation. See Caron (1984). The video share estimate for 2004 is based on the data in Galbi (2007b). While the data could support a higher estimate for the video share in 2004, I’ve used a rather low estimate to generate a conservative estimate of the growth rate.
Videos borrowed from public libraries: Calculated from library circulation and video share.
Video borrowing price from libraries: Dewing (1988) pp. 70-71 provides the data on prices for borrowing videos from libraries in 1987. Most libraries (73%) had a loan period of about a week. I roughly estimate the price in 1985 to be $0.50, and also roughly estimate the price in 2004 to be 0. The later estimate is based on the declining purchase price of videos and personal knowledge of library operations. Elgin (1992), p. 12, recorded that libraries that eliminated charges for borrowing videos experienced increased video borrowing.
Video rentals from video stores: From EMA, A History of Home Video and Video Game Retailing.
Video rental prices: EMA gives the 1985 average price. I calculated the 2004 average price from rental units and total rental revenue (Adams Media Research data).
References
American Library Association [ALA], Public Libraries in the United States Statistical trends, 1990-2003.
Caron, Barbara (Fall 1984), “Video Cassettes in the Public Library,” West Virginia Public Libraries; cited in Elgin (1992) p. 6.
Dewing, Martha, ed. (1988), Home Video in Libraries (Boston, Mass.: Knowledge Industry Publications).
Elgin, Romona R. (1992), Comparison of Book and Video Circulation in Public Libraries, Student Report, Northern Illinois University, Department of Library and Information Studies.
Galbi, Douglas (2007a), Book Circulation Per U.S. Public Library User Since 1856, available at galbithink.org
Galbi, Douglas (2007b), “library users like audiovisuals,” available on purplemotes.net.
Goldhor, Herbert (1985). A Summary and Review of the Indexes of American Public Library Statistics: 1939-1983. Library Research Center Report (Eric Document # ED264879). Urbana, IL, Illinois University.
National Center for Education Statistics [NCES], Public Libraries.