Jeffery Cole, director of USC's Center for the Digital Future, summarizes numerous trends affecting the internet.
This Insight Presentation took place at February's iMedia Summit in Florida. You can view the PowerPoint of the presentation here.
Read the first third of this transcript, in which Dr. Jeffery Cole described the rise of broadband and the resulting impact on consumer behavior.
Jeffery Cole: The next area I want to look at is media use -- offline and online media used. I touched on television for a minute, but the way in which television use is being affected by the internet is changing. So I'll start with television: As we look at this we see the nature of that displacement changing -- I’ll explain that in a moment. We found that in the first two years of our work, newspaper and magazine use didn’t seem to be affected by internet use. But for the third, fourth and now fifth years of the work, newspaper and magazine readership among internet users is dropping. The use of books declined slightly for internet users for the first time. The use of radio and watching videos or movies at home has not been affected by the internet yet. And age makes an immense difference in how we use media.
Okay, I'll start with television. This is one of the slides. I sat in the back and I actually could see the numbers, but the numbers aren’t important. What's more important is the fact that in every country around the world that we looked at, the internet users watch less television than nonusers. That was true from day one in the United States. It has been true in all five years in the United States. And it’s true everywhere around the world we look, that those who use the internet watch less television.
Now that raises the question that the broadcast networks argued four or five years ago. Well, of course they watch less television. They’re younger. They’re demographically different. And it may have accounted for some of this a couple of years ago. But now, our work shows 74 percent of Americans are online at least once a month. There’s practically no difference between internet users and Americans, except they’re slightly younger. There are differences between broadband users and modem users. Those differences are disappearing. But demographic difference doesn’t account for this. The truth is, if we’re going to carve out time to go online, currently about 12 and a half hours a week, it almost has to come from television, because as Americans are at home, awake time has historically been dominated by television. But as I mentioned, when talking about broadband, that displacement is changing, that now with broadband, people are watching more of the programs -- broadband is doing the same thing TiVo is doing -- but less of the commercials. It’s giving you control, but the amount of viewing that changes may diminish over the coming years.
Looking at other media -- just comparing internet users and nonusers, you can see that internet users spend a little bit less time reading books than nonusers. Nonusers spend almost an hour more per week reading books. Watching movies in the theater -- internet users spend twice as much time watching movies in the theater. They have a greater interest, probably, in all media. Watching rented movies at home -- internet users spend a little bit more time watching home videos or rented movies at home. Playing video or computer games -- internet users spend almost two and half times as much time playing video games. That’s all internet users. If you look at those under the age of 18, it’s about four hours more. If you look at listening to recorded music, things such as CDs or MP3s, you can see that internet users spend more time, about 1.3 hours more per week, with recorded music; reading newspapers about 1.9 hours less. Most of you know that newspaper reading has been in trouble long before the internet. It’s very difficult to find people in America, under the age of 30, who read newspapers. And sadly, they don’t seem to be picking up newspaper readership when they get over the age of 30. If you look purely at demographic trends there may be other factors that may mitigate this. But if you look at demographic trends over the next 40 years, the average age of newspaper readers in America will be dead, or two years after dead. It’s very depressing, really depressing.
However, if you view newspaper readership in the generic sense, while the average internet user spends about 1.9 hours less reading newspapers, they spend about 42 minutes a week reading online newspapers. If you consider it the same, then it’s not quite as dismal. And of those 42 minutes a week they spend reading online newspapers, about half of that is time spent reading the newspaper they're not reading in their hands any more. The one exception to that is people reading newspapers from their home towns wherever they grew up. So in that sense, maybe there’s some optimism.
Magazine use is down, but not as dramatically as newspapers. Listening to the radio -- not much of an impact so far. We don’t really have good internet options in the car and that’s where many people spend much of their time listening to radio. So, so far radio hasn’t been affected. But the type of radio they have is changing and we’ve seen some significant impact this year from satellite radio. We expect to see a lot more next year as we watch this great experiment to see what happens when an icon on commercial radio moves the satellite radio -- and will his fans follow him? And watching television as we said, from day one has been down as soon as people went on the internet, and hasn’t changed much since.
Looking at online media, we see online newspaper readership rising; the use of online magazines and radio climbing as well. The use of online books, online telephone and online television is still low -- although we have not … we’re in the field right now and have not been in the field for about eight months, and we expect to see online telephone use rise dramatically, although that’s hard to measure because a lot of people use internet telephone and aren’t really aware they’re using it. Online game use is very high, but we did see a drop from Year Three to Year Four. And for some young people, the use of online media is very, very high as well.
Looking at how much time people spend on online media, the previous numbers were hours per week. These are minutes. Reading online books -- not a very satisfying activity. Despite the fact that I love the idea of loading 40 books into my PC as I go on vacation, it’s not much fun to read a book on a computer. Younger people seem more willing to read more while printing it out less on computers, and maybe that will change. But you can see the numbers for playing video games online, for listening to recorded music or reading newspapers is getting pretty high -- becoming somewhat significant, enough so that I think advertisers should be paying significant attention, and they are.
If you look at the demographics -- and all you have to know here is that the people under the age of 18 are in blue -- and you can see they dominate just about every form of online media except newspapers. Newspaper readership online is dominated by those in their 30s and 40s. And you can see healthy percentages of under 18. With the exception of that, online media is dominated by those under the age of 18.
Third trend, one very powerful to us, that we think comes right out of broadband, is the fact that the internet has become, in America, the most important source of information. Information means everything from finding out what time a movie starts, how late a department store is open, to researching a catastrophic illness -- from the most trivial to the most extraordinarily important. It’s the first place virtually all internet users go for information. It’s the only place some of them go for information. And this is for two reasons. First because of broadband -- and this is the always-on aspect of broadband, and the fact that people have moved it closer to where they are when they’re home or right on their desks at the office and it’s always on.
The other factor that accounts for this -- primarily Google and other high quality search. If people had to spend 20 minutes looking for what they wanted on the internet, they wouldn’t be using it for information; they’d be going to the television, the encyclopedia or the newspaper. But the fact that you can enter a question and get an answer, literally in seconds, makes people go to it to find things out. This has been the real growth in the internet the last eight years, the perception that it’s a place people go to find things out, to learn whatever it is you want to learn about your world.
Importantly, so far -- and I think this is a theme of what we’ve been learning; I’ve been sitting in on most of the sessions and listened to Lloyd Braun yesterday, and Google’s huge investment in entertainment -- our work has shown us until this point, the internet has not yet become a significant medium for entertainment. It is primarily perceived as a place you go to learn things. Some of the things people go to learn about are entertainment. When a movie will open or what movies are coming out, that’s actually information. But the actual consumption of entertainment online is still at fairly low levels and has enormous room for growth, and I think it will grow. But I don’t think that the internet will ever be our most important source of entertainment. Television, for many years, was our most important source of both information and entertainment. It’s lost the information functions of the internet. I don’t think it will lose the entertainment function to the internet.
A fourth trend: reliability and credibility. How much we trust the information online varies greatly depending on how well we know the source of the information and also, interestingly, varies greatly from country to country. We see the credibility online for Americans is continuing to drop. And I think that’s a very healthy trend. It’s high in much of the world. How much we trust this information depends on how well we know it. In the United States we’ve been asking people: How much of the information on the web -- here we’re not interested in chat rooms or emails, so we say web instead of internet -- do you consider accurate and reliable? We do this to be consistent with what Gallop and Roper have asked about newspapers and magazines and television for generations. If you combine these two columns on the right, those who say most or all of the information is accurate and reliable, among our respondents, in America, it started with 55 percent saying most of the information on the internet was reliable, most or all. It went up the following year to 58 percent, which I found worrisome that many people trusted most of the information on the web. Then it dropped, went from 55 to 58, dropped to 53 and has dropped to about 50 -- it has gone down about eight percentage points in two years. And that I consider very, very healthy. What Americans are finding is that we tended to trust our mass media. We didn’t develop the skills to distinguish good information from bad, because by-in-large we didn’t have to. We were going online, trusting what we saw and getting burnt -- getting, in some cases, badly burned. Now we’re getting more and more, not cynical, but skeptical. We’re finding that you can trust some of the information, particularly branded information; you can’t trust others.
To compare this to other countries around the world: I said we’re at 50, but to compare the other countries we used last year’s data, 53 -- you can see that puts us lower than Singapore; much lower than South Korea where fully 70 percent of people trust information online. Also lower than Hungary; lower than China, surprisingly to me; and about the same as Britain. And countries that are more cynical than the United States would include Sweden where only about a third of the people trust the information they see; Germany where about a quarter do; and amazingly, Japan which is down at only 13 percent trusting more or all of the information on the internet. And America, as I said, we were at 50 percent in our fourth year -- that’s 50 percent trusting most or all of the information on the whole web.
But then you ask how reliable is the information on the websites you visit regularly? Not surprisingly, we think that the places we go are of higher quality. And there 78 percent think that they can trust the information on the places they go. If you ask, “How reliable are websites posted by established media?” it’s about 75 percent. If you ask, “How reliable are government websites?” it’s about 73 percent. We’re in a “trust your government” era. I won’t comment on whether that’s a good thing or a bad thing, but we are in one. And lastly, and compellingly, if you ask people, “How much of the information on websites posted by individuals can we trust?” about 10 percent. Four years ago people didn’t make these distinctions -- individual websites, established media, places I go. Now they have and there’s very low trust for websites posted by individuals -- a very low trust without proof.
Tomorrow: online buying and piracy, and questions answered.