Connection Money

Households in the US are spending an increasing money on “information and entertainment” services. Writes NYTimes:

An analysis of government data by academic researchers over the last 25 years shows that from the 1920’s through the 80’s, the average household spent about 6 percent of its disposable income on “information and entertainment,” a category embracing everything from newspapers and movies to telephone service, radios and television sets.

In the 1990’s that figure jumped to 8 percent. Today, “it looks like it’s more than 10 percent,” said John Carey, who teaches courses in new media at Columbia University’s graduate school of business. Clearly, Mr. Carey said, the increase in consumer spending on information and entertainment coincided with widespread expansion of cable and satellite TV and with the rapid growth of the public Internet.

Many market analysts predict that the surging popularity of TiVo, the digital television recorder, will inspire new home video servers that capture signals from multiple Internet, cable and satellite networks and feed them to computers, televisions and other devices around the house.

What all these emerging services have in common is a business model based on subscriptions that are billed monthly or yearly.

The clincher: “Research by Professor Katz suggests that the typical American household is nowhere near its limit – that the average family would be willing to spend as much as $500 a month for the right combination of subscription services.”

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Rajesh Jain

An Entrepreneur based in Mumbai, India.