Business Matters: Nielsen Study Examines Who Is Buying Music, Media

A third of the U.S. population accounts for 70% of entertainment spending, according to numbers released Wednesday by Nielsen. The "high spender" group has slightly more females than males, very few teens (5%) and a higher share of Hispanics (19%) than exists in the total population. But these high spenders are hardly wealthy: their average household income is $66,000 per year.
These and other insights into the U.S. consumer's entertainment spending are found in the Spring 2013 edition of the "The U.S. Entertainment Consumer Report: State of the Media" report. Nielsen compiled the publicly available report from previously released reports as well as its proprietary platforms. Because of this, most of the report's data comes from 2012, not early 2013.
The "State of the Media" is helpful in the way Cliffs Notes provide a good amount of information in a short amount of space. The report recaps 2012's music sales, music streaming statistics, social media behaviors related to music and consumer behavior for video, video games and books. It shows that over half of consumers on Facebook and Twitter read posts by artists -- but only 14% retweet artists' posts and 15% share Facebook posts by artists. But the report is most helpful when it details exactly who is spending money on music.
The famous 80/20 rule almost fits with music consumption. The high spenders, a third of all U.S. consumers, represent nearly four out of every five dollars (78%) spent on music. High spenders account for 79% of all video-on-demand spending, 76% of all video game spending and 70% of spending on satellite radio and reading material such as books, magazines or newspapers.
That leaves roughly 25% -- give or take a few percentage points -- of spending by the groups Nielsen calls moderate and low entertainment spenders. Moderate spenders have an average household income of $51,000. Half are female, 8% are teens and 11% are Hispanic. With a household income of $52,000, low spenders aren't actually worse off financially than moderate spenders. Ten percent are Hispanic, 19% are teens.
Ironically, high spenders don't actually spend the most time with each entertainment category. The lower two spending groups put more time into listening to music (5.9 hours per week for high spenders versus 7.6 and 8.9 hours for moderate and low spenders, respectively). High spenders put the least amount of time reading, playing video games, reading, watching DVDs and video-on-demand and watching video online. The only category high spenders don't rank last in is attending live events.
A broad swath of America buys music. In way one, the young-versus-old stereotypes fit: consumers 35 and over are most likely to be CD buyers while consumers 25 to 34 are most likely to be digital music buyers. But Nielsen's numbers may surprise some people. Young consumers aged 18 to 24 score an index of 98, which means they are only 2% less likely than the average U.S. adult to buy CDs. And consumers aged 18-to-24 are more likely (index of 131) than the 45-to-54 (90) and 55-to-64 (56) crowds to buy digital music.
On-demand music services do not see the same broad participation, however. Users of on-demand music streaming services are 90% more likely than the average consumer to be heavy spenders on music. (They are also 50% more likely to be heavy spenders on event tickets.) This makes sense. On-demand music is the domain of serious music consumers. At $10 a month for web and mobile access, the $120 annual cost of a subscription service goes a long way to making a person a heavy spender. An earlier Nielsen report said the top two (out of six) spending groups, which account for 27% of all music consumers, average $402 and $344 annually on music purchases.
Hispanic and Asian consumers are more likely than African-Americans and Whites to buy digital. They are the least likely to buy CDs. And the two groups are more likely to use on-demand music services. Although white consumers comprise 75% of all users of on-demand music services, they have an index of 97. This means white consumers lag behind the other groups relative to their share of the population. In contrast, Asian (130), Hispanic (110) and African-Americans (105) overindex in their usage of on-demand music.