Follow the Surplus: How U.S. Consumers Value Online Media

U.S. consumers realize large and growing value from online media. In fact, they now derive more value from online media—net of the associated costs—than they receive from offline media, according to new research by The Boston Consulting Group. We call this measure of value “consumer surplus” and, for online media, it amounts on average to approximately $970 per U.S. connected consumer, or online user, per year—or about 2.5 percent of the average annual income in the U.S. The comparable consumer surplus for offline media is approximately $900. (See Exhibit 1.)

The consumer surplus from online media will continue to grow, driven by consumers’ appreciation for the expanding array and volume of high-quality content available in the online world. A proliferation of devices, many of them mobile and designed to facilitate greater consumption of online media, will further widen the divide between the online and offline worlds. This shift has profound implications for all the participants in the media industry.

Shrewd media companies that build effective digital capabilities will enjoy more and bigger opportunities to extract some of this consumer surplus for themselves. The channels for realizing these gains include the established advertising model, new products and services, an increasing ability to charge for online content, and the still-evolving ecosystem for monetizing the massive volumes of consumer data that the Internet serves up.

Policymakers are likely to face an increasingly complicated and contentious landscape, including more—and more vociferous—calls to act on issues such as personal data protection and privacy. Since the Internet’s inception, U.S. policymakers have generally taken a light-touch approach, to which the marketplace has responded favorably. Consumers appear happy taking responsibility for their online lives, and concerns in some circles over potentially uneven or unfair developments—the digital divide, for example—have mostly proved unrealized. Indeed, the Internet has shown itself to be a powerful equalizer across demographics.

This report examines how consumers’ consumption of media is migrating online and the implications of this shift for consumers, media and technology companies, and Internet policy and policymakers. It builds on BCG’s prior analyses of the Internet’s economic and business impact on countries and companies; findings from the earlier analyses are contained in other reports in BCG’s Connected World series. (A subsequent report, to be published later in 2013, will analyze the consumer-led changes taking place in the media industry in Europe.)

The changes taking place are significant, structural, and largely irreversible. We believe that they are also substantially beneficial. Companies can tap an enormous opportunity if they determine—sooner rather than later—how to master the complexity of the online landscape to extract the kind of value from products and services that they have long enjoyed offline.