A teenager on work experience for a bank has written a 'research note' on media technology that has reverberated around the world.
This despite the fact that the research was not quantitative: he consulted a few friends, then wrote up in one day a paper that has been praised for its [anecdotal] insights.
The bottom line was that in their formative years of consumerism, teenagers are great adopters of digital media, but take issue with both cost and advertising (don't we all?, but the sensitivity is much greater). They adopt most media because it doesn't cost, and only some media by necessity. Texting [and phone calls] and cinema are the main media that are paid. Music is either pirated, or consumed from internet stations for which they have more choice of content, and no ads.
in: good mid-range mobile phones (can be obtained at birthday/xmas), Facebook, Internet as search/reference resource, viral marketing (word of mouth, so to speak), cinema (esp while at kids' prices), game consoles
out: Twitter (costs), radio (ads), regular tv watching, iTunes or similar, newspapers
Teenagers will carry many habits into adulthood; the fact that this is practically the first generation to have access to a wide range of digital media technologies suggests some significant adjustments in markets and advertising are afoot.
Morgan Stanley's comments are largely limited to: "[the] influence on TMT [technology, media, telecoms] stocks cannot be underestimated." But I can't resist making a few observations of my own.
Since all this suggests it will be harder to wean people off a non-payment habit, the implications are good for innovation in areas that benefit from large-scale commodification (commercial markets such as devices and mass-market pop music), but bad in areas that commodification detriments (art).
Implications are particularly bad for most music artists, as they will find it harder to earn money from selling content. Particularly at the medium to low volume end, this can profoundly affect the market, as far fewer people will be able to make a living from their music. At the top end, there will be greater pressure to tailor music for the paying market, which may drive the quality even further down to find a lowest common denominator that sells in sufficient bulk. Yet ultimately the ramifications are not all bad, if you consider the New Zealand model. Being such a small market, the expectations of most New Zealand musicians in the 1980s were not high in an income-earning sense, so in a way they made music with less regard to commercialisation. As a result, New Zealand was a hot-bed of innovation*.
Implications are also bad for advertisers, who will not easily reach people as they pass from a consumer stage of life to an earning, choice-laden lifestyle. Most traditional venues for advertising are ignored, particularly print (however, since the writer was male, he may have understated the appeal of girl's/women's magazines).
Consumer technology in the last couple of decades has been driven by mass commodification of technology, which led to great innovation in areas of affordability, for example home computers and mobile phones. The suggestions are that hardware innovation at the consumer end will continue to be focused on mobiles, computers and gaming.
The report was written in London by Matthew Robson for Morgan Stanley, and can be read here.
*spoken in a past tense because I have no recent knowledge of that market.