OECD Internet Economy Outlook 2012 (Presentation)

The views expressed in this presentation are those of the author and
do not necessarily reflect the opinions of the OECD or its Membership.
Internet Economy
Outlook 2012
(Embargo until 4 Oct 2012)
Taylor Reynolds
Information Economy
OECD
taylor.reynolds@oecd.org

The Internet and the ICT sector

The Internet’s second wave
Internet
(Wave1)
Internet
(Wave 2)

Apple: 17 years too early?
Hello Newton
1993
Hello iPad
2010

Devices ahead of their time?
Smart devices
1996
Tablets
2002

Internet
(Wave3)
Wave 3: Integration

The Internet and the crisis:
What crisis?

Top 250 ICT firms (2000-2011)
Average number of employees and current USD, index 2000 = 100 1
Note: Based on averages for those firms reporting.
1. Data for 2000 to 2004 are based on the panel of 250 firms of the ITO 2008. Values for 2009 have been estimated
based on firms’ interim reports in 2009.
Source: OECD, Information Technology database, compiled from annual reports, SEC filings and market financials.
8

ICT services growing quickly
Growth in monthly output in telecommunications
Year-on-year percentage change, 3-month moving average
%
Germany Sweden United Kingdom China Korea Japan
30
25
20
15
10
5
0
-5
-10
-15
-20
Aug-11
Jun-11
Apr-11
Feb-11
Dec-10
Oct-10
Aug-10
Jun-10
Apr-10
Feb-10
Dec-09
Oct-09
Aug-09
Jun-09
Apr-09
Feb-09
Dec-08
Oct-08
Aug-08
Jun-08
Apr-08
Feb-08
Dec-07
Source: Forthcoming Internet Economy Outlook 2012

Employment
• 15 million jobs in OECD ICT sector
• 6% of business-sector employment
• Growing faster than overall
employment in the economy
• At the height of the crisis in 2009,
job growth in the top 250 iCT firms
slowed to 1% CAGR but quickly
rebounded to 6% in 2011
• In 2011, 18% of individuals
reported using the Internet
for job searches

Employee productivity
1 000
900
Average annual revenue per employee of the top 250 ICT firms by sector,
2000-11 1
USD thousands
800
700
600
500
400
300
200
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Internet
Software
Telecommunications
Communications equipment
Semiconductors
Electronics & components
IT equipment
IT services

Understanding the economic
impact of the Internet with official
statistical data

Broadband: General purpose technology

Measuring the Internet economy
• OECD held an expert meeting in September 2011 in Paris
• 50+ academics, statisticians, consultants, and other
experts examined and discussed methodologies

Leveraging OECD data to measure
the Internet economy
• Initial focus on value added
from Internet activities in
the economy (direct impact)
• Use only official data from
national statistical offices
• United States is the first
country for analysis
because of the detailed
data that is available

Main findings: Measuring the US
Internet economy
At least 3% (narrow scope) and up to 13% (broad scope)
of the United States’ business-sector value added could be
attributed to Internet-related activities in 2010.
Non-Internet
(business excl. real estate)
Other sectors incl. real estate
(no Internet related data available)
Internet
(business excl. real estate)
Manufacturing
Services
Agriculture

What is value added?
Why not just use GDP?

Includes
Business sector as % of value
added
Does not include:
-Mining
-Utilities
-Construction
-Manufacturing
-Wholesale trade
-Retail trade
-Transportation and
warehousing
-Information
-Finance and insurance
-Rental and leasing services
and lessors of intangible
assets
-Professional, scientific,
and technical services
-Management of companies
and enterprises
-Administrative and waste
management services
-Accommodation and food
services
62% 38%
Business sector value added
Other value added
-Agriculture, forestry,
fishing and hunting
-Real estate
-Community social and
personal services:
-Educational services
-Health care
-Social assistance
-Arts
-Entertainment
-Recreation
-Government
-Other services (except
govt)

Internet in 3 sectors only 3%
total value created by businesses
The Internet-related value
added in these 3 sectors
alone account for 3% of
total business sector value
added in the United States
(i.e. the business sector’s
contribution to GDP)

Internet in these14 sectors 13% of
all value created by US businesses
The Internet-related value
added in these 14 sectors
accounts for 13% of total
business sector value
added in the United States
(i.e. the business sector’s
contribution to GDP)

Leveraging the Internet for growth

Internet/broadband adoption by
households in 2011

Businesses using the Internet
2010
(% of businesses with 10 or more persons employed)
100
94.2
80
60
40
20
0
2011 2007

Korea: How firms use the Internet
% of businesses with... / who ...
100
90
80
70
60
50
40
30
20
10
0
PC
placed orders over
the Internet
Internet
Broadband
web site
received orders over
the Internet
2000 2003 2006 2009
Fixed BB ‘11
EU27 = 87%
Web site ‘11
EU27 = 67%
Placed orders
EU27 = 35%
Received
orders ‘11
EU27 = 17%

MyTaxi app in Germany

US: Venture capital in ICT
Quarterly venture capital investments in the ICT sector in the United States, Q1
1995 – Q3 2011
Amount of ICT VC investments (billion USD)
% of ICT VC investments on Total
25
100%
90%
20
80%
70%
15
60%
50%
10
40%
30%
5
20%
10%
0
0%
Source: OECD Internet Economy Outlook 2012 (forthcoming)

US: Venture capital in ICT
Quarterly venture capital investments in the Internet sector in the United States,
Q1 1995 - Q2 2011
Amount of Internet-Specific VC investments (billion USD)
% of Internet-Specific VC investments on Total
15
100%
13.5
90%
12
80%
10.5
70%
9
60%
7.5
50%
6
40%
4.5
30%
3
20%
1.5
10%
0
0%
Source: OECD Internet Economy Outlook 2012 (forthcoming)

Digital content
Enhance
• New business models &
distribution platforms
• Mobility
• Storage in the Cloud
• Heavier use of User-
Created Content (UCC)
Social Networks*
• Crowdsourcing
• Local Content
Limit
• Geographical
restrictions
• Interoperability
• Technical
restrictions based
on license
Facebook
Wikipedia
Has 46 available languages
900+ million active users.
70+ languages available on the site.
350 million active users currently access Facebook
through their mobile devices
Over 150 million geotagged photos on Flickr.
Users upload more than 3,000 photos each minute.
18 million articles (over 3.6 million in English).
Information on 274 languages represented on the
site.
+106 million accounts on Twitter,
Most tweets are in English,
11 % are in Portuguese, 6 % in Japanese, 4 % in
Spanish, and 18 % in other language.
49 languages.
250,000 words are written each minute.
+2 billion views per day,
48 hours of video content added every minute.
YouTube users upload more video content each
month than the combined output of all three major
US television networks for the past 60 years.

Electronic medical records
Use of electronic medical records by physicians in seven OECD countries
(2006-2009)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
98%
2006 2009
99% 97%
92%
96% 95%
89%
79%
42%
72%
28%
46%
37%
23%

Broadband for health information
Percentage of broadband
and narrowband users
who report seeking health
information
(2010 or the latest)

Growth of registered trademarks
(security and privacy)

Employment growth for security and privacy sectors
Total number of International Association of Privacy Professionals (IAPP)
members
2000-11
Source: OECD based on IAPP (2011)
32

OECD iEconomy App

Thank you

Need business sector explanation

REVENUES and
E-COMMERCE
(non-SNA, Detailed data)
VALUE ADDED
(SNA, Aggregated
data)
TOTAL
GDP
Non-Internet-related
(narrow scope)
No Internet-related data available
Information
sector
Wholesale / retail
Other business sectors
(excl. real estate)
Other sectors
(e.g. real estate, agriculture)
data on
revenues
data on
e-commerce
online*
e-com.
offline
offline
Assumption #1
Assumption #2
Non – Internet – related business output
The Internet economy (narrow scope)
No data
available

REVENUES and
E-COMMERCE
(non-SNA, Detailed data)
VALUE ADDED
(SNA, Aggregated
data)
TOTAL
GDP
No Internet-related data available
Information
sector
Other business sectors
(excl. real estate)
Other sectors
(e.g. real estate, agriculture)
data on
revenues
data on e-commerce **
Wholesale / retail Manufacturing Other services
online*
e-com.
e-com.
e-com.
offline offline offline offline
Assumption #1 Assumption #2
Non – Internet – related business output
The Internet economy (broad scope)
No data
available

ICT employment
Share of ICT employment in business sector employment, 1995 and 2009
%
10
1995 2009
8
6
4
2
0