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SFeb 24, 2007

It's About Time

Scott Burns
dvd070225.jpgTime is money.

We all know that, kind of.

As a practical matter, we're a lot better at exchanging our time for money than exchanging our money for time. In fact, we're pretty out of it when it comes to exchanging our money for time. Sale after sale, we buy things with a hidden bill in time loss. Day after day, we make choices that have a hidden bill in time loss.

One indication is the phrase "time poverty." Google it and the search engine will come up with more than 200,000 references. With fewer people suffering from money poverty, time poverty may be the next economic frontier.

Sound esoteric?

It isn't. One example and you'll be a budding time economist.

Television, movies, time and money.

My wife and I like movies. We just don't go out to see them very often. Instead, we buy the DVD. Some are retained in the Permanent Collection. Others move on to friends or family. Either way, the movie is watched more than once.

This is not unusual. Industry figures show that DVD sales and rentals started to bite into movie attendance in 2003. The same figures show significant losses of network television viewing audiences, with the largest loss among young men age 18 to 34.

This is happening because buying a DVD is a good use of money. It's even better when you consider the time "dividend." I figure any DVD that costs $20 or less is competitive with going to a movie theater.

It's also likely to pay for itself in time value compared to watching it as a "free" movie on Television. The economics here are simple. Every hour of television is burdened with about 20 minutes of advertising. So a two hour movie will "cost" you about an hour of advertising. If you watch the DVD you can skip the advertising and gain an hour.

Today, the average hourly wage of private non-agricultural workers is $17.09 an hour. That worker can spend up to $15.67 for a DVD containing a typical 110 minute movie and she'll "save" 55 minutes of advertising time worth, you guessed it, $17.09 an hour. Lot's of DVD movies are available to $15.67 or less.

Earn more than $17.09 an hour? Well, the added time value is all gravy. Or you can spend more on the DVD.

On a recent visit to Best Buy I made a random list of television show DVDs. The list, along with the value of the time saved not watching advertising, is shown below.
Buying Time: The No Advertising Benefit of DVD Movies
Program Cost Minutes Cost perMinute Minutes of Advertising Avoided Value of TimeSaved Value of our Time To Be Self Amortizing
Benchmark movie for $17.09 worker

$15.67

110

$0.142

55.0

$15.67

$17.09

The Office, 1st Season

$23.99

135

$0.178

67.5

$19.23

$21.32

Monk, 1st season

$43.99

563

$0.078

281.5

$80.18

$9.38

Sopranos, 1st season

$54.99

680

$0.081

340.0

$96.84

$9.70

Band of Brothers

$67.99

705

$0.096

352.5

$100.40

$11.57

NCIS, 2nd season

$47.99

1007

$0.048

503.5

$143.41

$5.72

Numb3rs, 2nd season

$44.99

1037

$0.043

518.5

$147.69

$5.21

24, 5th season

$49.99

1048

$0.048

524.0

$149.25

$5.72

Murder, She Wrote, 4th season

$39.99

1127

$0.035

563.5

$160.50

$4.26

Source: Best Buy, Santa Fe, Feb 15, 2007; author calculations
The advertising time saved if you bought the 4th season of "Murder, She Wrote" (the wonderful Angela Lansbury detective series) amounts to 563.5 minutes. The DVD collection would pay for itself if you earned only $4.26 an hour on the time saved.

That's well under the minimum wage.

If you valued the time at $17.09 an hour the 563.5 minutes saved are worth $160.50--- four times the cost of the collection.

That's an extreme case, of course, but even the first season of Monk, the obsessive-compulsive detective, would have saved nearly twice its cost in advertising time saved. Shows like NCIS, Numb3rs, and 24 were all worth buying even if you earned only the minimum wage.

Readers who would like to play with this idea, figuring the time value of DVDs they buy, are invited to my website and a new online calculator, "TVversusTime."

Filed Under: Burns at Large