attention economy


In the little regulatory teaching I do, I have now shifted from deriving regulatory priorities from conventional industrial organization and administrative law principles to business models now prevalent in our countries. The below quotation from Business Insider shows ignorance of business models is not a problem limited to developing countries: Buried in pages of amendments to the European Union’s latest privacy proposal, the ePrivacy Regulation, members of the European Parliament recently recommended language that would strip European publishers of the right to monetize their content through advertising, eviscerating the basic business model that has supported journalism for more than 200 years. The new directive would require publishers to grant everyone access to their digital sites, even to users who block their ads, effectively creating a shoplifting entitlement for consumers of news, social media, email services, or entertainment. The language may seem confusing to the uninitiated. “No user shall be denied access to any [online service] or functionality,” the proposed amendment says, “regardless of whether this service is remunerated or not, on grounds that he or she has not given his or her consent […] to the processing of personal information and/or the use of storage capabilities of his or her […]
Never a good idea to read a paper, even though one existed because I wrote it up at the request of the organizers of the Manipal conference. Here is the conclusion: The communication space has been transformed by the attention economy. Thinking on policy has changed, with policy expected to set the ground rules for all participants rather than just define the role of the state. Operational challenges are significant given the difficulties of delimiting the scope of communication policy. But even more challenging is that theory has not caught up with practice.
The overt hostility among European opinion leaders to attention-economy companies such as Google and Facebook is not translated into use behavior. Their policy makers do everything in their power to slow down the attention economy. And they still wonder why their companies can’t cut it. Google now has an 85 percent market share for search in the region’s five largest economies, including Britain, France and Germany, compared with less than 80 percent in 2009, according to the research company comScore. Google’s share of the American market stands at roughly 65 percent.
The attention economy requires that major investments be made to acquire the attention base and then to monetize it. Although the attention economy has been around at least since 1830, people are still not used to the model. They may be right about the business model – in which case Twitter becomes a perfect case study in the economics of information goods. The key to success in cyberspace is to harness the power of Metcalfe’s Law, which says that the value of a network is proportional to the square of the number of its users. In layman’s terms this means that the faster you can acquire users the quicker you reach the point of becoming the winner who takes all.
The shift from the economy of things to the attention economy is now almost complete. The buying and selling of things will continue, but will be subservient to the production of attention on an industrial scale and its buying and selling. The data economy is fast catching up as another key element of the picture. Since most people are accessing the Internet through mobile devices and their small screens, as we have been saying for many years, this has become the most critical battleground. For the last two years, Facebook has been growing like a beanstalk in mobile advertising, gaining ground against Google, its chief rival.