Michael Goldhaber in his seminal article "The Attention Economy and the Net" really seems to be onto a fundamental economic transformation that will shape the face of the New Economy. Goldhaber argues that a new attention economy is being constructed before our eyes alongside the conventional market based economy. The new attention economy has certain important characteristics:
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Attention is a scarce human resource
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Attention is the critical companion to information. Having vast quantities of information available is of little value unless the audience pays attention to it.
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In its pure form, the attention economy does not involve exchanges of money or other conventional activity.
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Mechanisms of property defense and control (secrecy, privacy) tend to diminish the generation of attention, while openness tends to attract attention.
The idea is still in its infancy, and needs to be properly developed with better conceptual tools, but even this preliminary model has a quite impressive explanatory power.
The theory of the Attention Economy does a good job explaining a wide variety of different phenomena. The "economics" of Open Source software make much more sense when the attention component is added to more conventional economic thinking. The increasing wealth and popularity of celebrities is clarified when their income is viewed as a proxy for the vast quantities of human attention they command. Features of network economics, like the first mover advantage in information markets or winner-take-all markets can benefit from the application of the Attention Economy economic model.
Trends and Attention
There are two emerging economic trends which can be interpreted as part as a the broader shift towards an attention Economy: The Economy of
Feeling and Markets as Conversation. They are 2 key methods to gain attention in an Attention Economy.
The Economy of Feeling is a top down approach, deploying grand meta-narratives in order to capture the attention and enthusiasm of an infoglutted populace. The more compelling the mythology and symbolism, the more attention consumers will be willing to pay.
Markets as Conversation is a grass-roots approach, relying on the authentic communication between individuals as a mechanism to generate attention. Under this framework, the more quirky, individualized, and human the communication is, the better the chance of generating attention.
The Economy of Feeling
These seems to be a current body of related thinking that grounds the value-added of goods and service in the information age in the emotional responses generated in the consumer. Several books have recently been published exploring the implications of this idea:
The Dream Society by Rolf Jensen theorizes that the value will increasingly come from the meta-narratives that encapsulate the product. It's Ben and Jerry's Rainforest Crunch ice cream made pervasive throughout the economy.
The Experience Economy by B. Joseph Pine, James H. Gilmore and B. Joseph Pine II theorizes that the value of goods and services will be derived from the interactive experiences that are constructed around the consumption of the product. It's an economy filled with restaurants with average food but great ambiance. There is also the
Economy of Icons by Ernest Sternberg covers much of the same territory.
Whether meta-narrative, experience, or symbolism, the common thread between the three perspectives is that consumer preferences are becoming increasingly defined by the emotional feeling that comes with consumption, instead of more utilitarian notions of use. While I think this phenomenon will become increasingly relevant, I'm fairly skeptical that this is something revolutionary. The boys down on Madison Avenue have been "selling the sizzle, not the steak" for years by manipulating our emotions towards sex, health, power, and status. It's the same old wine in new digital bottles - but still a very useful model to help understand the evolution of the economy.
Markets as Conversations
Another cluster of related thinking is theorizing that the Internet has a revolutionary potential for communication that makes the authentic human voice a critical feature in the new economy. These ideas have been developed at several websites, such as Extreme Gradient Reversals and the Journal of the Hyperlinked Organization, and recently codified by a new website/book called the Cluetrain Manifesto.
According to the Cluetrain authors the internet has allowed authentic human voices to directly reach out to a mass audience. No longer are we forced to consume the processed pap that oozes from corporate publicity organs - instead we now have the choice to find and listen to authentic voices. The authors of Cluetrain take a narrative approach and proclaim that the balance of power has been tipped by storytelling. The Internet, with its mailing lists, newsgroups, chat rooms, e-mail and other one-to-one conduits, has enabled us to relentlessly chat with one another, restoring the voice of the individual in the marketplace.
While not a rigorous argument - it is a manifesto after all - they really do seem to be onto something. Just look at some of my favorite websites:
What they all seem to have in common is a human context for the information that gets delivered. Judging by the popularity of online chat, instant messaging and email, it would seems that I'm not alone in being drawn to other authentic voices on the web.
The NASDAQ bubble
One implication that I find particularly intriguing is that it seems to provide a better model for the extreme valuations of the companies involved in the Internet bubble on NASDAQ. Many of the hucksters of the New Economy blather on about the attention economy and place great emphasis on the ability of internet companies to sell goods and advertising to the "eyeballs" that visit their web site.
In their theory of the New Economy, even though Internet companies are losing money today, they assume that these companies will be able to expand their mindshare into a massive global market, and eventually figure out a way to monetize all the traffic on their web sites. Thus, the extreme valuations of Internet companies are justified, because the massive reserves of attention that these web sites command is an asset that is not accounted for in the financial statements of these companies.
On NASDAQ, the financial value placed on web site attention has been bid up to an extreme. The recent AOL/Time Warner merger is good example of this - Time Warner has greater income, and arguably a greater quantity of attention (Time, HBO, WB, Turner…etc) , yet AOL was able to purchase Time Warner because of very high financial premium placed on AOL's current and future shares of attention.
Monetizing Attention
The big if is whether this Internet premium for attention is even justified. Advertising click through rates are on the decline, and many of the better known pay-for-content sites have had to revert back towards a free content business model (notably Slate.com and TheStreet.com). If the "attention premium" of internet companies begins to "fall" in the perceptions of investors, the shaky financial underpinnings of the E-Commerce boom could suddenly come to light, with fairly dire consequences.
This looks like one of the big questions of the new economy - it remains to be seen whether or not attention on the web can effectively and systematically be monetized. Michael Goldhaber explicitly argues that it is doubtful that attention will be commoditized, abstracted, and exchanged in the form of an "attention currency." After all, you cannot spend all of your attention and use it to purchase other goods and services. Attention seems more like a resource with a limited but renewable supply, and a seemingly insatiable demand.
However, the programmers of Open Source software provide a counterexample. Linus Torvalds has leveraged his cachet as the creator of Linux into a lucrative job at Transmeta, and the mystique that surrounds him would make him a valuable asset at other software companies. Red Hat has distributed stock options to hundreds of open source programmers - shares that have skyrocketed in value during the recent Linux craze on Wall Street. The programming team for Apache web servers now have comfortable and lucrative jobs at IBM - and are now getting paid to continue the development of this popular open source software. An article on open source software in Release 2.0 describes other business models that have have been pursued by the open source community. These models may become increasingly relevant as attention becomes more central to economic life in the New Economy.
Futures and the Attention Economy
The theory of the attention economy seems to provide an alternative to the paradigm of continued economic growth, as well as the sustainability counter-movement that has risen in opposition. The attention economy allows for continued growth of the "economy" - but with much less emphasis on material luxuries as a sign of status.
Instead of pillaging the earth for the raw materials critical to the production of luxuries, the attention economy will transform status seeking into fame, celebrity or prestige - and consequently diminish the importance of material goods. In a full-fledged attention economy, a more sustainable material economy may be the order of the day - not necessarily because we have internalized the greener values of sustainabilty, but because we may be so busy chasing attention in a greedy bustle that it becomes much less important to buy our way to happiness.
Written by Mark Justman Copyright 2000 Posted 02/15/00 http://go.to/futureplex
