How Money Follows Attention—Eventually
And how media companies must reinvent themselves during the lag time.
There has never been a better time to be a reader, a listener, or a watcher of human creativity. An exhilarating torrent of books, music, movies, games, apps, and interactive media creations rushes before us. Every year the river widens–in volume, diversity, and ease of access. In every dimension, media today is at a high-water mark of glorious plenitude.
But while consumers have never been better served, the publishers, broadcasters, studios, and labels that have been producing this content are worried sick that their end is near. Once masterpieces are digitized by ubiquitous chips, their bits instantly drain into a fast-flowing river of cheap data, removing the distinction between original and copy and destroying the business logic that funded their creation. To make matters worse, these same digitizing chips encourage amateurs to get out of their armchairs and make, sell, and distribute what they themselves want to consume.
Nothing will stop the flow of bits, of course, but there is good reason to believe that some of the traditional intermediaries will survive and thrive again. The secrets to the new business models can be found in the data showing how money follows the only scarce resource we have: our time to pay attention.
In the marketplace that is taking shape, what you’ll pay for is not the content itself but the answer to this question: What do I pay attention to next? We all need help navigating the digital wilds. Someone, or something, has to choose or whisper in our ear to help us decide. These entities can be collaborative filters, recommendation engines, social networks, or opinion herders like Rush or Oprah. The revitalized institutional curators–what we used to call publishers, labels, studios, TV networks, magazines, and newspapers–will only survive by figuring out how to join them as the new attention managers.
If attention is the foundation of wealth in this digital economy, then the economic data of the last few decades should show that real money flows to where attention flows. In fact, that is just what the data show. To see how this happens, I began by charting the total annual revenue for various media platforms over time (chart 1).
Chart 1: Over the past 15 years, cable and satellite TV revenue has surged while other media have seen revenue remain flat. Internet revenue has boomed, but competition has caused a drop-off in recent years.
For instance, the entire newspaper industry in the United States took in $46 billion in 1998 and then remained about the same size through 2007. However, total revenue for the U.S. cable and satellite TV industry was $26 billion in 1996 and zoomed to $78 billion by 2007. Over this time, most media platforms remained steady. The Internet has indeed seen a financial surge–although increased competition has caused revenue to fall in more recent years.
What about attention itself? I used U.S. Statistical Abstract data to calculate the total “cognitive spending” on media types. The average American spends 1,010 hours a year watching cable and satellite TV, meaning that Americans as a whole gave 305 billion hours of attention to those media in 2007. Broadcast TV garners 204 billion hours–less, but still significant. In aggregate, Americans devote more than half a trillion hours of attention to television per year. Outside of radio, no other medium approaches that amount. The total time spent on the Internet is not even close (chart 2).
Chart 2: By far the most media hours go to television as a whole, but they have flowed to cable and satellite and away from traditional broadcast TV. Radio has also remained high.
But while the Internet is a minor distraction compared with television, it is rising fast, and broadcast television is slowly dropping. When we map the rise of attention spent online alongside the rise of revenue earned through online access, we see that one follows the other (chart 3). In the same way, the plateau of attention given to newspapers is reflected in the plateau of money in that industry.
Chart 3: Zooming in on Internet and newspapers, we see that for both forms of media, revenue earned correlates with attention received.
On average, in a given media channel, money does indeed follow attention–eventually. This suggests that as the Internet continues to suck our time, more money will flow to it. It also suggests that as attention drains away from more traditional media, the money will eventually flow away from them. But during the lag time while that transition is under way, publishers, music labels, and movie studios can reinvent themselves–by moving into the rising Internet realm and figuring out how to generate and manage attention.
Analyzing the same data in a slightly different way reveals something else about our attention: some of it comes cheap (chart 4). While half a trillion hours are devoted to TV, this medium generates, on average, only 20 cents per viewing hour. Not all attention is equal. Newspapers occupy a smaller slice of our attention but generate more revenue per hour spent. And the Internet, remarkably, is increasing the amount of revenue it generates per attention-hour.
Chart 4: Television is the cheapest of all media in terms of revenue earned per hour of consumption. The most expensive media are books and newspapers.
While attention is the only thing we really have to give to others, and the only limited resource we personally have control over, it is relatively inexpensive in general. Attention is cheap in part because we have to give it away each day. We can’t save it up. We have to surrender it second by second, in real time. Since attention is typically priced at under a dollar an hour, you have to move a lot of it to make real money. Luckily, trillions of hours of undervalued attention remain untapped. Consider the number of hours around the world devoted to YouTube, which took years to begin generating sizable ad revenue. How about the surging number of hours that people spend on Twitter in a year?
These are just a few examples of great reservoirs of attention that have not been fully monetized–yet. A real opportunity thus lies ahead for media intermediaries. Figure out how to mediate attention on YouTube or Twitter, and you’ve got yourself a big business. Google created one of the world’s largest market valuations by channeling attention on the Web. The only question is who is going to do it for these other new forms of media. The more the full capacity of human attention is mined, gathered, unleashed, and diversified, the more demand there will be for an interesting, smart, or intuitive way to navigate through this superabundance. There is no end to the creative ways that attention can be captured, and no end to the wealth that will be generated by those who follow it.
Kevin Kelly is senior maverick for Wired and author of What Technology Wants, published this month by Viking.