Silicon Valley’s Eyeball Problem: A Broken Market for Consumer Attention

Today, there is a digital culture where the incentives are all wrong. It has produced a marketplace for attention that fails to capture the social downsides created by the digital information industry's rapid growth.

In the wake of the 2008 financial crisis, we discovered that Wall Street was broken. From the loan agents to the rating agencies to the banks, a short-sighted financial culture pursued short-term profits at the expense of social well-being. As Michael Lewis wrote in his best-seller, The Big Short, “The incentives on Wall Street were all wrong; they’re still all wrong.”

Today, there is a digital culture where the incentives are all wrong. It has produced a marketplace for attention that fails to capture the social downsides created by the digital information industry’s rapid growth. Every time we sign up for an online service, install a new mobile application or buy something over the internet, we get more than we bargained for.

Free services aren’t really free–they are offered by publishers and developers in exchange for a slice of your attention. That slice could be in the form of your email address, the right to send mobile push notifications or your time spent viewing advertisements. Even paid transactions are subsidized by this same mechanism. That is how Amazon, Diapers.com and Jet offer rapid, convenient delivery at a lower cost than traditional retail channels. They make their money from follow-on and repeat business by “re-engaging” you in purchases.

So far, this may not sound bad. After all, digital services create value for us and we freely choose to use them. But this marketplace does not factor in what these slices of attention cost individuals, nor what digital overconsumption costs society (economists call these “negative externalities”). There is no transparency around the information consumers need to make more conscientious decisions. The market for consumer attention is broken.

The market for your attention

Every blog post, image, text message, email, song, game or video you use on your computer or smartphone involves a transaction. Wherever it appears, this digital information is a commodity in the attention marketplace.

This marketplace has suppliers: device makers, app developers, content creators, marketers, data services and publishers that don’t profit unless you consume content. The supply side of this market belongs to what columnist Christopher Mims coined the “Distraction-Industrial Complex.”

On the demand side, there are users who consume information and services on their computers and smartphones. Many want constant updates and news, as well as the ability to send and receive text messages, instant messages and emails in a consistent flow throughout the day.

These consumers are “utility maximizers,” from an economic perspective. They gain value from these transactions in the form of entertainment, education, alleviating boredom or increasing work productivity. I’m sure you have read a digital article or seen a YouTube video that changed your life for the better. However, with user attention now at or near saturation, the supply side’s quest for growth increasingly requires binge consumption or addictive behavior patterns. The distraction-industrial complex needs our eyeballs more than we need it.

A less-than-wholesome digital diet

Information isn’t a uniform good–we consume different kinds of updates, messages and content. The wonder of getting stock quotes or sending emails in the early days of the internet has transformed into a throughout-the-day diet of content marketing and needless interruptions. It’s as if we’re all eating from a stale bag of Doritos, only because it’s open and staring at us from the shelf.

In 2014, Crowdtap and Ipsos MediaCT found that millennials spend roughly 18 hours with different types of media per day. To hit these hours, they use multiple devices at the same time (e.g., two hours using a smartphone and laptop simultaneously would count as four hours).

It’s not just millennials at this all-you-can-eat media buffet. James E. Short, a researcher at the San Diego Supercomputer Center, estimated that Americans would consume 1.7 trillion hours of traditional and digital media in 2015, averaging 15-and-a-half hours per person, per day. That’s 74 gigabytes per day, or nine DVDs worth of data. That is not necessarily the amount of data comprehended–that is the sum of media requested and delivered. Overall, Short found that media consumption increased 5 percent year-over-year between 2008 and 2013.