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, 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.

The utility of this 1.7 trillion hours of content is questionable. At my company, Delvv, we polled 500 U.S. smartphone owners (both Android and iOS users) between ages 18 and 65 using SurveyMonkey Audience and collected responses over the course of two days. 78 percent of respondents thought that at least one-half of their mobile push notifications (i.e., requests to look at content) were irrelevant. Nonetheless, only 11 percent of respondents said they could go 24 hours without checking their phone.

Why did respondents feel such a strong craving for content they find irrelevant? Why would smartphone users reach for their devices an average of 150 times per day, by one calculation?

Addicted, stressed and unproductive

Economists have studied why people engage in compulsive behaviors that might be destructive in the long run but rewarding in the short term. “Rational addiction theory” is one attempt to reconcile these behaviors. It argues that people who engage in addictive behavior measure the short-term benefits against the long-term costs of their future behaviors.

Researchers have applied this theory to smartphone usage, particularly with regard to the most “addictive” mobile apps. Sang Pil Han, a professor of information systems at Arizona State University, teamed up with researchers from Korea Advanced Institute of Science and Technology to study social app use in this framework.

They looked at Facebook and Anipang, a popular Korean mobile game, among smartphone users in Korea and found that, “In terms of addictiveness, (mobile social apps) more considerably foster dependency than do cocaine and alcohol, but are less addictive than caffeine and cigarettes.”

Although Han’s team found that addicted app users behave rationally, we know they still suffer physical consequences. Multiple studies find that internet addicts show the same brain abnormalities as drug addicts in MRIs. They crave dopamine hits the way compulsive gamblers do. Though only one in 10 Americans are probably true addicts, as many as 90 percent of us “abuse” our internet devices, according to David Greenfield, director of the Center for Internet and Technology Addiction.

One consequence of device “abuse” is multitasking, the practice that makes 18 daily hours of content consumption possible in the first place. As we’re compelled to consume content in the midst of other tasks, multitasking slows down our brains, stunts creativity and raises stress hormones, as researchers at McKinsey & Co. report. It creates a dopamine feedback loop, “effectively rewarding the brain for losing focus and for constantly searching for external stimulation,” added McGill University Prof. Daniel J. Levitin. Ultimately, multitasking depletes the nutrients and neural resources you need to make good decisions, Levitin said.

To be fair, consumers do contribute to the addictiveness of social apps like Facebook. In an MRI study at Harvard University, Diana Tamir and Jason Mitchell found that disclosing information about oneself triggers the dopamine reward system, just like sex and food. We are part of a vicious cycle that rewards self-disclosure, content overconsumption and multitasking.

I can’t overstate the economic impact of this pattern. One commonly cited study, Intel’s War on Information Overload: A Case Study, found that information overload cost the U.S. economy $900 billion per year–and that was in 2009. “A large part of that figure is the cost of unnecessary interruptions and resultant recovery time,” the authors said. They found that interruption and recovery consumes 28 percent of a knowledge worker’s day, meaning that we lose roughly 36 billion person-hours to distraction every year.

So we have a market that grows by pushing a digital diet with addictive potential comparable to cocaine and alcohol. It degrades our mental performance and costs the U.S. economy almost $1 trillion annually. But we see no evidence that people who install a new app or sign up for an online service are aware of these costs. Neither buyers nor sellers understand the true price of attention.

The need for transparency

Are internet and mobile users to blame for not having better discipline? While users have the freedom to choose how they spend their time, the odds are stacked against developing healthy habits. Developers and publishers have a wealth of tools at their disposal to track app and web usage and keep us glued to our handsets. The word “addiction” has been co-opted from a social ill into a product development milestone. Although consumers willingly trade their eyeball-time in the marketplace of attention, they don’t know what suppliers do behind the scenes.

As a first step to fix this marketplace, we need to make transactions more transparent. Let’s borrow a convention from the food industry: nutritional facts. When you open a bag of Doritos, you know what you’re getting into. The nutritional facts display the calories, nutrient types and ingredients you will put into your body. Although not the healthiest snack choice and arguably formulated with addictive ingredients, Doritos are as transparent as they are orange.

In the attention market, “nutritional facts” are hard to come by. No one in content distribution wants you to know how many “calories” of information you consume or exactly what you consent to in the future through your current consumption. This needs to change. Device makers and apps could easily tell you how many times you unlock your phone, how many messages you receive, how many push notifications you receive, how many articles you load and, most important, how much time you spend with your media.

The bankers and lenders in our metaphor have that information, and you, the consumer, should have it, too. It’s unfair to place all the blame on you for abuse and addiction when you can’t count your drinks.

Beyond that first step, fixing this marketplace becomes more complex. At scale, the social costs of addictive behaviors go beyond individual users. Digital nutritional facts can’t fix lost workplace productivity, car accidents caused by messaging while driving and many more scenarios. It is difficult to bring these negative externalities into the attention market and “price” them into apps and content consumption. That doesn’t mean we should ignore them.

This brings us back to our plot foil, the financial crisis. In the short term, many Americans profited from an opaque, unsustainable market. People bought homes they could have never purchased in a healthy marketplace. Banks and insurers made a fortune on subprime mortgages, at least until bond defaults caught up with them. But in the long run, the social costs of bad loans and dishonest packaging had to borne by somebody. It fell on governments and taxpayers to backstop broken market mechanisms.

Collectively, we will pay the social costs of a broken attention marketplace, just as we paid for the financial system. Silicon Valley’s eyeball problem is our problem, too.

Felice Miller Gabriel is the founder of intelligence app developer Delvv.


Image of woman with smartphone courtesy of Shutterstock.