STOCK MARKET WATCH -- Monday, 31 December 2012 (and Tuesday, 1 January 2013)

[Demeter]

66. The rise of the attention economy

http://www.aljazeera.com/indepth/opinion/2012/12/201212271132754429.html

People in the attention economy spend their personal time attracting others' attention...For much of human history, there was no economy based on trade and fungible goods. People operated in small groups and fended for themselves. Scarcity was self-limiting: If you could not grow or catch your own food, you died (or moved). Specialisation, trade and pricing - not to mention religions and (economically) unproductive religious institutions, mass production, mass media and big government - are all recent developments...Our current world is a mix of people still subsisting with almost no external income, people generating (and consuming) surpluses and other people consuming surpluses generated by others. Commodity prices spread worldwide, though influenced by local conditions and constraints (including tariffs and other protectionist measures in China, Russia, America and elsewhere). Many activities that were previously performed "for free" (often within a household), such as sex, home maintenance and care for the sick and elderly, are now frequently outsourced and counted as economic output. In general, it is fair to say that these activities are performed more efficiently as a result: People whose skills are worth, say, $50 per hour spend more of their time earning $50, rather than performing chores "worth" $10 or $20 per hour.

AND WHAT SETS THAT WORTH? TALK ABOUT A CIRCULAR ARGUMENT, AKA TAUTOLOGY.....

But the internet is changing that as well, in a way that may befuddle the many companies who view it primarily as an economic platform, where they can market or sell things, or even charge for content. Those companies go online to earn money. Google is perhaps the purest example of a company that transforms purchase intentions into income; most other "internet" companies offer something of independent value on the other side of those searches. But many individuals, most of the time, go online without any interest in buying something. They are there to find out about the world, catch up with friends, play games, listen to music, chat, or just hang out - and, increasingly, to get the attention of other people. Thanks to highly productive surplus economies, they can spend a lot more time being economically inactive. INACTIVE, BY WHOSE DEFINITION?

This is not the familiar question of whether our machines will put us all out of work. In fact, the question is whether we will start doing more and more intellectual work for free or for barter, becoming more like our ancestors. Instead of producing food or housing for ourselves or for barter, we will be producing content and amusement for one another, without engaging in explicit (taxable) financial exchange. Yes, there is a so-called gift economy, but there is also an attention market that may not be fungible or priced - a distributed, many-to-many economy that harks back to the old days. The economic and psychological implications of this are profound. It seems pretty clear that most people gain self-esteem and mental health from doing something useful, whether raising children or earning a salary. I am not predicting a utopian world in which everyone is equally valued. But it may be a world in which people use their Klout Score (a measure of one’s online influence), their Twitter following, or a similar measure to justify their existence, assign value to their activities and measure their self-worth.

The trouble (for economists and traditional businesses, at least) is that this future disturbs traditional notions of economic growth. Companies that provide content will increasingly find themselves competing with individuals who offer entertainment for free. This phenomenon is not visible yet, because analysts focus on popular bloggers and online media sites competing with traditional media...

MORE THOUGHT-PROVOKING AT LINK AND ENOUGH FALSE ASSUMPTIONS TO PULL DOWN AN ENTIRE ECONOMIC MODEL...