The internet economy and the poverty of attention

By Gill Lambert, Wednesday, 11th March 2009

In a recent interview by McKinsey & Company, Hal Varian, Google’s chief economist and professor of information sciences, business, and economics at the University of California, shares his views on the internet economy. He observes that the internet has created an environment that allows for limitless incremental technical innovation, and although this offers business great opportunity for productivity improvement, it has effectively removed the barriers to create and disseminate content.

Without barriers, competition is inevitably fierce, pushing prices down “to something that approximates zero”. Revenue has to be generated elsewhere in the value-chain and our scarcest, and therefore most valuable, resource is attention. Varian refers to psychologist Herb Simon who said “A wealth of information creates a poverty of attention” and this, Varian confirms, is the basis upon which Google has built its business.

If you are in the mood for reflection you can read the full interview, but it does put in context the importance of an efficient process by which content is created and its value leveraged –  or optimised – in order to succeed as a business in this environment.

The real cost of website ownership therefore is not the applications and add-ons, but the knowledge and expertise required to realise the opportunity that your content offers – but don’t worry, it’s just a phase we are going through!

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