Attention Margins

By | September 21, 2009

Free” isn’t about giving away goods and services for nothing. Let’s not have that false debate. Really, it’s code for “we are now making a full transition to an information economy.”

“Free” makes no sense at all if you’re talking about stuff being exchanged for money. Through this lens or framework, stuff cannot be free (there are only freebies).

It makes perfect sense, though, if the stuff is being exchanged for something more important than money, and that something is attention.

I know, calm down, but let’s get with it.

In the world we’re now in, this young, healthy information economy, attention is more valuable than money, So, there’s little choice, if we want to work in our own best interest and with economic forces, to invest in it, cultivate it.

It works like this. I wanted a great way to send invoices and track time. Soon, I found out about and signed-up for Harvest. Harvest gave me full access to its app for free, forever (the deal is 2 projects, 4 clients, unlimited invoicing for 1 user). Additional projects, clients, and so on require a monthly subscription.

Harvest was so easy to use (not just good, but great) I decided to test it by actually invoicing a client (no demo this). Successfully, beautifully accomplished. As a result, I had real data in the system (a live invoice), which I was able to play with to figure out tracking, my use cases, and collaboration.

Harvest got my attention. And they invested a lot to get it, to get it prior to my money, and to keep it.

The fact is lots and lots of information creates a lot less attention. Or as the economist Herbert Simon put it, attention is consumed by an information-rich environment. Once that happens, it’s gold.

Fine, one might say, but I don’t want to make attention, I want to make money. Sure, do it, and remember two things.

First, the money economy is now a subset of the attention economy. Money isn’t threatened, attention transcends and includes it. The attention economy couldn’t survive without the money economy; it’s the foundation. Money is here to stay.

Second, because money is a subset of attention you’ll generally make less per customer (as a user I’m already paying you with something else, right?), but the number of customers you have, with networks spilling into other networks, will likely be greater, and, the real beauty of it all, your cost of acquiring those customers can be shockingly low.

Craigslist serves as the poster child for this phenomenon: free to most users, 30 employees, $5-10M in costs, 100M in revenue. Now, what kind of capitalist are you if you’re not excited about those efficient margins? No industrial-era company can touch it.

Okay then, let’s not deny, defend, or rail against the attention economy (or, on the other hand, claim it replaces money) – it doesn’t make sense. Customers, like me with Harvest, are ecstatic with the result (and happy to pay with both attention and dollars), and those of us creating the services/products get to be smaller scale and yet radically profitable. Rejoice.

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