What Is the Attention Economy? Types & Consequences for Our Lives

What is the Attention Economy?

The traditional way to make money through commerce is to sell goods or services for money. Selling books, vegetables, or haircuts are examples of this traditional way of doing business.

The attention economy operates differently. It is a business model in which businesses offer a product for free or at a low cost to help spread its use and then cash out by selling access to users’ attention to third-party advertisers.

Examples of attention economy businesses are:

• Newspapers

• Radio stations

• TV channels

• Social Media platforms like Facebook and YouTube

• Some dating apps like Tinder and OKCupid

• Music streaming services like Spotify

[Note that some of these businesses are not purely attention economy businesses. Some of them have a mix of revenue sources. For example, some social media and dating apps might offer paid features.]

Two Types of Attention Economy Business Models

I think it is important to distinguish between two types of attention economy models because they:

• require different features to succeed economically for business owners, and

• have different behavioural and psychological consequences in their users.

Let’s call the two attention economy models Type 1 and Type 2.

Type 1 refers to attention businesses that create their own content or buy it from others. Newspapers and TV channels are good examples of this business model.

In contrast, Type 2 is an attention-based business model in which businesses offer a digital product that enables users to create and share their own content with others. Type 2 products usually include features that further stimulate users’ content creation and engagement with the platform, such as notifications in the form of “likes”, and algorithmically ranked content feeds. Social media is the perfect example of this attention business model.

Both attention-based business models rely on advertising to make a profit and, therefore, are after your attention and seek to maximise the time you spend using their products.

As you can see:

the difference between Type 1 and Type 2 lies in the fact that users of Type 1 products are mostly passive consumers of information or entertainment, while users of Type 2 are (or can be) both creators and consumers of content.

Type 1 Attention Economy

Tim Wu’s book The Attention Merchants explains well how many Type 1 attention businesses began, with the first being the New York Sun, founded in 1833.

Newspapers at the time were bought by very few people (less than 1% of New York’s population), and the price covered production costs plus a profit margin. The New York Sun was different: it was sold much cheaper (1 cent instead of the 6 cents of traditional newspapers) and, therefore, the cost of production was higher than its selling price. Its low price, together with the publication of sensationalist news stories (including fake news) to capture readers’ attention, helped the New York Sun gain a large readership. This, in turn, enabled the company to generate revenue through advertising and become profitable in less than a year.

The radio was initially not an attention economy business either as the profit came from selling radio devices. Radio programs were produced by radio device manufacturers to make people want to buy their devices. In the 1920s, this changed with the introduction of sponsored content, which altered the nature of the radio business. Now, radio shows required large audiences to profit through the commercialisation of advertising.

Television definitely went further than newspapers and the radio in the quest to capture people’s attention and sell it to advertisers. The combination of image, movement, and sound made it especially appealing to the public. In 1950, only 9% of Americans owned a TV; this figure rose to 72% in just 6 years!

More importantly, television led to the emergence of a new phenomenon known as peak attention: a moment when the same messages were paid attention to by the largest number of people in human history. The record for peak attention was set by Elvis Presley’s TV performance in 1956, with almost 83% of views.

Consequences of the Type 1 Business Model

Type 1 attention economy businesses offer engaging content to people, but this is just bait. The purpose of these businesses is to run commercials and get people to pay attention to them. The nature of the business model has important consequences for society, and for the behaviour and mindsets of its users.

One consequence of Type 1 is a greater extension of a way to transmit information through technology that we can call “one-to-many”, in contrast to “one-to-one”, like in a phone conversation.

One-to-many transmission of information through technological devices had existed before through books and traditional newspapers. However, the audiences of these early one-to-many forms were quite limited. They were confined to people with higher education. In contrast, type 1 economy businesses demand less from the public and, therefore, practically everybody can be reached through one-to-many forms of information transmission. This led to a relative homogenisation of the messages that people were exposed to.

A second consequence is the replacement of other activities with media consumption.

This was especially acute in the case of television: by the end of the 50s, people in the US were spending almost 5 hours a day watching it. Because of this, television has been a key contributor to the epidemic of sedentarism across developed countries, which has led to an important increase in the number of people affected by chronic, non-communicable diseases such as diabetes and cardiovascular disease.

Type 2 Attention Economy

The commercialisation of the internet in the 1990s created the conditions for a transformation of the attention economy through the emergence of Type 2 attention economy businesses, in which people were not merely passive consumers of information but also its producers.

Nevertheless, the internet at the beginning was not an attention-economy business, as The Attention Merchants well illustrates. In the US, there were four internet providers, all based on a subscription model. For example, the company AOL charged $9.95 for 5 hours per month plus $3.50 for each additional hour, which tells us how little the internet was used at the time. Furthermore, these internet providers also produced much of the content on the internet.

However, some of them also offered tools for interpersonal communication, including chat rooms, discussion forums, and email, which proved to be the most attractive to users.

The most paradigmatic example of a Type 2 attention economy business is Facebook. Social media sites such as Myspace and Friendster existed before Facebook, but Facebook became the most popular and the only early social media platform (apart from LinkedIn) still with us.

Initially, Facebook was launched exclusively at Harvard University, where its creators were studying, and later rolled out across American universities. Facebook’s theoretical purpose was to connect people. However, by then, the only things possible on Facebook were to edit your profile, send friend requests, and view other users’ profiles. It was not even possible to chat or comment. So, early on,

students presented a curated version of themselves on Facebook and began seeing the social site as a marketing tool for their social lives.

In 2009, 3 years after making Facebook available to everybody in 2006, Facebook implemented the “like” button, which acted as a variable social reward that encouraged its use. Furthermore, Facebook had extensive data on its users. Not only users’ self-reported information about their demographic characteristics, place of work, location, etc., but also information about their tastes. This data was then used for nanotargeting: showing ads tailored to the tastes of specific users to maximise the efficacy of advertisement.

Facebook is a paradigmatic example of a Type 2 business because it is offered for free to its users, who create content on the platform for free and give their data to the social media owners for free, so that Facebook can show them advertisements tailored to them.

Other social media platforms such as Instagram, YouTube, and TikTok, have followed strategies similar to Facebook’s. Therefore, it is not necessary to explain them in detail in this article.

However, it is important to highlight that,

the spread of smartphone use has had a substantial impact on the attention economy. Now, our attention can be diverted towards attention economy products in all our spare moments, anytime, anywhere.

Consequences of the Type 2 Business Model

Like Type 1 attention economy businesses, Type 2 businesses require their products to be habit-forming so users keep using them. However, the fact that Type 2 entails user-generated content leads to distinct psychological and behavioural consequences.

The first consequence is that users’ content creation breaks the relative ‘homogenization’ of information people were exposed to in the past, when only Type 1 attention-economy businesses, such as radio or TV channels, were available. Furthermore, some users can share the economic benefits of the advertisement if they meet certain conditions. In some way, we can say that,

Type 2 has, to some extent, democratised the diffusion of information and the economic benefits of advertisement. However, this democratisation is not entirely positive, as attention merchants have implemented slot-machine-like features, such as the “like” button, to encourage users’ content creation.

Therefore, a second consequence is compulsive use of social media sites and other type 2 attention products. In psychology, we use the term operant conditioning to refer to a learning process in which voluntary behaviour is modified by its consequences. In simpler terms, this means that if a behaviour (e.g. publishing on Facebook) is rewarded (e.g. through the accumulation of social approval in the form of “likes” and comments) it tends to be repeated. Furthermore, we know that variable and intermittent rewards, which create uncertainty about the intensity of the reward one will attain, are more effective at reinforcing the behaviour than rewards that are always of the same intensity. This is how slot machines work and what makes them so addictive. Similarly,

the number of likes and comments entails variable rewards which explains why users check social media multiple times per day and why every interesting life experience needs to be captured on camera and shared online.

Third, type 2 attention businesses have hijacked status psychology. Social status, understood as being admired and respected by others, is a basic human motivation, with important consequences on our subjective well-being, self-esteem, and health. Status psychology is useful to navigate social relationships within small groups. For example, it can help us to identify valuable sources of information under conditions of uncertainty. If everybody behaves like a specific hunter in a hunter-gathering band is the best one, it is likely that, effectively, that hunter is the best one (or one of the best ones). In this way, we can safely infer that learning from him would be advantageous. In the online world, the features that make this learning strategy effective, such as direct contact, shared environment, and relevance of the information for personal goals, are not usually present. Therefore,

the strong association between skill level in relevant domains and admiration has largely decoupled in the online world, yet we still act as if someone who receives a lot of attention is worth following.

Related to the hijacking of status psychology, a fourth consequence is that explicit status metrics and the curation of people’s social media profiles have led to social comparisons on steroids. Social comparisons are not bad per se – comparing ourselves with others who are doing better at something can provide important insights into our own performance and motivate self-improvement. However, if the difference between our situation and those with whom we compare ourselves upward is substantial (rather than moderate) and/or very frequent, it could lead to detrimental outcomes, such as reduced motivation and well-being.

Today, there is good evidence that social comparisons are a key mechanism explaining how social media negatively affects subjective well-being, mental health, self-esteem, and body image.

The fifth consequence of Type 2 is the replacement of significant portions of time previously dedicated to other activities, such as in-person social interaction and physical exercise, with Type 2 products. This is especially dramatic for teens: one quarter of American teens reported to be almost constantly on social media in 2015 – a figure that has risen to nearly half in 2022.

Lastly, the fact that Type 2 products are accessible on smartphones everywhere has created an epidemic of distraction: even when people engage in face-to-face social interaction, physical exercise, or other important activities like studying or caring for children, they intermittently glance at their phones. This behaviour seems detrimental to our sustained attention and interferes with the quality of our face-to-face social interactions.

As you can see,

the social aspect of social media and other type 2 attention businesses is the most damaging to a life of focus. Now, it is not just Hollywood film producers, local newspapers, and national television who are after your attention: everybody, to some extent, is.

Artificial Intelligence & The Future of the Attention Economy

The latest technological innovation to capture the public’s attention is generative artificial intelligence. AI companies today rely on a subscription model, i.e. people pay a monthly fee for their use. However, the high engagement of people with some of these generative AIs might make it tempting to turn them into Type 2 businesses. In fact, many people already use AI to create social media content (e.g. images, songs, videos, text).

Furthermore, OpenAI (the owners of ChatGPT) has recently released Sona, a TikTok-like social media platform with videos created through AI. Although Sona does not rely on advertisements at this stage (Facebook and YouTube did not do so initially either), many of its features are typical of the Type 2 Attention Economy: algorithmic feed, personalised recommendations, and highly engaging content. Therefore,

it is quite likely that the near future of Artificial Intelligence is just more noise and distraction.

Conclusion

In this article, I have defined the attention economy and classified attention economy business models into two broad groups: Type 1 and Type 2. The main difference between the two types is the level of user participation in content creation, with Type 1 being only receptors of information and Type 2 being both receptors and producers of information.

We have seen that these two attention business models lead to different behavioural and psychological consequences. Both have some positive effects (e.g. free or low-cost access to content that might be useful to users). However, they both entail a serious threat to a focused life and have some negative effects on physical (e.g. sedentarism) and psychological (e.g. anxiety) health, at least for a substantial proportion of their users.

In future articles, I will delve deeper into the effects of the attention economy and present strategies to benefit from some digital technology features while avoiding most of their serious negative effects.

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