The next big thing has finally arrived: Twitter's ascent marks the end of the Web 2.0 period (1999-2009) and the beginning of what I would call, without any originality, the "attention economy."
The term "attention economy" was invented by the futurist Michael Goldhaber, who wrote a remarkably prescient piece in December 1997 in which he described a new arrangement in which the
"flow of attention" replaced money as the currency of the Internet.
Twitter Inc. -- with its medieval-like armies of followers and followed -- is a good example of how this new attention economy works. The value to us of Twitter is based on how many followers we have and thus how many people read our words. We all compete on Twitter for both attention and followers, of course, because time is finite, and there is only a certain number of people we can realistically follow and only a certain number of messages we have the bandwidth to read.
While Goldhaber was right to focus on the flow of attention, he was wrong to argue that it would replace money as the currency of the Internet. Let me explain using the Twitter example. The micro-blogging network now has 8 million users actively sending and receiving short messages. But these users aren’t customers, because the service is absolutely free of charge. As a pioneer of the attention economy, Twitter now is faced with the challenge of monetizing attention. For it to become a viable business, the VC-backed startup -- which only just appointed a sales and business development team -- needs to identify what it is, exactly, the company is selling.
In the Web 2.0 period between 1999 and 2009, the dominant business model was advertising. So Internet businesses like Google (Nasdaq: GOOG), MySpace , Facebook , and YouTube Inc. all gave away their technology for free and then sold advertising alongside all their user-generated-content. If, however, as I suspect, Twitter represents the next big thing, then its business model is going to be radically different from the advertising-centric model of the Web 2.0 period.
Serial entrepreneur Jason Calacanis accidently-on-purpose revealed Twitter’s radically new business model a couple of weeks ago. With his 62,000+ fans, Calacanis is a classic example of a power Twitter user -- a digital feudal knight who has won the attention of a huge army of loyal followers. As the CEO of Mahalo.com Inc. and founder of TechCrunch 50, Calacanis uses Twitter to build his personal network and brand. The service offers such significant value to Calacanis that this always-on, globetrotting entrepreneur has taken the time to personally make 6,812 updates of his own.
Earlier this month, Calacanis expressed his ire at the powers-that-be at Twitter because they left him off their suggested users list -- a group of 20 A-list names given to all new Twitter users. Making a public offer of $250,000 to be included on the list for two years, Calacanis presented Twitter with a highly viable business model for the new attention economy. What he was doing, of course, was quantifying the value of attention. Calacanis was telling Twitter that an exclusive position on the network had an annual value to him of $125,000.
For most of Twitter’s 8 million hoi-polloi like you and me -- with our pitiful handful of followers -- the real-time network has no monetary value. But for Twitter’s power-players, new digital aristocrats like the English actor Stephen Fry (over 320,000 followers), the bicyclist Lance Armstrong (320,000 followers), or the pop diva Britney Spears (448,000 followers), this is a significantly valuable marketing platform that provides them with a captive audience to promote and sell their ideas and products.
The Twitter community is growing fast. By this time next year, its 8 million members will have exploded to between 25 and 50 million, and the attention economy will have truly arrived. Imagine Twitter creating a two-tiered system in which its 100 leading celebrities paid $500,000 a year for the privilege of appearing above the fold on the sign-in page for new users. Then imagine that all power users with more than 10,000 followers had to pay Twitter an annual maintenance fee of $1,000 (a veritable bargain at less than 10 cents per follower per year). Now wouldn’t that be a radically more innovative business model than trying to sell advertisements and sponsorships?
— Andrew Keen, Silicon Valley author, broadcaster, and entrepreneur, can be reached on Twitter at @ajkeen.
So if your attention theory holds true in the near future, then with the huge fan base of these clubs, i can really see Tweeter becoming a major force to reckin with on the digial landscape. Do you know of other sport franchise in the U.S. that are presently on Tweeter??
Even in Sioux Falls Twitter is moving up to receive high attention. KELO TV did an eye on KeloLand spot to draw attention to how collegiates are using Twitter for everything from personal updates to following campus events or celebrities.
Not a harbinger of things to come, I assure you, but about 2 years after the music started! They even advertised their twitter use at the station. follow keloland on twitter at your own risk!
Once you have more than about 100 people you follow you are not really reading everything they all post. You tune in for a moment, usually when you are posting something you think your own followers will be interested in, and during that moment you "catch up" with a couple of dozen people by seeing what they just posted. When the numbers of followers and people you follow reach the thousands you are only sampling a tiny bit of your follow community. Just as only a small fraction of the 200k+ followers of Britany Spears (or her Twitter assistant) ever see her posts.
Younger marketers are excited about Twitter. Check out Christopher Penn and John Wall's podcast, Marketing Over Coffee. They've described possible uses for Twitter that I otherwise wouldn't have conceived on my own. Christopher Penn's written an ebook about it as well. It's amazing how much marketing budget can be reduced with proper Twitter use, assuming, of course, that your customers are within the Twitter demographic. Its best beneficiaries are probably startups, small businesses, and individual professionals.
jabailo, by george you've got it! I think you are absolutely correct.
I think the appeal of the internet is the randomness and innovation, as well as the creativity and opportunity for individuals to operate outside of the "corporate" structure, which does own and control. I think the reason the internet has succeeded is the fact that no one owns it.
I like your thoughts that the future may belong to individual entrepreneurs and/or collaborative groups who come together to create something of value to someone else.
If all we do is re-establish the existing business models on the new capabilities we will never realize the potential. I think that is the intrigue and opportunity with twitter and new communication lines that advance human-to-human interactions. The services that create that value will find markets and revenues.
Hi Andrew. Oh, that was a spontaneous response to the concept of "attention economy," so I don't think you'll find that in any marketing or economics books. I just wanted to point out that while securing attention certainly appears to be Tweeter's obvious strength, if it can extend that capability and positive induce action on the part of its audiences, then it can really grow into this generation's killer marketing app. Sort of like applying the AIDA process to the Twitter framework.
Brian -- but it's a simper, more ergonomic Facebook, just as Google was a simpler, more ergonomic Yahoo. the big jumps in technology are really just sideway shuffles.
Excellent post, Andrew. I do understand why you are excited about Twitter, and I also have a feeling that the venture is on the cusp of something really big. But I don't think it's quite there yet. I find the metaphor of medieval clans most intriguing, but at the same time, I think if Twitter were to lock itself into that old paradigm, then it would be missing the new opportunities it created for itself. Some out-of-box thinking is definitely in order here, and the answers for Twitter are certainly within reach. As for the attention economy, I think Twitter needs to see beyond this and work itself as a tool for the "action" economy. Attention is a good start, but I think it's the resultant action that gets results.
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