You are a commodity and your value should increase (but won’t)
Jun 21, 2016
The value of users in the media market will increase as consumption growth reaches its limit, leading to a competition for their attention and a redefinition of their role as both product and seller.
In a lecture at Stanford a few years ago, Professor Paul Saffo described the evolution of the economy in the 20th century as moving from the economy of scarcity to the consumption economy. According to him, with the 2008 crisis, the consumption economy reached its peak and began the transition to the creation economy, which ultimately results from the creation you make when you take an action as simple as clicking on a link. Precisely for this reason, you are a relevant part in this market and your "price" will go up - but unfortunately, not enough to support you.
Saffo's description is much more complex than the one mentioned above. Don't settle for my explanation because it is fundamental to understanding the transformation that will occur in the media where your value will increase. Basically, he says that the new economy, which among other characteristics, carries collaboration in its DNA. Without this seed, products like Google and Facebook would have values equal to a minimal fraction of what they have today.
The decline of print and the rise of digital are old news, but two numbers here are important and not necessarily noticed by everyone. The first is the deceleration of TV (which I will address in another text) and the second is a deceleration of another number - the global time of traditional media consumption.
These numbers refer to the United States, but are reflections of a timeline that happens in all markets. The US, Western Europe, and the richest markets in Asia have a faster maturation than other countries. This happens due to a lower illiteracy rate, a better communication infrastructure, more sensible regulatory and tax laws, and other details. In other words, the same trend should arrive here, only with some delay.
The phenomenon of decreasing media consumption is explained by a level of maturation. In the United States, the number of people who are not among the consumers of the sector is very small. Even with a very high illiteracy rate (it's worth mentioning that the concept of illiteracy in the US is much more rigorous than here in Brazil), there are few people left to start consuming media in general. Cell phones have developed to a point where even older users or those with limited literacy can perform simple tasks.
This creates an issue that investors usually see as a death sentence, which is the small growth rate. If global media consumption were a single company in Silicon Valley, its shares would be falling, even though it is a multi-billion dollar market worth half a trillion dollars, solely due to the 5% growth rate. With numbers close to double that, Twitter is considered decadent in the technology market. And as large as the investment in media in the US is, the number of people consuming this media is reaching its limit.
The charts show an obvious thing: markets are finite. There is no such thing as a 30% annual growth rate forever. The number of people whose time can be dedicated to watching, reading or listening to content is limited. The amount of time these people have is limited. As much as the market likes to think that it's not, on a large enough timeline, the growth projection is zero.
This provides a certain paradox: media companies have always worked based on what their users consumed. The entire advertising market is based on this. The creation economy mentioned by Saffo alters this order. The consumer has transformed itself, in a way, into a product. Yes, he spends time consuming media, but is more relevant as an item of desire for advertisers because he or she is telling advertisers what he wants to buy. The rule that if you don't pay for what you're seeing or using is because the product is you has never been more true. Facebook, Google and all companies linked to media consumption have in their audience their most expensive product: you. Without your clicks, both companies would have fractions of their relevance as a business.
This is also not news. The creators of this system have made this clear for a long time. But the chart of the deceleration of media consumption growth is. Today it is possible to envision a moment in which this finite amount of consumption time will mean that you have a price, a value in the market, just like any raw material or manufactured product. This value, today, is equivalent to the price of the products that you receive without having to spend money: messages from friends and family, texts from your favorite sites, videos and all and any service in your day-to-day life.
It may sound strange to imagine that the reification of the user reaches a point where there is an open dispute for him, but that is what will happen. Among the users, the heavy users who spend long periods consuming media (digital or not), will be the most disputed. They are the filet mignon of the category. They spend hours on end on various platforms, sign up for experiments and beta phases of new products, adhere to new behaviors that are viewed with suspicion by most of the audiences (using credit cards for Web purchases was once a taboo), usually are opinion leaders (if not to the public in general, at least to friends and family) and hardly shy away from a well-executed and offered product. Less frequent users will not be despised, but those who consume a lot will be at the forefront of the dispute. They do all this for free, or in exchange for advantages that have zero additional cost for those who produce on a large scale.
This process is already underway, but it will intensify as the digital markets finish their maturation. The weights of the markets (digital, print, radio and TV, etc) will be rebalanced within this limit in the amount of time spent with media. This readjustment will have different times with the pace of changes in the United Kingdom, let's say, happening before than in Brazil, but ultimately, growth will reach zero at a certain point and the theory of supply and demand will come into play. The amount of minutes consuming images, text, audio or virtual reality will have reached a ceiling and the price will go up until it finds balance.
The process described here will neither complete this year nor start on any date. It is already underway. The finite attention of readers, viewers, listeners and browsers tends to have characteristics: it must be centralized, with the oligopoly of existing technology companies today being accentuated, it must be "liquid" (where media consumption will have less definition than today - video, audio, text will be less separated, as, for example, in virtual reality experiences) and in the digital world, it must be unnoticed (users will not know that they are making choices).
In practice, like any product like iron ore or smartphones, the dispute for you will be through supply and demand. Unlike most of the market auctions, the one who decides which is the best price will also be you, who will be at the same time product and seller. Once it is not possible to decrease the value that you pay for the content, publications (and platforms) must try to attract their potential "customers" with richer content and that offers more advantages. This strategy tends to favor larger companies because they are the ones who can lower the costs of a certain product by scaling the quantity of their production - which explains the better position of technology companies.
Contrary to what it may seem, the "end" of media consumption growth should not be reflected in the sophistication of the contents. The trend is the opposite: increasing levels of automation (with more items being produced by algorithm, something already widely used in the creation of sports match reports, for example), greater use of rich media like infographics, videos and compilation of user-generated content (UGC).
"So does that mean I will be more contested by publications and platforms, but will not receive anything more for it?". Yes, if the question is in relation to money or any concrete gain. Theoretically, the advantages given to heavy users will be those achieved by marginal costs, such as greater storage capacity, quantity of accesses, discounts on partner offers and the like. In the world of mega markets, money never flows out of companies, not even when paying those who are used in the process. But cheer up: the world is not worse because of this - you are just realizing it.