The Economics of Attention Markets

41 Pages Posted: 2 Oct 2017 Last revised: 16 Apr 2020

See all articles by David S. Evans

David S. Evans

Market Platform Dynamics; Berkeley Research Group, LLC

Date Written: April 15, 2020

Abstract

The attention market involves competition in which platforms acquire time from consumers, with bundles of content and ads, and sell ads to marketers to deliver messages during that time. This paper shows that the attention market solves a transaction-cost problem that prevents efficient exchange between consumers and advertisers and that content plays a central role in solving that problem. The attention market contributes to consumer welfare by supplying valuable content, which more than compensates for any nuisance value of ads, and by facilitating competition through the provision of ads. This paper shows that American adults will spend more than 500 billion hours on ad-supported content in 2019. The value of content is measured in the trillions of dollars given the opportunity cost of time; recent studies of the consumer valuation of online media are consistent with that order of magnitude.

Keywords: advertising, attention platforms, attention markets, media, two-sided markets, network effects, digital platforms, online advertising, advertising and welfare, value of online content

JEL Classification: D02, D12, D13, D21, D22, D23, D62, D83, J22, K11, L11, L86, M37

Suggested Citation

Evans, David S., The Economics of Attention Markets (April 15, 2020). Available at SSRN: https://ssrn.com/abstract=3044858 or http://dx.doi.org/10.2139/ssrn.3044858

David S. Evans (Contact Author)

Market Platform Dynamics ( email )

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Berkeley Research Group, LLC ( email )

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