Audio Recording by George Hahn
For the better part of the past century, the most important commodity has been oil. Wars have been fought over it — Pearl Harbor was a preemptive strike to secure Japanese access to Indonesian oil — and it elevated desert tribes to the ranks of the wealthiest cohorts in history. But the sun has passed midday on oil’s supremacy. We’ve moved from an oil economy to an attention economy.
We used to refer to an information economy. But economies are defined by scarcity, not abundance (scarcity = value), and in an age of information abundance, what’s scarce? A: Attention. The scale of the world’s largest companies, the wealth of its richest people, and the power of governments are all rooted in the extraction, monetization, and custody of attention.
Commercial exploitation of attention is not new. Humans have been competing for attention since the days when nomadic leaders argued over which branch of the river to follow and turning “content” into wealth since Aeschylus produced the Oresteia. Oil was elevated by the invention of the internal combustion engine, industrial revolutions in mechanization and plastics, and the development of a Western lifestyle dependent on the mobility of goods and humans. Now the shift from atoms to bits — digitization — has put wells into pockets, on car dashboards, and on kitchen counters, drilling night and day for … attention.
The largest companies by revenue are still mostly oil companies, but the most valuable companies are mostly attention-seeking enterprises — Big Tech holds 4 of the top 5 spots. From Apple to Amazon, Facebook to Fox News, Twitter to TikTok, tech and media companies are the sheikhs and wildcatters finding and capping our attention. And, just as in the rise of the oil economy … there will be blood.
There are more players in the attention economy than just the tech and media giants. Podcasting is a high-growth, low-barrier-to-entry opportunity for newcomers to harvest attention, and (for about 1% of them) to convert it to wealth. Conferences are a nice business of in-person attention harvesting. Substack has spurred a modest revival of the email newsletter, Salesforce paid $30 billion for Slack’s command of workplace attention, and Spotify is leveraging our music listening attention into a platform for all media.
Conferences, newsletters, and even music streaming are all artisan projects, bit players in the shadow of the supermajors. Even a mega-conference like the 130,000-strong Comic Con is a sub-2.0 flutter on the Richter scale of the broader attention economy. The biggest players measure monthly active users in hundreds of millions.
However, the attention economy is defined by disruption, and even the giants are susceptible. If Facebook is Exxon and Netflix Shell, TikTok is fracking king Chesapeake Energy, the rule-breaking insurgent armed with novel extraction methods that threaten the established order. Like oil, attention must be extracted, processed, and monetized. Disruption occurs when innovators re-architect the attention economy value chain.
Pre-digital attention entrepreneurs drilled for attention with interesting or entertaining content such as a newspaper or TV show, and monetized it through subscriptions and ads. The first wave of innovation was driven by the infinite capacity of digital storage and distribution: the bottomless well of choice. Netflix rose to dominance by cracking a gusher of classic sitcoms and rewatchable movies. More commercial-free content extracted more attention. By 2016 that was enough to make Netflix bigger than the entire industry it supplanted, cable TV. But the scale was linear, with few network effects.
Social media brought two major innovations. The first was to offload content production, and its cost, onto the user. No matter how efficient Netflix gets at producing shows in multiple languages, or how shamelessly Disney milks its existing IP, their economics are dwarfed by TikTok or YouTube, where consumers build the content drill rigs that the platforms monetize.
Next, the social media companies broadened the very notion of what content could be. Twitter, Facebook, and Reddit feature “content” in the traditional sense, but they turn the emissions (users’ comments) into content that’s still more valuable (addictive even) as it has more emotional resonance. By emotional resonance I mean they satisfy a deep need for others’ approval or they enrage us. The comments/replies, the pissing match, the rapidly brigaded insanity is what mines attention and emotion. It’s as if Exxon found a way to make heroin out of exhaust. Connecting the world has augured a simple question: Should we be this connected without having a commensurate presence? You’d never say (much of) this shit to people in person. And anonymity enables fake accounts and bad actors, which platforms tolerate so they can profit from greater noxious emissions.
While the sewer of ad-driven social media enragement was contaminating the water table, a new innovator arrived. TikTok is remixing the attention economy value chain. The short-form video platform relies on the economics of user-generated content, but it takes a narrower, less “social” approach to delivery.
Netflix rose on the back of infinite choice. Choice, however, comes with a hidden cost: the cognitive work of choosing. TikTok asks less of its consumers than any platform since broadcast television. Open the app, and a video starts playing. A single swipe at the end of every video tees up the next one. An algo watches how long you watch, what you watch to the end, and whether you like or follow, and manicures a streaming network that is singular. You can get more involved, following individual creators and even responding, but the app is built around a passive experience. TikTok’s recombination of attention economy capabilities makes it the new apex predator: The app commands more attention per user than Facebook and Instagram combined. And among teens it’s catching up to the passive king itself, television.
Fossil fuel’s externalities are now well understood. An economy built on burning carbon has had a catastrophic impact on the planet. The advent of fracking led to huge profits and a recalibration of the oil economy, but at increased cost: flammable water, earthquakes, and chemical leaks.
Though it’s wrapped in dance and dog videos, TikTok comes with many of the problems linked to algorithmically generated content and platforms. A Wall Street Journal investigation found new accounts registered as belonging to 13- to 15-year-olds would veer down “rabbitholes” of sex- and drug-related videos in just days, simply by lingering on initial, tamer videos with those themes. And TikTok comes with an additional, unique externality: its links to the Chinese Communist Party. The potential risks in that relationship have been recognized by our last two presidents. I’m particularly concerned with the propaganda potential of the platform.
To be clear, there is no evidence the CCP has manipulated content to undermine American interests. What is also clear: A headjack installed on America’s youth, who spend more time on TikTok than any other network, that connects them to a neural network that may be shaped by the CCP is a risk we cannot tolerate. If the product cannot be separated from the ownership (e.g., spun off or acquired by Western firm), I believe the app should be banned. Putting the term “ban” so close to the term “media” justifiably raises concerns. An easier argument may be that we should have a reciprocal approach with China re media businesses. (See above: Ban TikTok.)
It was a theme sounded by others at the Code conference. When I asked Axel Springer CEO Mathias Döpfner for his thoughts on TikTok, I expected a watered-down “we’re watching them” nothing-burger response. (That’s the protocol for a public company CEO.) Instead: “It is of course a tool of espionage … TikTok should be banned in every democracy.” There are signs of momentum: rumored regulations that could result in a ban, and calls for app store bans from FCC Commissioner Brendan Carr. We banned Russian oil, why not Chinese (potential) propaganda? Others see it differently: After I spoke about the issue on Bill Maher last week, several prominent tech journalists said my TikTok rant was distracting us from the real issues in the industry, including privacy and data reform. But this isn’t a zero-sum shitstorm. Big Tech offers us more than one threat, and I’ve been warning about those posed by Facebook and other platforms for years. We can walk and chew gum at the same time.
Is TikTok the ultimate evolution of the attention-economy titans? Everyone else in the attention economy is acting like it. Original content is out. CNN+ was unplugged; Netflix is churning subscribers and has shed 70% of its market cap; households are canceling cable and streaming subscriptions in record numbers; and two tech platforms that tried to launch their own original content streaming services just threw in the towel: YouTube Originals shut down in January, and Snap Originals followed in August.
Instead, everyone is trying to outTik the Tok. Netflix launched “Fast Laughs,” Instagram introduced “Reels,” YouTube brought out “Shorts,” Snap did “Spotlight,” Roku is trying “The Buzz,” Pinterest launched “Watch” … even Twitter is exploring a TikTok-like product. I think they should call it Vine. Just a thought.
Internal documents at Meta reveal that users spend less than a tenth of the time watching Instagram Reels as they do watching TikTok. Reels engagement is in fact falling, perhaps because a third of the videos on the platform are created on a different platform (usually TikTok, complete with watermark). Meta has tried to algorithmically “downrank” these videos so they receive less traction, but they remain pervasive. Users are actively resisting these product changes. After Kim Kardashian and Kylie Jenner spread a meme asking Meta to “Make Instagram Instagram Again,” a petition gained, at last count, 312,000 signatures. The petition will fall on (Mark’s) deaf ears. Meta is not innovative (see Oculus and fever dreams of a legless hellscape), just the fastest follower in social. Note: Many who pushed back on my calls to break up Meta and let the market do its job have an increasingly strong argument, as the company’s stock is at a five-year low.
TikTok’s short-term dominance at the front end of the attention extraction business won’t be stopped by anyone who doesn’t hear “Hail to the Chief” every time they walk into a room. However, if you check this space five years from now, will TikTok still be a supermajor in the attention economy? If the answer is no, I’d posit that the likely dragon reigning over, and defending, Kings Landing will be YouTube.
Fifty-six percent of Americans watch YouTube on a daily or weekly basis. Ninety-five percent of teens use the platform, compared to a third who use Facebook and two-thirds who use TikTok. Back in 2019, YouTube disclosed that users were uploading more than 500 hours of footage to the site every minute, a number that’s likely much higher today. Last year the platform generated almost $29 billion in advertising revenue — roughly equal to Netflix’s total revenue.
As with so much in business and biology, diversity is key. Oil can be found in the desert, under the sea, or in the tundra, and extracting it from each ecosystem demands a unique skillset. Likewise, refiners convert crude into gasoline, natural gas, lubricants, and aspirin. No attention-economy player has the diversity of YouTube. Videos can be as short as one second or as long as 12 hours. Some are user-generated, others are studio-produced. (In fact, the second half of my Bill Maher appearance was produced specifically for YouTube.)
You can socialize (argue) with people in the comment section, or you can just use it as you would a streaming platform. More and more people turn to YouTube for more and more reasons: home improvement projects, makeup advice, music videos, product reviews, etc. You can load up infinite videos on a topic or from a creator, subscribe to your favorites, or just let the recommendation algo take over. While it depends on user content, YouTube isn’t passively waiting for that content to arrive. The company’s strategic partnership managers advise about 12,000 creators. According to a senior director, if a YouTube star doesn’t post once week, their manager is “likely to know why.”
YouTube’s kevlar is its betweenness, especially on the creator end. Users can get their start with low-production vlogs and selfie videos — just as they do on TikTok. However, as your following grows, the scale of your production can grow with you, bringing longer videos, broadcast-quality camera crews and performers, and increased costs commensurate with revenue. A prime example of this is YouTuber Jimmy Donaldson, otherwise known as MrBeast. MrBeast started making cheap gaming videos and commenting on YouTube dramas.
As his YouTube subscriber base grew, so did Donaldson. Today, MrBeast creates formidable productions with reinvested earnings. His most popular video, a real-life reenactment of Squid Game, cost $3.5 million to produce (the cost of an episode of Mad Men). It received 300 million views. This is the sort of content that currently doesn’t happen on TikTok, whose specialized attention-extraction tech has a much more limited range. Now, Donaldson is refining his attention to offline energy, with a burger restaurant (it drew 10,000 fans opening day) and cloud kitchen venture.
What to Do
Any massive increase in wealth over a short period is accompanied by externalities. There is no free lunch. OK, maybe caffeine. The externalities are typically opaque, and the parties best able to address them early are incentivized to create weapons of mass distraction to delay and obfuscate while they achieve economic security for themselves and their families. It’s also clear that the longer the externality runs unfettered, the more damage is done and (exponentially) greater the cost to address the issue. TikTok’s COO, Vanessa Pappas, didn’t wrap herself in glory at this week’s congressional hearings. She was over-consulted by her comms team and claimed that ByteDance has no headquarters, as it’s “a distributed company.” Despite the awesome news that there’s a new class of firm we can legitimately call a DisCo, being full of shit only fosters additional resentment against the company, and the uncomfortable link it’s forged between the CCP and the emotions and beliefs of a rising generation of American citizens.
This shouldn’t distract us from the (still) clear and present danger American platforms present to our privacy, teens’ mental health, and our less and less civil discourse. The leaders of American media platforms don’t suffer from immorality but amorality — indifference and dissonance about the damage their companies do. When it’s raining money, your vision gets blurred.
An autocratic government that seeks to diminish America’s standing and way of life is, in my view, immoral. There is evidence that the CCP has used, and will continue to use, all assets at its disposal to undermine U.S. interests domestically and abroad. TikTok should be spun to Western investors or treated the way China treats American platforms: kicked out.
Life is so rich,
P.S. We could all stand to be more productive. Our Productivity & Performance Sprint closes enrollment on October 4. Watch the first lesson for free, then upgrade to membership to sprint with a group.
Very sensible article – thanks. Gokulram Arunasalam
My favorite end of day Friday read. Looking forward to the upcoming boom.
Scott, my visit here was promoted by your interview on Maher specifically for youtube- with the ads removed. As professor of marketing you fail at getting my attention and succeed with your miserable advertising only in driving away viewers. How many actually watch TV commercials instead of fast forwarding them? How many listen to AM radio without being disgusted by the streams of ads? I have not tuned to AM in many years for exactly that reason. How many read their junk mail? I enjoy Leno’s Garage but cannot stand a lying car ad.
I agree Tiktok is a “Clear and Present Danger”. I also agree that “attention market share” is important so chose Joe Rogan on Spotify versus you on ?. How is your new King Chuck 3?
emotional resonance ? That is the new oil ? Stanford has a brand new center for this. Gotta dig. Hi by the way. I managed to steal some of your attention today. (Note to self: How do I monetize this ?)
Political comments or content should be banned from all platforms. And yes, TikTok even though I am not a user of it, should be banned. While America is divided, China is laughing all the way to world dominance. If you think Democrats or republicans are your enemy, you ain’t seen nothing yet.
Great article Scott. Telling that Apple CEO Tim Cook said don’t let your kids use social media in Jan 2018. Silicon Valley tech billionaires still advising offspring against it.
As a long term fan/follower/viewer/listener etc. – if you dare give that cretin taylor lorenz any air time on your content again, you will lose my “attention” irrevocably.
Absolutely love this and agree 100%!! This should be mandatory reading for the leaders of the western world – and to urgently act on.
Let’s talk about shelf life. As technology accelerates, companies shelf lives get much shorter. Oil was lucky – it came into prominence early in the industrial revolution. So it’s had a good run. But it’s waning and caught in one of longest, most painful hangovers in modern history. 20 years ago, when I walked the dog down to Peet’s for a coffee as the Twin Towers collapsed in NYC, many of our conversations those mornings were debates about whether or not Facebook was the next big thing. I said it was a joke, and boy was I wrong. Except, if you add a time horizon to the equation, here we are 20 years later, and Facebook is the incumbent. The only place where being the incumbent is a good thing is in politics. If your space matters, being the incumbent only accelerates your rate of decline. While I agree that Tik Tok is of concern, I doubt very much if it will be of a concern in 5 years. Shelf life. Technologies have increasingly short shelf lives and Tik Tok won’t be a thing long before we the words, yet alone pass, legislation to ban it. Given the average age in Congress, sometimes I wish we would focus on things non-economic and let the markets do the work. Because they do, except for the shit we do to slow them down. My biggest concern in this article was the comment about passive consumption of media. Some kids are creators while the rest of them passively close in on themselves and consume endlessly!
But great article Scott.
I agree with the article Steven Levy wrote in Wired, if you want to emphasize the harmfulness of TikTok, I think you should focus on one point, CCP. If algorithms and systems are having a negative impact, then clearly advocate for guidelines and set industry standards. The same is true if you believe that the rise of foreign content platforms is dangerous. We need to consider why some of what we call non-tariff barriers are essential to protect our (your) society.
From my perspective as a foreigner, the worst part of American companies is that they are releasing TikTok paraphernalia en masse and are not shy about showing their uncertainty in their philosophy. I would like to see American companies keep it cool.
I wonder why what you say about the bottom-up dynamics of Donaldson on YouTube would not apply to Tik Tok? Tik Tok will indeed evolve too. Moreover as you say, they have strong incentives to adapt.
Wow wow wow
China has made a habit of copying western media platforms (see Weibo) and fitting them into their one party surveillance state system. They then brush off all copying/copyright infringement claims (as they do with many physical products). So what’s stopping some enterprising tech whiz in the west from copying tiktok’s functionality while western governments slowly pressure the actual tiktok out of business (or at least out of western countries)? Isn’t it about time we got off out high horse and started playing “let’s infringe copyrights and pretend we didn’t” game that China has used so greatly to its own advantage over the past thirty years?
Scott – aside from the brilliance of your observations, I’d also like to add that poetry, alliteration, metaphor, irony, wit, and sarcasm are the real spices of the attention economy… you observations have staying power.. because they seem like a human being in somewhere behind the algorithm.
Great article, I agree with your stance on TikTok. The US government should ban that application, just as China did Google and so many other American companies. I find it very concerning how slow our government reacts to clear and present danger to democracy. Like our lack of laws around privacy, what will it take for the US government to realize this is a potential threat?
Love your stuff, but I don’t think Aeschylus got wealthy on the Orestei. Like most successful Americans today, he picked his parents well and was born that way.
Hell he got famous though, and isn’t that the real thing americans worship?
Another thoughtful and action seeking essay! Hope this can be understood & read byFed agencies & Congressional committees to investigate.
Prof Tim Wu (late of Columbia, now of the White House) wrote a book several years ago, “The Attention Merchants”, centering on a part of that economy Prof Galloway ignores in this essay: the advertising industry. It has been laser-focused on attracting and holding attention for more than a century, experiencing only the most exceptional failures (screens above urinals). And that industry’s main product is lies.
The future lies ahead. All of the angst regarding social media is far more appropriate to opinion appropriation than showing off. But those who are members of proselytising religions can’t keep their hands to themselves. This is what has brought dissociative thinking to rule conservative groups. Facebook is the real threat, not TicTok. Bringing the PRC into the catalogue of values is simply a distraction.
Thank you, Scott.
The data provokes some thoughts. The one I’ll center on is the positioning of Youtube, particularly concerning its diversity of content, and being a parent.
As a parent and someone who’s career is built on tech sector analyses, can you advise on any guiding principles, methodologies, or even monitoring tools to use to provide more age-appropriate access (see: restrict range of accessible content) to YouTube, web browsers, or other social media platforms?
Until gravity wins,
Excellent commentary, and fully agree with your take on TikTok. When we’re done with that, we can move on to stricter regulations for other distributed content platforms, even the American-owned ones.
Hi ! i very much agree with this excellent piece. As an investor i have always been perplexed that ESG fanatics focus on oil, energy and climate change and nothing on the social, mental and emotional costs of social media…we need a healthy planet, but we also need healthy people to live on it ? such hypocrisy by Wall St and big asset managers shows they are not serious about improving our chances at all!
It seems when a business threatens the market dominance of a US business, instead of upping their game they follow lets cancel them because of their evil intent. China Huawei bested Apple and android phones, evil spies; now TikTok is the target. So much for “free” market competition and innovation.
The real evil is the capitalist system when it’s allowed to run wild. Admittedly, other than the search for love, the motivation of making money is the strongest human propensity. Banning Huawei is the pot calling the kettle black. They lose, we lose…but we get to wrap ourselves in the flag.
Greetings: The more I get olden, the more I want to hear this kind of important and smart information. Whew! Thank you. Stay well. LEStewart
I don’t understand the need for so much distraction in our lives. Kids and adults alike. Mostly we have our phones in our faces all day. Walking down the street, on a five minute bus ride, on planes, everywhere! Even at home. We might put down the phone to watch YouTube. Or Netflix, etc. It worries me that young people especially have a difficult time talking, seriously, or can’t concentrate for more than s few minutes. I don’t remember if we were the same as kids, or what we did for distraction. Saturday morning cartoons? TV in the evening? No idea. Nor do I know if the availability of distraction creates a need for distraction, or the need for distraction creates more distraction. Anyhow, thank you.