facebook, instagram, snapchat and you the product

Some simple ideas from broadcast television/radio/etc:

• The station buys your attention with entertainment, news, etc.
• The station sells your attention to advertisers (who created the station in the first place)
• You are the product
• Advertisers are the customers
• The cost of everything the station does to create the entertainment, news, etc., is the cost of acquiring the product—your attention 

Transpose station with Facebook:

• Facebook buys your attention with entertainment, keeping in touch with friends, etc.
• Facebook sells your attention to advertisers
• You are the product
• Advertisers are the customers
• The cost of everything Facebook does to create and run Facebook is the cost of acquiring the product—your attention
• The more of your attention Facebook has, the more it can sell
• When Facebook bought Instagram for $1B (ignore the actual number), it bought the attention of 30M users at something like $33 a pop
• That’s 30M more units of your attention to sell to advertisers
• In order to keep making more money, Facebook has to sell more (and better) of you to its customer the advertiser
• At some point, Facebook’s organic user growth has/will drop off and thus its supply of you—the product—will become constrained
• So Facebook must go out and buy your attention wherever it is, be that Instagram, SnapChat, WhatsApp, whatever in order to maintain its supply of product (you)

The real question...Is $33 a pop a good price to pay per unit of your attention, given

• The cost to run a service like Instagram AND
• What advertisers are willing to pay to plaster themselves in front of your eyeballs everywhere your eyeballs might roam AND
• Whatever measure of “quality” you can apply to the particular unit of attention you give to Instagram?

Replace Instagram in the story with SnapChat and that’s how I’d look at whether $3B is a good price to pay.

Replace Facebook in the story with any other advertising-selling business that does not charge for what you as user get from it.

Then consider what most of the talent in the technology world is out there doing. 

And finally, what would you do if the money these companies are getting from selling your attention went to YOU instead?  

Hat tip: this post 100% inspired by Benedict Evans’ post on Instagram and Youtube.

And finally, this:

Attention is the currency of rich people.

— Paul Ford (@ftrain) February 13, 2014