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The economics of user-generated content & attention


The current set of Web app firms have valuations based on the generous contributions of users like you. The platforms, in and of themselves, aren’t worth the valuations that VCs, or acquiring firms, are attributing to them. It’s never about the software, it’s about the community, the audience, the users. In fact, the most interesting developments are the most simple. Think about blogging software, RSS, Twitter, podcatchers— it’s not the software it’s what is enabled for the users.

Audiences used to be aggregated so that you could sell their eyeballs to advertisers. Now, to a large extent, the audience creates the product. Jason Calacanis was criticized for wanting to pay the audience at Netscape. But if the user contributes to the value of a platform, shouldn’t the platform owner pass some of the revenue through? The economics of “user-generated” content will be similar to the economics of user attention data. The user will want to retain, or be compensated for, the value of both their raw attention and the content they’ve created.

Published in economics user data value venture capital zettel