
Attention Arbitrage - nateberkopec
http://nateberkopec.me/post/30752551695/attention-arbitrage
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nhebb
If you didn't click through to Andrew Chen piece, I recommend reading it
before jumping to conclusions. "Outsource you monetization" struck me as daft
- until I read what Chen meant. The examples he cites are are about leveraging
existing services instead of building your own:

    
    
      - There’s 200+ ad networks to plug into
      - Payment providers like Paypal, Amazon, Stripe
      - “Offer walls” like Trialpay
      - Mobile payment solutions like Boku
      - and new services coming out all the time (Kickstarter)

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jacques_chester
Basically, supply and demand. Let's look at advertising, since it's still the
major way for publication-oriented websites and consumer webapps to make
money.

1\. Demand as in demand for advertising.

This is actually a proxy for the ultimate consumer. Advertising demand is
driven by the amount of money that can be made from the viewers of the
advertising.

But this changes relatively slowly. With 2 billion internet users we've either
reached or are fast approaching the inflection in whatever sigmoid function
describes the growth in users. After that taps out growth will rely entirely
population growth -- ie, internet businesses will be constrained to the same
dynamics as everyone else.

2\. Supply as in the supply of "inventory".

Inventory is just ... a box where you put your add. Inventory does not require
9 months to create followed by >10 years to raise. It is being created
fantastically quickly.

So if supply is expanding exponentially, but demand only sigmoidally ... well
it's not pretty for anyone outside the top few percentiles.

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001sky
_“Outsourcing monetization” has got to be the worst oxymoron I’ve ever heard.
The purpose of a business is to make money, and it doesn’t take a business
school degree to know that you outsource to reduce costs, not to raise
revenue._

\--While this is true to some extent, a few counterexamples are worth noting.
Namely, transactions services. These are of a real business that scale. Think:
paypal, visa, etc. There is also a class of services that are pre-transaction:
like amazon referral fees. These services all monetize through external sales,
but represent real-value-added services. They are _orthogonal_ to attention,
in that the make life easier, simpler, less complex.

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jval
This is a great piece.

Building and scaling a business model is just as difficult and important as
building and scaling your technical platform. I think that people often talk
in general terms about how they plan to monetise, but miss the details. It's
one thing to have an overall plan (e.g. advertising) but as we start to get
more detailed these plans tend to fall over.

Advertising --> Types of advertising (Banners? Sponsored Results/Posts? etc)
--> Precise details (Where are you going to put the banner? How big is it
going to be? How are you going to source your inventory?)

Bubble 2.0 was built by having big web 'properties' value themselves the same
way they did 10 years ago. But as the article validly points out, the
competition for attention isn't what it used to be, so the valuations don't
correlate.

New hot startups are no longer 'properties' in the traditional sense and
actually build businesses with technology as an enabling factor rather than an
all-consuming strategy. I'm looking forward to seeing how these turn out!

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dllthomas
> The problem with a “just build a great product” strategy is that it assumes
> that all created value can be captured.

Well, really it assumes that _enough_ created value can be captured.

