The New Economics of Valuelessness


Reader J.S. writes “I thought you may not have seen this but I know you are a big twitterer so you may see this differently.” This is an article making the case that Twitter should be eager to accept a purchase offer since ultimately there’s no revenue stream behind it:

The blogosphere was all atwitter over the weekend with news that Google (NSDQ: GOOG) is close to offering a lot of money for Twitter. I know I’m going to get dinged for saying it, but I think the company’s founders should take the offer, whatever the price. […] And, when matched against the potentially cosmic implications of ubiquitous social/search, Twitter might be only one mechanism in search of an issue (or issues) to resolve. Sure, it’s immediate and quick, but what exactly does Twitter really own?

That seems entirely reasonable to me. I think that the true essence of the “new economy” of the digital era is that there will be lots of activity going on that people enjoy and find useful, but that has very little in the way of economic value that’s captured by profit-making firms. The quintessential enterprises of this era are things like Wikipedia, which may no money, or CraigsList which makes a very modest sum of money, even while they both revolutionize certain spheres of endeavor. Certainly the revenues associated with CraigsList are tiny compared with the revenues that used to exist in the rapidly-dying newspaper classified ad market.

Twitter seems like something that could become extremely widespread, and that lots of people could receive a small-but-real amount of daily enjoyment from, all without ever generating much money. And I think that will be pretty typical of the digital realm. The fact that Google itself is a very successful company sometimes serves to obscure the fact that the total amount of money being made off the internet is pretty small considering how ubiquitous internet use has become. Ultimately, I think understanding this growing de-linkage between value and monetizability, or perhaps between “use value” and “exchange value” as Marx would say, is important to understanding the world we’re increasingly living in.