What's the deal?

Everyone says nothing is for free. If you get a voucher for a 20%-70% discount from your local mall, it’s just because they want to motivate you to buy new kinds of stuff you probably don’t need.

But what about free digital products? What is the real price of using social media platforms for free? Why can TikTok make millions of dollars per month, when it’s totally free to use?

Well, first we need to understand their revenue model. According to Business Model Toolbox:

"TikTok generates revenue from ad revenue and in-app gift purchases. The ads function synonymously as those from other social media platforms: advertisers select their target demographic and TikTok places this messaging in front of the advertiser’s desired audience. Gift purchases can be made when users convert their real money in exchange for TikTokens. A user can purchase 100 TikTokens for 99 cents."

But what actually is this target group doing? Why they can use and enjoy these apps for free? Well, we are reading, listening, watching, and focusing on something on a screen. Literally, we are paying 💸 attention.

Without our attention, the advertisement opportunity on these platforms would be worthless for companies so that we can state that:

Attention is the new gold

“A wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it”

— Herbert A. Simon

But what does it mean? Imagine, you are after a long winter day. Everything you want is to laying back on your cozy, warm couch and watch a great movie on Netflix. But you have seen every movie your friend suggested after you ran out of your favorite ones. Frustrating right? You are trying to find something new, something catchy, something that can reach the needed trigger level, where you can pay attention to something.

,,The human brain is not designed to effectively process large quantities of information because this requires a lot of energy. Since our attention is naturally limited, we have started to skim information torrent without paying attention to anything in particular, beyond our awareness, which triggers just dopamine release on each impression to keep going on. As a result, when it is time to choose, we just can’t. " ∼ "No doubt, information overload or infoxication affects not only personal well-being but also has many economical implications. It forces businesses to compete far beyond product features, quality, and brand power. Now, they compete for our attention."

—

Michael Loboyko

Side note: There is an article from 1997 that is about how the new currency will be our attention instead of money.

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The trilemma of a digital product

Consequently, I tried to summarize the 3 key attributions of digital products. These are the following:

• Freeness // you don't have to pay for it directly
• Popularity
• Security // don't sell your attention / data to the third party

Here we can see the elements of a trilemma. Due to the peculiarity of the trilemma, only 2 things can be fulfilled at the same time:

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So are these products worth it?

Of course, I can't tell you. I use these products as well because they entretain me.

I'm just saying that you should pay attention to what you are paying attention to!

Here you can see a, let's say so, the utopian example of selling attention: