Besides their other attributes our readers have been on top of this story for years but sometimes it bears repeating.
From Bloomberg:
Lady Gaga for Free Online Shows Boom Missed by U.S. GDP: Economy
Neilson Barnard/Getty Images
Economists other than Erik Brynjolfsson, a professor at the
Massachusetts Institute of Technology in Cambridge, are also trying to
quantify how much better off people are by experimenting with various
methods to calculate the maximum amount consumers would be willing to
pay for otherwise free services.
Since completing a master’s degree in electrical engineering in 2009,
Ti Zhao, a self-described “education junkie,” has continued to take
classes. The total price tag for the last eight in which she enrolled:
$0.00.
“It’s hard for me to imagine ever paying for a class again,” said Zhao, who has taken advantage of free studies provided by
edX and
Coursera Inc.,
including a public-health course taught by a Harvard University
professor, after hearing about online education services through a
friend. The 27-year-old San Francisco resident had been spending about
$500 a class to enroll in a local university’s continuing-education
program.
College lectures join a growing pool of web-based goods
and services being given away that are transforming the lives of
consumers like Zhao. Government statistics such as
gross domestic product
that only track things people buy underestimate the “very promising”
progress made by the U.S. economy in this area, according to
Erik Brynjolfsson, a professor at the Massachusetts Institute of Technology in Cambridge.
“In
the coming years, we’re going to have to reinvent the way we measure
economic growth,” said Brynjolfsson, director of MIT’s Sloan School of
Management Center for Digital Business. “The reality is, GDP, the amount
we spend, is not equal to what we get.”
Deriving the value
consumers implicitly assign to the Internet by gauging how much time
households spend on free websites, Brynjolfsson and MIT postdoctoral
associate JooHee Oh calculated that those virtual goods added an
additional $34 billion to consumers’ welfare each year from 2002 to
2011. That’s equivalent to 0.26 percent in GDP.
Money, Time People
pay for those sites with their time instead of their money -- time
that, in theory, they could have spent working more or consuming
something else.
“These measures of consumer surplus are
improving quite nicely,” said Brynjolfsson. “You can see why ultimately
we need to think harder about our metrics.”
The impact of free virtual goods is clear to young consumers like Emileigh Buck. Among her favorite online applications is
Pandora Media Inc.’s Internet radio service that she uses to stream music ranging from
Lady Gaga to indie electronic artist
Robert Delong.
Pandora introduced her to new musicians she never would have discovered
on her own, helping broaden her tastes without the cost or hassle of
accumulating and storing stacks of CDs, she said.
“I got an
iTunes gift card two years ago that I still haven’t gotten around to
using,” said the 25-year-old Seattle resident, referring to
Apple Inc.’s digital music store. “It’s just so much better with Pandora.”
Other Estimates Economists
other than Brynjolfsson are also trying to quantify how much better off
people are by experimenting with various methods to calculate the
maximum amount consumers would be willing to pay for otherwise free
services.
IAB Europe, a Brussels-based group that promotes digital marketing, and McKinsey & Co.,
a New York-based consulting firm, jointly surveyed Internet users in
Europe and the U.S. to estimate the value placed on services ranging
from search engines to social networks. Americans in 2010 would have
spent 32 billion euros ($42.9 billion) above and beyond the cost of
services they actually paid for and expenses associated with such things
as advertising and privacy, according to the study....MORE
Seriously, how can you put a pricetag on the Lady Gaga
Drone Dress?