Inversion of scarcity

Every business, if it’s smart, should realize that the Internet has the ability to drop out its pricing floor, or more precisely, to eliminate the scarcity on which price depends. This is what is usually meant by the catchphrase “disruption.”

What often happens, subtly, is that the locus of scarcity is reversed — in the consumer’s favor.

Consider information businesses, like newspapers, classified ads, Bloomberg, and even employment agencies. It used to be that the information they supplied was scarce. Thus a consumer might reasonably pay for access for such “rare” goods.

As information has become ubiquitous, its scarcity obviously falls away, and with it the pricing power of gatekeepers. But note the complementary phenomenon…

This information abundance has made consumers’ attention proportionally more scarce. The market has flipped.

The ability to reach smart, desirable people has become much more difficult. This is a common complaint among advertisers, and perhaps it’s not new.

What they should understand is that consumers’ attention is now a very liquid market. Good deals are scarce, and by “good deal” I mean underpriced eyeballs.

Advertisers might (and do) try ever more-invasive techniques. It can work tactically. But those eyeballs have choices, and invasive ads will turn many away.

Inevitably, the eyeballs will become more expensive for advertisers. They’ll need to pony up — either in $$, or in the creation of valuable content.

Consumers may gripe about advertisers’ desperate moves, but it should be understood as a sign of the consumer’s strength. They are an abundance of suitors.