Friday, March 17, 2017

The Internet is worth how much??

Do you ever see headlines that make sweeping claims such as “The Internet is worth $_______”, and then wonder what that even begins to mean?

If so, today is a day of edification, because a study I co-authored on precisely this topic was released this week.

When you are a hybrid such as I am, it is often tricky to explain what it is that one does. And when the project is quantifying the economic value of the Internet, the conversation can get even more convoluted.

So I had to come up with a way to describe the project to people, just well enough to satisfy their basic curiosity, but not so detailed as to bore them to tears. I came up with the following:

Think of the Internet as a framework that starts on the left side of the doodle below (yes, I’m the artist) with the Internet backbone on the left side and you, the user, Craigslisting and Instagramming away on the right hand side of the picture. 

My early conceptual doodle for this project; Click to enlarge

In between the Internet backbone on the left and you and your smartphone on the right lie the various components of the machinery of the Internet, from infrastructure, such as the provisioning of broadband, wi-fi, and cloud storage, to the advertising and marketing technologies (aka ad tech and mar tech) that enable the movement of money between brands and the the consumer-facing layer of the Internet. That's just a fancy way of saying the only part of the Internet most of us ever come into contact with, as that’s where we find things such as news and information sites, entertainment such as games and video sites, and eCommerce.

The big picture is one in which the Internet as a market-making machine can be conceptualized and then analyzed at micro and macro levels. This makes possible an assessment of its impact on not only the economy writ large, but also the effects of networked connectivity on particular industries, plus less black and white outcomes such as societal good, in the form of things like crowdsourced problem-solving and civic engagement apps.

The TL;DR answer to what all this adds up to, for the U.S. economy, which was our task with this project: $1.12 trillion contribution to the GDP of the U.S. and 4.1 million full time equivalent jobs (and an additional 6 million full time equivalent jobs in what economists refer to as indirect employment). How this was accomplished is explained in detail in the study, but rest assured many, many spreadsheets and models were constructed.

Fun with spreadsheets; all part of the job of determining the scope of Internet-dependent activity 
The mapping of the economic model of the Internet evolving, on my floor, Summer 2016

And if that wasn’t enough, we mapped the Internet-dependent employment to congressional districts in the U.S.

Image from www.iab.com/economicvalue

For those who are curious, see the methodology section of the study (Chapter 2, pages 17 through 20), which explains the methods used and assumptions made to arrive at this figure.

And for those in a bit of a rush here are some highlights to provide an overview of our findings, placed into the context of the last time this study was conducted (2012) and now.

Click to enlarge
Click to enlarge

 To see the study in its entirety, just click here. But be forewarned; It's 118 pages long.