“Free” Internet Content: Web 1.0, Web 2.0, and the Sources of Economic Growth

Leonard Nakamura, Jon Samuels and Rachel Soloveichik

No 18-17, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: The Internet has evolved from Web 1.0, with static web pages and limited interactivity, to Web 2.0, with dynamic content that relies on user engagement. This change increased production costs significantly, but the price charged for Internet content has generally remained the same: zero. Because no transaction records the ?purchase? of this content, its value is not reflected in measured growth and productivity. To capture the contribution of the ?free? Internet, we model the provision of ?free? content as a barter transaction between the content users and the content creators, and we value this transaction at production cost. When we incorporate this implicit transaction into U.S. gross domestic product (GDP), productivity, and household accounts, we find that including ?free? content raises estimates of growth, but not nearly enough to reverse the recent slowdown.

Keywords: Internet; productivity; advertising; marketing; measurement; GDP (search for similar items in EconPapers)
JEL-codes: C82 L81 L82 M3 O3 O4 (search for similar items in EconPapers)
Pages: 73 pages
Date: 2018-05-24
New Economics Papers: this item is included in nep-ict, nep-ino, nep-mac and nep-pay
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Citations: View citations in EconPapers (4)

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DOI: 10.21799/frbp.wp.2018.17

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