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Lady Gaga For Free Online Shows Boom Missed By U.s. Gdp: Economy

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http://www.bloomberg.com/news/2013-11-12/lady-gaga-for-free-on-internet-shows-boom-uncaptured-by-u-s-gdp.html

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.

Whilst GDP is a pretty useless measure is the "free" welfare going to pay off the US debt?

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That's such a good news story about online education. £9k a year at some no-mark ex-poly or zero. Which is the cleverest student?

The last time I remember ascribing value happening was in the dotcom boom when internet companies were posting these massive revenues but the bottom line remained a small loss. It turned out that the great majority of their transactions consisted of posting adverts on each other's websites. So Co. A posts a notional £1m worth of advertising revenue for hosting Co. B's ad, whilst paying a notional £1m for Co. B hosting Co. A's ad. The stats looked great and the bottom line losses were put down to expected early phase costs.

Then it turned out all that the majority of these companies was good for was incurring costs, they made no actual income.

If that starts coming into GDP measures then we are royally fecked.

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