By Rachel Soloveichik

Some economists argue that official GDP measurements since 2000 underestimate economic growth because they overlook the value of online entertainment. Although consumers access many online platforms for free, these services are largely funded through advertising rather than direct payments.

Rachel Soloveichik’s paper examines how current GDP calculations, based on the System of National Accounts 2008 (SNA), handle this issue. In the current system, the production value of advertising-supported media is counted in GDP but classified as an intermediate input to other industries, not as final consumption by households. As a result, its contribution is excluded from final expenditure figures.

To address this, Soloveichik proposes an experimental method that would include advertising-supported media as part of final consumption in GDP calculations.

The findings show that adopting this new method has a very small effect on recent U.S. GDP growth. Although online entertainment has expanded rapidly since 2000, traditional print media supported by ads has declined sharply. Thus, the overall impact on real annual GDP growth is almost negligible, changing from 2.485% to 2.484%.

Additionally, the new method would slightly raise the U.S. GDP level compared to other OECD countries — by about 0.13% — suggesting that cross-country GDP comparisons could be affected if advertising-supported media were counted differently.

Conclusion

While the experimental method provides a more complete picture of how "free" online services contribute to the economy, its effect on measured GDP growth in the United States is minimal. However, it could have greater significance for international economic comparisons.