Jason Fried, founder of 37 Signals, asks me what I think of the news that Microsoft is jumping into the hosted application space.

I say that’s cool, but Google is building both Web Monetization Gadgets and Web Buzz and Brand Building Gadgets. They are building an advertising platform that’s very interesting. Google is no longer a search company.

Personally, I share Jason’s skepticism. I wanna see shipping services and gadgets. Enough talk. More action needed. Google has their stuff out there (even if they do call it all “beta”). Yahoo, in many ways, is further along than Google (but not in advertising model, which is why their stock price isn’t going nutty like Google’s is).

I want to get a more complete look at what we’re doing first, though, before I mouth off. I hope to sit down with Ray in the coming weeks and get a good look at what we’re doing.

It all crystalized earlier this week when Ethan Stock, CEO of Zvents showed me his new Web-based business. See, I’m pretty slow. It took me four years to get blogging after Dave Winer first started his. It took me two more years to really get RSS’s relationship power. I still haven’t gotten OPML totally (although, I’m working on a directory of my blogs that’ll be pretty cool, so I’m fairly far along getting that).

On Monday night Steve Gillmor explained what he meant by attention (he started AttentionTrust.org). See, I thought what he meant was that attention was all about gathering the clicking behavior of people like you in a central database. Imagine when you go to Bloglines. Thousands of people visit that every day. They all click on links. Bloglines tracks those clicks. I thought that was attention data that Gillmor was talking about.

I was wrong.

And it took me seeing Zvents (and hanging out later with the smart folks from the content and advertising industries) for me to get it.

So, let’s dive in. Zvents is an event page. You tell it that you want to see a football game this weekend. It gives you a result back. So far, pretty basic stuff. But, click on an event. See the Google Map? Forget that it’s Google for now. Let’s call that a Web Buzz Building Gadget.

Now, see the Google Ads over to the right? Let’s call that a Web Monetization Gadget.

So, here’s the new Silicon Valley business plan. You build a service. Add a Buzz Gadget (Google/MSN/Yahoo are working on more to come). Add a Monetization Gadget (Google calls that their Web Advertising Platform — MSN and Yahoo are working on their own). Mix and mash and we have a business. Guess what? This business will be very profitable. Why? You develop it cheaply and if you did your job right, a boatload of people come and visit your service, like it, keep coming back, and hopefully they click on the ads (the more they click on the ads, the more money you make).

Now, that sounds cool, right? But here’s where attention could come in.

What is Zvents capturing? Well, they know you like football. They know you probably are in San Francisco this weekend. And, if you click on one or two of the events, they know you’re interested in them. Now, what if you see an ad for a pair of Nikon binoculars. If you click on that, then Zvents would be able to capture that as well.

Now, what other kinds of things might football fans, who are interested in binoculars, who are in San Francisco, want to do this weekend? Hmmm, Amazon sure knows how to figure that kind of problem out, right? (Ever buy a Harry Potter book on Amazon? They suggest other books for you to buy based on past customer behavior!!!)

It goes further. Let’s say this is 2007. Let’s say that Google (or Yahoo or MSN) has a calendar “branding” gadget out. Let’s say they have a video “monetization” gadget out. Zvents could build the calendar “branding” gadget into their page. What would they get out of that? Lots of great PR, and a Google (or MSN or Yahoo) logo in everyone’s face. But, they would also know where you’d be this weekend. Why? Cause you would have added the 49ers football game to your calendar. So, they would know where you are gonna be on Sunday. And, that you just bought binoculars. Over time Google/MSN/Yahoo would be able to learn even more about you and bring you even more ads. How?

Well, let’s say you’re Starbucks. Let’s say you make a deal with Google to put Starbucks ads on Google Maps. Let’s say the ads say “$.50 off of your next latte if you give this code: XZP1.” So, you go into Starbucks and give them the code. They punch that into the register. It reports back to Starbucks headquarters that you bought a latte because of the Google ad. Then, they report back to Google that you bought something (Starbucks will get a discount on their ads for this kind of reporting).

Now, Google knows you like coffee too. Oh, what Google knows!

It’s all attention. So, now, what if Zvents and Google shared their attention with everyone through an API. Now, let’s say I start a new Web business. Let’s call it “Scoble’s tickets and travel.” You come to my site to book a trip to London, let’s say. Well, now, what do I know about you? I know you were in San Francisco, that you like coffee, that you just bought some binoculars, that you like football. So, now I can suggest hotels near Starbucks and I can suggest places where you’ll be able to use your binoculars (like, say, that big wheel that’s in the middle of London). Even the football angle might come in handy. Imagine I made a deal with the local soccer team. Wouldn’t it be useful to put on my page “49ers fans get $10 off European football tickets.”

But, it gets even better. Now that the system is capturing my attention, and sharing it, my Web Gadgets (both branding and advertising) get better over time. They start to thrill me at some point. And, when I go to a search engine, it can see ALL my attention data and start suggesting things it thinks I’d like (sorta like Amazon suggests things to me).

Now, imagine my blog hooked into this attention system. Wouldn’t I get better ads along the right? Damn straight you would. And, let’s say I had a weather gadget on the right. Wouldn’t that show you YOUR city? Yes.

Wouldn’t it be able to see changes in your behavior over time and bring you even cooler stuff? Let’s say this system watched you for three years and then you started searching on pregnancy. Or “best price on diapers.” Or buying books on Amazon with titles like “Parenting.” And, Flickr could report to the system that you wrote “our new baby.” Oh, and it could watch everything you type on your blog.

Couldn’t the system know that you are likely a new parent? Couldn’t it bring up new kinds of advertising targeted at a new parent?

When I ran a camera store we sold diapers in our store. Why? So that we could get new parents into the store. Turns out that new parents buy a TON of camera gear.

My mind is racing from what you could do with this kind of data. I’m sitting with Buzz Bruggeman, CEO of ActiveWords. I bet that even ActiveWords could make use of such attention data.

Now I’m starting to get scared by this kind of world.