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July 28, 2005

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Comments

David Sabel

I agree with Adina. You don't need hits. You just need to have data source that is a true reflection of what people consume / collect / like. But I disagree that you need to have community when you don't have hits.

For example, in music, P2P networks offer an amazingly long tail of music fans and content within which to explore.

The trouble has been in finding something relevant to your tastes among that diversity (no P2P tool I'm aware of has a recommendation engine).

While you can "browse host" to peer into other user's collections, this has to be done one collection at a time, a requirement that is way too time consuming for most.

Fortunately, given the public nature of these shared folders, it is not impossible to aggregate and analyze people's collections. From there, you are just an algorithm away from enabling fan of one niche band to find another niche band.

No hit is needed to "leverage down" to the tail.

An example is found here:

http://tinyurl.com/9svyt

(In this example a fan of a niche band such as Guadalcanal Diary could discover a wide range of other "niche" bands including The Feelies, Throwing Muses, Oingo Boingo, Melvins, etc. all without having to rely on using the name of a hit band to get there, or needing to search through communities or interested users who list "college rock" as an interest at Live Journal.)

Even iTunes, with its sales-based data set can generate a list of recommendations for Guadalcanal Diary that is "niche" in nature (The Silos, Camper Van Beethoven, Funker Vogt).

Chris, while I agree that the starting point has to be something the user already knows, that does not mean that either:

a. what they know necessarily has to have been a hit in order to find something in a niche

or

b. you need a community (as is defined by the Flickr, LJ examples) in order to go from niche content to other relevant niche content

David

chris anderson

David,

No P2P network would survive if it didn't have the hits. Most people fire up Kazaa to get the same things other people are going to Wal-Mart for. Once they're there, however, they may also explore in the niches, but according to BigChampagne, who tracks these things, the P2P top 100 charts are not wildly different from the Billboard Top 100.

Matt

Depends on how you define success. If your definition incorportates (explicitly or implicitly) a requirement of brand familiarity outside of the target niche, then I'd say no.

But if success is strictly about viability (and for me it is), then yes, I can name successful entities which could be classed as "user-created content aggregators" (even though they don't use that term themselves) without actually trying to foster signficant "community" among their members.

John "Z-Bo" Zabroski

Chris, what is the impact of P2P Network filesharing statistics? What can it tell us about doing business in a long tail market that is beneficial? Simply saying P2P Network filesharing statistics BigChampagne Top 100 Chart are similar to the Billboard Top 100 tells us nothing, other than the fact our society has tiny pockets of anarchy.

The Underworld of Filesharing and Digital Piracy

For fun, I thought it would be interesting to try and track the number of Harry Potter e-books that were stolen on the Internet with its latest installment's release. What I found was overwhelming. There were so many requests for Harry Potter books over various filesharing networks that I estimate the number of requests for the book (based on sampling demand at various times) to be over 30 per minute over the first three days. At its lowest, the requests were 8 per minute. I also noticed there was discussion on these filesharing networks (message boards) about how some of the copies of the latest installment were phonies and that they had to download a second or third or fourth copy of the book to get the correct copy. This disturbed me because I realized my study was less worthwhile than I originally anticipated. However, lets say conservatively there were 20 per minute over the first 72 hours:

72*60*20 = 86,400.

I wondered more about how accurate this might be, and tried to find someone who would claim to have over 50,000 or so books. I found someone, and after they sent me their list of files, I was sold they were telling me the truth. I mentioned to them the figure of 86,400 Harry Potter books over 72 hours and he/she laughed and said, "Is that all? I started blocking the requests for it after awhile because it was so ridiculous."

I then started to scrutinize the impact of my statistics. I realized they have no real value, when I simultaneously realized I was tracking the wrong data: A better research experiment would've been the number of Harry Potter e-books, installments 1-5 downloaded over a long periodcompared tothe instant release of Harry Potter installment 6. I threw out my data on Harry Potter because it was heavily flawed and also lacking impact.

Danny Kim

There is actually an example where the demand has gone in reverse order: from niches to hits.

There is a social networking service in Korea called "Cyworld", which might be the largest in the world with over 12 million registered users (that's about a quarter of population of the entire South Korea.)

Anyhow, it started out pretty grassroots-fashioned, with mostly teenagers building their homepages and connecting with each other, putting up pictures like on flickr and writing daily journals like on blogs. Then the network got really really big. Everyone started jumping in, so everyone else started to join to keep up with what's going on with his or her friends. Pretty much all of Cyworld's contents are user-generated and their daily income of about $200,000 comes mostly through the users buying digital avatar items.

As Cyworld got more coverage in the mainstream media for all its business success, the big corporations and celebrities, even politicians, started jumping into Cyworld for PR/marketing. After all, they could do all the marketing and ads on cyworld for free and they are indeed getting tens or even hundreds of thousands visitors every day. The Long Tail has been formed, just the other way around this time.

More on this:
http://www.thechrispirilloshow.com/help/20050712_interview_with_rick_kim_of_cyworld.phtml

John "Z-Bo" Zabroski

RE: WHAT IS NEEDED FOR A LONGTAIL "TAIL ONLY" BUSINESS MODEL

I read an article a long time ago about "The Relationship Revolution" and believe I referenced it in the comments section of this blog a few weeks ago. If you have not read it yet, read it. If you have read it, read it over again: The Relationship Revolution by Michael Schrage.

I will highlight for you what you should be looking at:

* The first paragraph says a lot, mentioning the overuse of the phrase "Information Age" to describe the value of the Internet.

* The second paragraph mentions that experts (e.m.) concede if we are not living in an "Information Age," then we are living in an "Information Economy" where information is the de facto "Gold Standard."

* Paragraph three: Schrage warns the reader this is a DANGEROUS way of thinking.

* Paragraph four: The phrase "Information Age" conceals rather than reveals what's going on: "the genuine significance of these technologies isn't rooted in the information they process and store."

* Paragraph five: SCHRAGE's THESIS STATEMENT: The biggest impact these technologies have had, and will have, is on relationships between people and between organizations.

From there, Michael Schrage expertly uses the intercutting technique of storytelling to explain the impact technologies have on relationships between people and between organizations.

SO WHAT IS SCHRAGE SAYING?

He's saying each of the tails are insignificant in comparison to the newer ways people are able to better communicate with each other. Rather than studying The Wal-Mart Shelf Effect, a more simpler and more powerful study of the Long Tail would be a heavy study into Blogging. Adina Levin might be suggesting this also. This all fells well in line with Peter Merholz' article on Less-Controlling Strategies: How I Learned To Stop Worrying and Relinquish Control, which I also linked earlier. I am a subscriber to the Adaptive Path newsletter and originally took notice of the thought of effectiveness of Less-Controlling Strategies with Merholz' New Year's Resolution for 2005:

5. Put relationships over content management. Peter Merholz

As an information architect, my tendency is to address the content of a website as a series of discrete elements. I prepare to analyze, organize, and present it. “Where should this content live?” and “How will people find it?” are typically the paramount questions.

This approach, however, ignores a fundamental question, “Why do we have this content in the first place?” Content isn’t interesting in and of itself. Content is interesting only in the way it allows readers to successfully perform some task, while creators achieve an organizational goal.

When you look at it that way, you realize that content is only relevant when it serves as a mediator between an organization and its customers (patrons, visitors, readers, and so on). Sound content helps both parties to get to know one another better, creating a mutually beneficial connection.

Because of this, I resolve to approach the user experience design of websites not as a matter of managing content, but as a matter of nurturing and maturing relationships.

(For more on the idea of information as simply a relationship broker, read “The Relationship Revolution”, an insightful essay by Michael Schrage.)

It seems the people at Adaptive Path have adapted quite nicely to the business model of the 21st century

Ray Lawton

Whoa whoa whoa... don't start applying the "long tail" to any old random thing. The long tail needs a short head by definition. Communities like Flickr go against this - precisely because they aren't examples of the long tail. What long tail economics shares with community web sites is that they both take advantage of the Internet, but in completely different ways. Long tails occur because of drastic reductions in shelf space cost. Large-scale communities and niche communities are formed because of the reductions in labor of communication. These are cousins but not brothers.

John "Z-Bo" Zabroski

@Ray Lawton

Presumably I as well as others were applying the long tail without a short head. I cannot answer your criticism and defend the "tail only" application of the Long Tail just yet. You raise an important objection, however, and one issue I am sure many people here would like to comment on since there has already been a lot of discussion regarding whether both halves of the tail are necessary.

However, I have my own objection. You claim that "Long tails occur because of drastic reductions in shelf space cost." I disagree firmly, but cannot backup my disagreement just yet. My only temperament at this point is to caution you against viewing such a relatively new business and economics model with absolutism.

"Fire burns both in Greece and in Persia, but men's ideas of right and wrong vary from place to place."

-- Aristotle, Nicomachean Ethics

Terry Steichen

(First, sorry for the length of this comment - I didn't have time to try to make it more elegant.)

When I think of the "long tail" concept, I think of a world comprised of (a) producers, (b) merchandizers (called "aggregators" here), (c) consumers and (d) finder mechanisms (called "filters" here). The new insight pertaining to the "long tail" notion is that, in an information rich environment, merchandizers no longer need limit their focus to items for which there is substantial consumer demand. Rather, because "shelf space" (via online storage and publishing) has become so cheap, it's possible to generate substantial revenues by offering items whose low demand would have previously precluded them.

This post (that I"m commenting on) raises several questions. First, must a short tail exist to make the long tail meaningful? Put in terminology I'm more comfortable with, can a merchandizer succeed by focusing only on low-demand items? The answer is yes - provided that the niche market that is served is large enough to support the business. If the niche merchanizer's focus is sufficiently narrow, the need for a finder mechanism (aka filter) diminishes. (However, the size of the market served also diminishes.)

On the other hand, a merchandizer who handles high-demand (short tail) items can also derive potentially significant revenues from low-demand items (given the now low cost of shelf space) provided that the merchandizer also provides appropriate finder mechanisms. For such a merchandizer (aka aggregator), it makes no sense to forego the high demand (short tail) side, even though it theoretically could. After all, who knows how much of the short tail market also has needs on the long tail side?

Another question pertains to community and content. My view is that community systems exist to generate and consume participant-provided content. This content may be shared with many participants (as in a group discussion), or privately (as in private discussions). The value of the content may take the form of better insights, business contacts, etc. In this case, the participants play the role of both the producers and consumers. The merchandizer/aggregator is the system provider/manager, and the filtering is accomplished via the sharing of personal information by which one participant discovers others with which to interact.

A third question was whether there is a short as well as a long tail in such community systems. My answer is sure. Some discussions are much more popular than others, and garner lots of attention and interaction. Others have a smaller scope and thus less interaction (and less content generated). Purely private exchanges might be considered the longest of the long tail.

So, "do you really need both ends of the curve?" Not if you're going to focus sharply on a single niche. But if you're focusing on generating incremental revenue from small niche markets, you need something (e.g., high demand business) against which to increment.

John "Z-Bo" Zabroski

Terry, express no shame in your opinion. You compliment what Ray Lawton said very well and what you said puts in better perspective perhaps what Ray was trying to say.

Chris Anderson has mentioned that content is a pretty important aspect of (most if not all?) Long Tail business models. Chris recently mentioned that he feels one of the reasons why Long Tails that might start out with communities and then build content are successful is because they have "content on top of community." Danny Kim mentioned Cyworld as an excellent example of this and mentioned Cyworld brings in $200,000 a day in revenue as well as now reaching agreements for promotions from main stream media.

Ray Lawton mentioned that, "Long tails occur because of drastic reductions in shelf space cost," and I disagree, because his opinion (most likely unintentionally) precludes the Long Tail is a business model for goods instead of services. Services do not really have "shelf space," do they? Certain services do, but not all services are born on shelves or even use shelves for pretty much anything. In fact, I can put my finger on a service that has VIRTUALLY NO shelf space whatsoever (minus a few technicalities): Auctioning off clock cycles from a Super Computer to companies who need on-demand computing. While there is no data I have that proves auctioning off the clock cycles has a long tail effect, it is very possible that it is a Long Tail business model or could be turned into an effective Long Tail business model. Incidentally, this is also a business that has "no community" just like Technorati. Perhaps community-less or review-less business services are correlated to the "no shelf space to begin with" phenomenon.

I might be missing Ray Lawton's point still, but I think I raise a valid objection that shows his statement is only partially true. To be fair, my point about the Relationship Revolution is also (partially) invalidated by the point I just made. I think I may be guilty of a sylogism as well. There are many issues at play with business and that's why there is no universal blueprint for success and no one is the wiser except to measure the bottom line. It will be interesting to hear Chris Anderson weigh in on this issue.

Nicholas Paredes

It is my belief that we have three layers: community, metadata, and content. My opinion is that community and "content" are interwoven and their growth directly correlates. I am also of the opinion that the best organizations grow through educating their clients, which also feeds the "long tail." Without an educated, discerning clientele there is no such thing as a tail. Getting there takes consuming effort. This effort should also match the feedback in the sense of "Flow". Mihaly Csikszentmihalyi discusses the most rewarding feedback mechanisms relative to internal rewards. A community that requires too much effort is a dead or inclusive community.

A community requires the dicussion of adjacency, which is metadata rather than content itself by implication. Does content interact? One of my favorite companies since I was a teenager is Morningstar. The charts and organization was fantastic. They create nothing that is not available elsewhere for free, but have created a nitch in organizing the information for a discerning group of investors. Investors who have fed the brand by quoting them continually. This "connoseurship" is perhaps an important aspect.

Terry Steichen


My comments (TS==>) embedded below.

Z-Bo said:

"Chris Anderson has mentioned that content is a pretty important aspect of (most if not all?) Long Tail business models. Chris recently mentioned that he feels one of the reasons why Long Tails that might start out with communities and then build content are successful is because they have "content on top of community."

TS==>I see it as iterative. You start with a small level of community activity and small amount of "seed" content (to prime the pump, so as to speak). Then, as commnity activity grows, the community-generated content grows, which encourages more community activity and so forth.


"Ray Lawton mentioned that, "Long tails occur because of drastic reductions in shelf space cost,"

TS==>I'd say it this way: "Having virtually unlimited "shelf space" is a necessary (but not, by itself, sufficient) condition to provide long tail opportunities".


"..and I disagree, because his opinion (most likely unintentionally) precludes the Long Tail is a business model for goods instead of services. Services do not really have "shelf space," do they?

TS==>I think of "shelf space" as what constrains a physical store - it's really what the store can present to the customer. In an online world, there's no specific limit to such presentation, and hence the references to zero or low cost shelf space.

TS==>If the service is fully automated and available online, I think what's really being generated is customized content. So, in those cases, the analogy to content fits well. For other services, I don't see long tail opportunities.


"It will be interesting to hear Chris Anderson weigh in on this issue.

TS==>I agree


Scott Brenner

Looking through your blog I haven't found and examples of flat curves or at least flatter curves.

Have you found and markets where the least popular products sell as well or almost as well as the most popular?

I would guess even a market that is at an extreme end of the head/tail curve still has a pretty steep curve.

scott o'malley

Chris, arriving late with a thought...

I was introduced to Flickr through U2's most popular and excellent fansite, www.atu2.com - they started a group for fans to post concert pics.

I was introduced to Friendster / MySpace through, well, friends - other single guys looking for dates.

My point is I consider the U2 fansite and my friends in these examples as "heads," in that they referred me to the communities.

Now, no doubt I would have found Flickr through another avenue, but I doubt I would've found the @U2 concert fan pic section.

I just don't agree with the notion (if I understand Levin) of people joining the community and finding their niche, rather I think folks find their niche and then join the community - they follow the niche.


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Tidbits

The Long Tail by Chris Anderson

Notes and sources for the book

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