Curves, head and tail: discuss

I've been summoned by a good conversation in the comments to elaborate on my post on whether you need both ends (head and tail) of the spectrum of content and products to build a successful aggregation business.

    I suggested that you could survive with just "tail content" if you build a community first. The community can, in turn, create its own content (photos, indie music, virtual real estate) and find an audience for it within that community through a combination of social networking and merit. The two--people and content--then build on each other in a positive feedback loop to create a lasting, vibrant site. No global hits required.

    Now to the comments. Ray Lawton rightly smacks me for sloppy semantics:

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.

  Fair point. Rather than saying "tail content" I should have said that you can survive on "niche content" alone (ie, what would be Long Tail content in the overall market for that kind of media) if you establish community first.

    This is a good place to make a broader clarification. What one means by "head" and "tail" depends on what one means by "the curve". If the curve is "Music" then the head is Coldplay (this week). But if the curve is "Christian Metal" then the head is Chevelle. A "Music" site that didn't have a built-in community would have to have Coldplay to satisfy the head demand. But a "Christian Music" site could start at Chevelle and Reliant K and the other hits of that niche (note that odd construction; such linguistic clangers arise from our preconceptions of what popularity means) and do fine.

    In other words, your head may be my niche, but what's important for content aggregators without built-in community is that they span from top to bottom of their chosen domain.

    Next, John Zabroski chides Ray for using "shelf space" as part of his definition, since he says that only applies to physical products and not, say, to services, which also exhibit Long Tail behavior.

    I'll rise to Ray's defense and argue that "shelf space" is shorthand for the cost of access to market. In the case of physical products, those costs include manufacturing and distribution; in the case of services it can be geography, language, culture, time zones, or anything else that raises the transaction costs of providing a service. The same technology that gives Amazon infinite shelf space (the Internet) gives Wipro the ability to connect a near-infinite supply of smart global labor (in India and China) with a near infinite demand for the same (in the West). Or IBM to connect distributed customers to centralized computing resources (or vice versa).

    Finally, I should note that these are just guidelines. There are no hard and fast rules in the emerging economics of the Long Tail. My research (which will lead to some prescriptive chapters in the book) aims to identify and articulate the forces at work in these new markets of hyperabundance, but it's the entrepreneurs and audiences who will eventually translate that into successful businesses of many sizes. The one thing we've learned so far is that success doesn't have to measured on the Google scale.

("Undulating Curves" photo from Declan McCullagh)

Comments

[Terry Steichen]

Some semi-random thoughts:

1. Chris asks how do you build community before you have content? I personally don't think you can - you can't *make* community happen. You have to start with a small level of participation (maybe based on some "pump-priming" content of your own), let that initial participation generate more content which stimulates more participation and so forth.

2. You might consider thinking of "shelf space" in a slightly different way. For example, it is the capability to present items to prospective customers. A physical store has a physical limit on shelf space. A virtual store has no such limit.

3. The virtual store, however, has a limit that seldom applies to its physical counterparts - the limit of the customer's ability to find what they're looking for. In the physical store, the merchandize is directly viewable, and usually provides a clerk to help. Not so easy in the virtual store.

4. I think every market has a short and a long tail. Even if you discover the existence of a specific market segment that focuses on "long tail" products, once you focus on that segment, you once again expand into a short/long tail distribution.

5. It seems that the long tail business opportunities center on products in which the cost of delivery is very small compared to the cost of production. Content products meet this requirement as do most physical products (provided that these physical products are accompanied by adequate metadata). Services that are provided on an automated basis do also. However, non-automated services do not.

Just my $0.02 worth

[Randy Blumhagen]

Chris says, “…successful Long Tail aggregators have to have both a head (hits) and a tail (niches) to work well.” But, hits and niches are only relative in terms of competition.

Assuming most content starts in the Long Tail and ends in the Long Tail with the potential for a short life as a hit, then using music as an example, if the content is a combination of: 1. old music, which experienced hit status and has long since resided in the Long Tail, 2. maturing music, which may have not long ago been a hit and is entering the Long Tail and, 3. new music, which aspires to attain hit status and exit the Long Tail, then it makes sense that there can only be “some current hits” in the Long Tail and likely only “moderate hits” before they must exit the Long Tail.

Hits relate directly to attention, attraction and competition in the Long Tail. Given their lesser ability to attract and compete for attention the Long Tail community suffers in the presence of too many hits. If they are unable to compete for attention fairly against one another then they are very likely to seek a new community in which to compete. This may account for the rise and fall of many former communities that did not play for their evolution. Therefore, a successful Long Tail aggregator must also provide a mechanism by which to move hits away from the Long Tail in order to maintain solidarity within the community.

[John "Z-Bo" Zabroski]

Chris, in your initial Wired Mag article, just below the title it reads: "Forget squeezing millions from a few megahits at the top of the charts. The future of entertainment is in the millions of niche markets at the shallow end of the bitstream." The "shallow end of the bitstream" is a nice term to describe the markets for tiny niche content. I was also reading an article by Alexis Gutzman, Gutzman's Best of 2000, in which she used the phrase "bit players" to describe companies whose business models could not generate growth because they lack brand power and visibility, and were "doomed" because of it. The word "bit players" intrigued me further, and a Google search on the phrase yields a very interesting PDF file: More Than Bit Players: How Information Technology Will Change the Ways Nonprofits and Foundations Work and Thrive in the Information Age by Andrew Blau. This is a very interesting document because I have been wondering about the role of successful government businesses in a world with Long Tail businesses and if anything will change. I have not heard you mention government involvement in Long Tail businesses, and as the policymakers that set the boundaries of operation they play a very important role.

[chris anderson]

I'm sure there are many implication for governments and politics here. But I try to steer clear of both of those domains as much as I can and, since they're not obvious examples of the phenomena, I'll leave them to others.

[Matt]

Build the community and then build the underlying product was the concept behind Brewtopia in Australia a small online beer company .
These guys had very little brewing knowledge and a whole lot of IT experience so they set up a website got a email list set up and sent out a multiple choice question every week about the marketing of the Beer and in return members got a share in the company they ended up getting 20,000 members about two years ago .They also give customers a share for every case of beer sold and let customers design their own labels online .

Brewtopia is soon to IPO in Australia and is selling a whole lot of beer they even ran out of beer at Christmas time last year .I was a microbrewer that gave these guys some advice to go into online sales and not set up their own brewpub.Sometimes I wonder why I didn't stay in OZ now I'm in the USA

http://www.blowfly.com.au