The Long Tail

Remember when diaries were secret?

Ah, those little stamped metal keys that were supposed to keep your sister's diary safe from prying eyes (a screwdriver worked as well. Sorry, sis!). Today, that diary has become a MySpace page and the secret crush is the guy draped over the keg on her Facebook gallery.

Something big changed over the past decade as a long trend of diminished privacy suddenly flipped to radical transparency. I suspect that most people who put their innermost thoughts online don't really expect them to be read by anyone other than their friends (a strategy known as "security through obscurity"), and sometimes not even them. Still, Michael Kinsley has an amusing take on the new era of living in public:

"But anonymity does not actually seem to interest many of the Web's most devoted users. They are the ones who start their own sites, or sign up for MySpace, or submit videos to YouTube. Quite the opposite: The most successful Web sites seem to be those where people can abandon anonymity and use the Internet to stake their claims as unique individuals. Here is a list of my friends. Here are all the CDs in my collection. Here is a picture of my dog. On the Internet, not only does everybody know that you're a dog. Everybody knows what kind of dog, how old, your taste in collars, your favorite dog food recipe, and so on."

Dutch cover

While in Utrecht I had the pleasure of seeing my book in Dutch for the first time, and was delighted by the playful interpretation of the curve. We're starting to think about the US paperback version, which we may release in late 2007 with a new cover. What do you think--would a fun pencil-sketch curve help explain the Long Tail without seeming too math/homework-ey? (The typography would be more like the current US hardcover, but I'm thinking of replacing the enter key with something a little more, er, on point)

(See this post for what other countries have done with the cover.)

Amazon names The Long Tail best business book of the year

Just a quick note from Utrecht, The Netherlands, where I'm speaking at the Marketing3 conference. Two cool bits of news:

1) Amazon's editors have named The Long Tail the best business book of the year. Thanks Amazon! 

2) Spencer Wang at Bear Stearns has just released a great report on how the Long Tail will affect the television industry. I've asked him if I can post the whole report, but in the meantime you can read about it here and, if you're a Bear Stearns client, listen to the conference call here. (If Spencer gives me the green light, I'll post the login for that, too).

UPDATE: the pdf is now available here and the presentation can be heard here.

UPDATE2: I'm afraid the pdf linked to above is just the slides to the presentation. The full report, which is worth reading (and give full credit to my book, btw), unfortunately still isn't online and I'm still waiting for permission from the Bear Stearns "compliance officer" to post it (sigh). Sorry about the delay...

UPDATE3: Finally, here it is.

In Praise of Radical Transparency

One of the most fascinating phenomena of the blogging era has been the inversion of corporate norms. As the tools of production and distribution are democratized, institutions lose power and individuals gain it. As the Web becomes the greatest word-of-mouth amplifier in history, consumers learn to trust peers more and companies less. And as the same trends play out within the firm, businesses are shifting from command and control to "out of control", distributing more and more power to the rank and file.   

Perhaps the most interesting of these is the shift from secrecy to transparency. The default communications mode of companies has traditionally been top-down, with only the executives and official spokespeople permitted to discuss company business in public. The standard rule, explicit or not, was "That which we choose not to announce is not to be spoken about." Aside from some special exemptions, such as conferences where those employees trusted enough to go chatted guardedly with outsiders, employees were cautioned that what happened at work should stay at work. Loose lips sink ships, etc.

But over the past few years, a new breed of executive has emerged, and with them a new attitude toward controlling the corporate narrative. From Microsoft to Yahoo!, the public face of the company is increasingly employee bloggers who are trusted both internally (allowed to blog without legal or PR review) and externally (they're just regular folk like us!). The consequence is that much that was once hidden is now open for all.  These rarely include big disclosures (the real secrets stay secret), but instead tend to be about routine issues that dominate the day-to-day life of engineers and project managers. The small cost of some competitor getting early wind of a new feature is more than outweighed by the good will generated among customers by candid insights into product development. So far, so Naked Conversations.

What really interests me, however, is when this goes even further. Not just transparency, but Radical Transparency. The whole product development process laid bare, and opened to customer input. Management in public, via blog. CEOs venting, without benefit of legal counsel, in late-night postings.

The poster child for this is, of course, Mark Cuban.  His postings on everything from NBA refereeing to video competitor strategies are riveting, an unfiltered lens directly into the brain of one of the most primal entrepreneurs on the planet. Like him or loath him (disclosure: I like him), you can't stop reading him. His blog is the Being John Malkovich of capitalism--you're in the head of a extraordinarily intuitive businessman who can't help but say what he thinks.

In the spirit of transparency, I'm going to continue to build on this theme on this blog in public even as I help develop it into a story or series of stories in Wired. That is, of course, exactly what I did for my book, which worked better than I could have dreamed. Now I'd like to try applying it to magazine-making, too. The difference is that this time I won't be the author of the magazine piece (my job is to catalyze great work, not do it myself), so I'm just one party of many. We'll see how it goes... 

I'll end this post with some recommended reading on Radical Transparency:

Fred Wilson: "We are living in public more and more every day. It's becoming the norm. Our kids out their personal lives on their MySpace and Facebook pages. We blog about what we did this weekend and where we ate last night."

Jason Calacanis: "The CEO of Wesabe is taking calls seven days a week for four hours a day--from any user!"

The Wikipedia entry: focuses on management and government.

JPG Magazine: The community votes on which pictures go in the magazine.

The Sunlight Foundation: Uses Web 2.0 data-aggregating to bring transparency to politics

The OpenHuman project: Very silly. Still, a data point...

(Image taken from the Visible Human project)

The Rise of "Freeconomics"

It's a big day for Moore's Law. I'm not sure anyone else has noticed this, but by my calculations we have in the past few months reached the penny-per-MIPS* milestone. Intel's Core Duo running at 2.13 GHz now costs around $200 at retail (it's around $180 at volume), but can do about 20,000 MIPS. I remember my first 6 MHz 286 PC in 1982 that did 0.9 MIPS. I have no idea what the CPU cost then, but the PC it came in cost nearly $3,000 so it couldn't have been cheap. Say it was around $1,000/MIPS back then. Now it's $0.01/MIPS. I know I shouldn't be astounded by Moore's Law anymore, but that really is something.

I begin my economics of abundance speech with Carver Mead's mind-bending question: "What happens when things get (nearly) free?" His answer is that you waste them, be they transistors or megabytes of bandwidth capacity. You use them profligately, extravagantly, irresponsibly. You shift out of conservation mode and get into exploitation mode. You do crazy things like offering people the ability to put their whole music collection in their pocket, or promising the average email user that they'll never have to delete another message to conserve space. Just as Alan Kay "wasted" transistors to create the graphic user interface, we will all learn how to waste newly abundant resources, retraining our minds to ignore our instincts about costs and scarcity.

Today we have an unprecedented number of resources that are closing in on free when measured in units that were once meaningful to regular folks. Through the 1950s and 1960s Mead watched transistors drop from $100 each to $10, then $1, then $0.10, then a penny. Then, in the 1970s as transistors were integrated into semiconductor chips, they fell to a millicent and then a microcent. They're now nearly down to a nanocent--virtually free. Hard drives now go for about 30 cents per gigabyte, or .03 cents per megabyte (I remember my first 10-megabyte drive, which cost me a few weeks salary at the time). Bandwidth now costs less than ten cents per gigabyte at retail, and it wouldn't surprise me to hear that it's fallen below the penny-per-gigabyte level for big commercial outfits. How long would it have taken you to download a gigabyte of data in the old dial-up days, if you could even keep a connection open that long?

With apologies to Levitt and Dubner, I'll cheekily call the emerging realization that abundance is driving our world "freeconomics". Understanding when to shift out of scarcity mode and start giving away what you once held dear is a core competency for our age. Heck, there might even be a book in it!

My friend Michael Schrage had a good column in the FT that talks more about the power of free, and the policy quandaries it creates. I'll finish by quoting him:

"Never in history has so much innovation been offered to so many for so little. The world’s most exciting businesses – technology, transport, media, medicine and finance – are increasingly defined by the word “free”. Whereas WalMart, the world’s largest retailer, promises “everyday low prices”, entrepreneurs and ultra-competitive incumbents develop business models predicated on providing more for free. It is a difficult proposition to beat."

Indeed.

(* MIPS stands for million instructions per second, and is a standard measure of processing power)

Gears of War is overrated (and other geekdad advice)

I was as psyched as anyone about the release of Gears of War, the while-you're-waiting-for-Halo 3 hit of the season for Xbox 360 fanboys. The trailers looked fantastic, the designer was top notch and the buzz was deafening. And when it came out last week the reviews were rhapsodic. So I'm starting to wonder what's wrong with me for being so unimpressed. I haven't finished the game--I'm a bit more than halfway through--but I've gone far enough to see the gameplay for what it is: a totally scripted shooting gallery on rails. Even the fabled graphics are just more detail on the same tired post-apocalyptic cityscapes and hyena-faced baddies, all stuck on the concrete-gray side of the chromatic spectrum.

I was picking up my oldest son (9) from a birthday party at a bowling alley today, and is often the case the boys were playing crusty old arcade games. There was an old Area 51 machine there, and as I watched it go through its demo loop I realized why Gears of War felt so familiar: they're essentially the same game, advanced by little more than ten years of Moore's Law graphics acceleration and similarly improved character AI. Been there, done that.

I'm going to quit GoW now and instead focus on what I think is the far superior game launched on the same platform at the same time: Call of Duty 3. This is the third installment of the WWII series inspired by Saving Private Ryan, and the battle is now in France, on the way to Paris. The graphics are jaw-dropping (to my eye, every bit GoW's equal) and the gameplay far more free roaming and tactical. Unfortunately it doesn't have a co-operative play mode, so it's online multiplayer or single-payer, but after the 9-year-old gets a bit further in the game he and I can face the ruthless hordes out there together on XBox Live in the sweet split-screen mode. I'll get my butt kicked charging into the fray while he hangs back with a sniper rifle and laughs his ass off at my mistakes. (Yes, I know the game is rated for T for Teen. I'm a Bad Father.)

Finally, on that note, here are my latest top ten computer/game parenting tips for geek dads:

1. Try cooperative mode on any game that offers it. Best father-son bonding ever!
2. Make up your own mind about what's appropriate for your kids. I think Halo 2 is fine (cartoonish violence and fictional settings), and Call of Duty 3 is okay for my 9-year-old (accurate historical setting and a war-is-hell message) although not for the younger kids. But I think Gears of War, which is essentially a horror game, is too scary and full of bad language and adult themes, so they're not playing that. Other parents will come to different conclusions. You know your children better than the ratings agencies do--decide for yourself.
3. Give the kids old laptops and let them use the net, but keep those computers in public spaces (not in their rooms) and make sure the rules are clear.
4. Those rules should include: time limits, no computers until homework is done, and full discussion about how some websites are "inappropriate" and they're expected to avoid them.
5. The easiest way to do that is to limit the sites they visit to the bookmarks that you set. You can't stop them from typing URLs into Google, but you can at least make clear that this is a violation of the Rules.
6. As far as I can tell, all NetNanny and other "safe-surfing" filters are crap. They block as much legitimate stuff as they let through, which creates a miserable tech-support headache for you when things that should work don't.
7. That said, set their Google preferences to "safe search"
8. If they want to hang out with their friends online, encourage them to try kid-safe sites such as Club Penguin. The clever strategies there to make it both fun and safe are impressive, up to encouraging kids to become "secret agents" to help police the site. My eight-year-old daughter just passed the test to get such a designation and she's thrilled. My dismay that she's turned into a narc is more than outweighed by my admiration of the site's ability to get the community to keep itself clean.
9. If the kids are into games, see if they might want to try their hand at making a game themselves. The educational tools today are awesome, and programs such as Games Factory 2 completely submerge the code layer, making quite sophisticated 2D games a matter of dragging and dropping objects, setting their properties and scripting events.
10. Get Lego Mindstorms NXT. Permission to build and program cool toy robots is not the only reason to have children, but it's up there. If only the kids were as into Lego robotics as I am. Soon, my precious, soon...

More on the Economics of Abundance

First, my apologies for the slow posting. I was traveling for all but five days last month (giving speeches for audiences ranging from telecoms to fashion), pretty much as I had the month before and the month before that and... Basically my life has been nuts since the book came out in July (yes, I'm writing this on a plane). The good news is that all these speeches should provide excellent blog fodder, once I can find a minute to write them up.

Second, I promised to post more on the economics of abundance, which has been a theme I've been toying with for a few years but am now starting to get serious about. As I mention in the book, one of the most common definitions of economics is "the science of choice under scarcity," which doesn't leave much room for abundance. Indeed, in many economic equations if you set the scarcity term to zero you get divide-by-zero errors. But economics is not a grand unified theory of everything, and nobody ever expect it to be. There is much in our world that economics leaves to other disciplines, from psychology to biology. 

Yet just because economists struggle with abundance, that doesn't mean that we have to, too. Abundance thinking--understanding the implications of "practically free"--is a core competence of our age. It brought us everything from the iPod ("what if storage were so cheap you could put your entire music collection in your pocket?") to Gmail ("why should you ever have to delete an email?"). Most truly disruptive technologies disrupt because they take a scarcity assumption and, thanks to some technology that generates abundances, simply turn it on its head. Just think VOIP (why should phone calls, which use hardly any bandwidth, cost anything?) or how anyone under 25 uses a digital camera (why settle for stills when you'd rather have the video?)

Before I riff more on this theme in forthcoming posts, I'll close this one out with a round-up of interesting abundance-related posts that came in response to my original speech at Pop!Tech or just randomly popped up on my radar over the past week:

Zero is the loneliest number: Mike at Techdirt goes on a terrific tear on the theme after he comes back from disappointing policy debate where everyone seemed to be talking past each other, mostly because some saw the world through a scarcity lens and some didn't. On the plane back, he writes,

"I decided to reread a book I'd picked up at a used book sale a few years back, called Zero: The Biography of a Dangerous Idea, which is a fascinating history of the number zero -- and the fact that not only did it take societies ages to even recognize the number zero, it was considered heretical in some areas for a while. Zero caused all sorts of problems in that it didn't work like other numbers. It isn't a number. It's the absence of a number, and that screws up a lot of things. For thousands of years, it held back progress. You can't have advanced math or physics without an understanding of zero -- and the difficulty in accepting it was a real problem."

 
"Of course, for all of us who learned about zero in elementary school, this seems laughable. How could zero be such a difficult concept to understand? Except, as I read the book, it occurred to me that it's the exact same problem that was causing this breakdown in the discussion. It's incredibly easy to misunderstand zero in economics. That's because economics, we're often taught, is the "science of scarcity" or understanding resource allocation in the presence of scarcity. All too often, economics itself is defined by scarcity. So, for example, basic economics tells you that a free market will push prices towards their marginal costs. If their marginal costs are zero (as is the case with digital goods and intellectual property), then it says that price will get pushed towards zero. However, this makes people upset, and makes them suggest the model is broken when a zero is applied. They see a result where there is no scarcity, and it doesn't make sense to them since they've always understood economics in the context of scarcity."

Sooner or later, scarcity bites back: The always astute Nick Carr points out that the traditional scarcity functions that hold back the productivity efficiencies promised by Moore's Law--software and human learning curves--have been joined by another: electricity consumption.

"It's certainly true that, from the standpoint of the consumers of basic computing resources, those resources often seem "sufficiently abundant as to approach free." They are abundant, and that does recast a lot of economic tradeoffs, with far-reaching consequences. But if we step back and look at the supply side of computing, we see a very different picture. What Gilder calls "petascale computing" is anything but free. The marginal cost of supplying a dose of processing power or a chunk of storage may be infinitesimal, but the fixed costs of petascale computing are very, very high."

Nick's article-length post, which builds on the implications raised in George Gilder's Wired article (from which the illustration above was taken) and neatly squares it with his characteristically contrarian comment, is masterful. Read it all.

What if complexity were free? Erick Schonfeld casts 3D printing in abundance terms with a great example:

"He pulled plastic sample cases out of his bag filled with an array of tiny mechanical devices, gears, heat-sinks, and other parts.  Then he showed me a small, white ceramic square not much bigger than a cell-phone battery.  It was a prototype for a fully-functioning tiny chemical plant that could turn alcohol into hydrogen for fuel cells.  Inside were 33 different cavities, pipes, and chambers made out of five different materials, printed one layer at a time.  The final part was made of 300 layers.  "Complexity, for the first time in history, is free," declares Chait." 

Free French: Finally, Om Malik writes about an effort to out-FON FON:

"The maverick French broadband service provider, Iliad, and the company behind the Free, broadband service has made a habit of anticipating disruption; embracing it and then extending. Cheap broadband - they did that. Cheap (and almost free) Voice - they did that. Cheap IPTV, check. So what’s next to do? Open up wireless (WiFi) networks for one and all, and thus create one giant mesh."