Further evidence that AOL doesn't get the LT

From Jason Calacanis:

As part of the consolidation of niche blogs at AOL they are shuttering PVRWire. This one I don't agree with because PVRWire is clearly on the road to hitting 1M pages a month as you can see below.

He explains that big companies have trouble "managing" niche blogs. That says more about the companies than the blogs. Hey PVRWire--let's talk!

Comments

[Jason]

I think AOL gets the long tail very well... I think they get it so well that they understand that it's better business to focus on the winners!

Do the math... if you're making $20 RPM (revenue per thousand pages) on something like PVRWire you're making $8,000 a month. That's probably around what it is costing to run. If it's making $100k a year and breaking even, but taking your time away from something like Autoblog (15m pages a month) or Joystiq and the 10 joystiq spinouts (20m pages a month), you're basically taking your eyes off the prize.

The long tail is great for smaller companies, but when you're working for a company doing $7-8B a year you have an obligation to your shareholders to focus on the things that will throw off at least $1M a year in revenue.

PVRWire, Divester, BBHUB, etc. are never going to move the needle and AOL needs to move the needle.

Also, it's important to note that AOL isn't throwing the bloggers to the street. They are moving the bloggers from PVRWire to EngadgetHD and Engadget. So, this is just consolidation into the bigger brands.

Finally, in terms of buying the assets from them good luck... I've tried and they won't even sell them to me!!!

best j

[Jason]

That being said... I think PVRWire would hit 1M shortly... I would have kept it going.

[John I.]

I think that "focus on the winners" isn't Long Tail business strategy.
It just provides the hits needed to drive demand down the Long Tail, but, in order to get there, there must be a Long Tail in the first place (or at least a Long Tail content mechanism).

What is more, in an ideological business framework, the notions "The winner gets it all" and "Build a Long Tail business" are two opposite perspectives, two totally different realities about what the meaning of human activities is all about.

I am not sure that the large corporations - most of them at least - understand (or are willing to understand) this shift of meaning....but it doesn't matter. They'll have to!

[Jason]

To be honest the big companies don't need the long tail... they need the fat tail and part of the midtail. The best bet for big companies is to camp out on the midtail and just see what makes the jump from small to mid and buy/replicate that.

Waste of time for big media companies to focus on the end of the tail. Would be like the coach of the Lakers spending his weekends at basketball games for six-year olds.

I believe in the long tail, but folks are a little drunk on it's a ability to scale/make money. The long tail is great for prospecting, but not for making a living.

[Mark Murphy]

I agree with Mr. Calcanis. To take another spin on his comments, it's not like Netflix has to hire another person for each film they have in inventory.

The Long Tail is a lot about having markets with minimal additional *overhead* cost per SKU (i.e., distinct item being sold). I can't imagine that running a blog like PVRWire is something that one person handles among 10 other blogs, so the overhead cost for the PVRWire "SKU" is far from negligible, even if the benefits (traffic, etc.) are noteworthy.

Contrast AOL and PVRWire with, say, Technorati or BlogAds. For those firms, having one additional blog in their index or ad inventory adds minimal additional overhead, since they're not the content creators.

[John I.]

I agree with Mr. Calcanis and Mr. Murhy.
Making money out of Long Tail business isn't quite evident yet.
Unless, that is, you are a sucefull Long Tail aggregator, and, even then, the game is played in the middle or the head of the powerlaw with only a few exceptions that go beyond it, in the "real Long" Tail. The economics of the shelve are still very present in our everyday life (they probably always be, but in a far lesser degree in the future).

But what really fascinates me is the sense of freedom this theory brings forward...the sense of free choice...our OWN choice as consumers and as individuals! And, the wisdom of the crowds, or, what Isaac Asimov called in his "Foundation" trilogy the science of "Phycohistory"...a brand new concept of decision making procedures that will shape our individual and collective awarness in the future,

A future closer than ever!

[Phil]

my take on current blog aggregates, the long tail and blogger motivation...

http://www.eightfatswine.com/View.aspx?bid=16

[Josh Bernoff]

The long tail is the most infectious meme to be released in a long time -- and anything that popular is going to get misinterpreted. My reaction to this is to say "congratulations."

Here is one you missed:

THE NUMBER OF TV CHANNELS ISN'T INCREASING, IT'S DECREASING. HAH! (Or any other "it's not happening in Market X comment.") As I understand it, the long tail applies when the costs of distribution get radically reduced. In markets where the long tail hasn't happened (yet) the costs of distribution are still high. For example, not only isn't there enough cable bandwidth for 1000 channels (or 100 HD channels), there's no good navigation metaphor. It's interested that some of these channels coming off of TV are going into video on-demand, where there is virtually unlimited capacity.

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