The Long Tail

June 26, 2007

Bear Stearns Takes a Second Look at the Long Tail

Bear Stearns has released an interesting new report on the Long Tail effect in media, focusing especially on television. It's a follow-up on an earlier report on Long Tail effects, and as such it's an effort to address "pushback" and other objections from media industry heavyweights who make up a big part of Bear Stearn's client base.

The main objections were these three:

How much demand is there for user-generated content (UGC)?
Can UGC actually be monetized?
Won’t “content always remain king”?

To the first question, Bear Stearns brings some real data to bear and finds that UGC is indeed a big deal:

Some investors remain skeptical that UGC is more than a passing fad. If we define UGC as page views only from sites such as Myspace.com, Facebook.com, Youtube.com, Wikipedia.org, Blogger.com, and Digg.com (which is quite conservative), we estimate that UGC now accounts for 13% of total U.S. Internet traffic, up from 0%-1% in 2004. Based on these statistics, we submit that UGC is here to stay.

On the second, the investment bank's answer, like everyone else's, is a fuzzy "probably", predicting that we'll get video advertising right someday. Of course text advertising on UGC content is already there.

Finally, on the third question, Bear Stearns believes (as do I; indeed a third of my book is focused on this) that in a world of infinite choice, content is only as valuable as your ability to find it. They call that "context and aggregation", and it's what both Google and your favorite blogger do when the filter the web according to a narrow lens, be it your expressed search term or their own sensibility.

And then, in one of the best parts of the report, they illustrate the problem with the notion that "content is king". In practice, only good content is king, and good content is impossible to consistently create.

One of the counterarguments to our “context and aggregation are king” thesis is that,
for as long as most can recall, the entertainment industry has lived by the axiom
“content is king.” However, no one company has proven consistently capable of
producing “great content,” as evidenced by volatility in TV ratings and box office per
film for movie studios, given the inherent fickleness of consumer demand for
entertainment goods.

This chaotic mess of a chart below says it all. Like the wise man said, in Hollywood, despite the bluster about track records and taste, "nobody knows anything." It's all a crapshoot. Better to play the big-n statistical game of UGC, as YouTube has, than place big bets on a few horses like network TV.

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Comments

I take issue with Bear Sterns' definition of UGH. It doesn't make sense to me that Bear Sterns would equate UGC with pageviews of sites that allow UGC. It seems BS is missing the "generated" part of the equation.

For example, on YouTube, UGC seems to imply the videos that get uploaded, not the videos that simply get viewed. In this sense, how many YouTube users actually upload videos? I think the answer is far fewer than the number of users who simply view pages on the site.

Posted by: Ryan | June 28, 2007 at 12:00 PM

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Posted by: çeviri | June 29, 2007 at 08:28 AM

Content is king, and as soon as price controls are lifted, we'll see to just what an extent.

You're either making widgets or creating content.

And the world is separating along those lines.

Once content has the ability to differentiate itself like jeans, popsicles, paperclips, automobilees and underwear, we'll have a rich and luscious market where meaningful content competes for the attention of not the 18-34 demographic, but folks with money.

Everyone.

Call it premium mass content.

And, since manufacturing's methods are contrary to the flowering of top notch creative (time pressure, motive force, control management, competition), it's likely that these two undertakings will be relatively distinct.

So long tailers are actually setting themselves up to miss the boat on what will be, in a very short while, the dominant economy.

They're turning themselves into Wal-Marts when consumers are becoming more and more boutique sophisticated.

They're also guaranteeing themselves a lot more work and much smaller returns.

More about this at whiteg.com—the world's first premium content company.

Posted by: Eben Carlson | July 03, 2007 at 08:28 AM

http://tv.stafex.net

http://parishilton.stafex.net

http://britneyspears.stafex.net/

Posted by: http://tv.stafex.net | July 05, 2007 at 11:17 AM

I love the term "user generated content" as though there is a difference between "user-generated" and "big-important-people-generated" content. There is in the "old" economic model; but in the new model of your long tail, there is not.

For BearStearns second point, "Can it be monetized?" The acquisition of DoubleClick by Google answers this with an emphatic "yes."

Posted by: King Hill | July 06, 2007 at 07:37 AM

I think the graph looks like a mess only because different colors were not used to represent each studio making it very hard to track a given studio. If you look at Disney I would say they are doing very well indeed.

Posted by: anon | July 10, 2007 at 08:08 PM

Chris,

There is something disturbing about the notion of 'demand' for UGC. Demand is associated with producers and consumers, but the defining factor with UGC - at least as I see it - is the community and conversational elements. 'Demand' indicates assumptions about broadcast media.

Posted by: Matthew Hurst | July 16, 2007 at 12:48 PM

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