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Long Tail comment elsewhere...

  • Might the Long Tail actually reduce choice?
    Nick Carr notes a NYT column that suggests that if all content is "unbundled" and forced to fend for itself, the cultural products subsidized by commercial junk may go away. Carr writes: "It's not a sure thing, in other words, that an a la carte menu will end up giving us the widest possible array of choices. Rather than promoting the creation of a "long tail" of diverse products, unbundling may end up pushing even more economic rewards to the "hits," squeezing out a lot of the good stuff." My take: unless he's referring to the number of mediocre album tracks that piggyback on the singles, I think Carr is overestimating the amount of subsidization that actually takes place.
  • Long Tail software development mailing list
    There's a mailing list for people who want to discuss the Long Tail of software development, something I've talked about here and here.
  • Railroads: the Long Tail of 1869
    Nathanial Talbott, in a long meditation on software that goes from rails (iron variety) to Rails (the programming language), makes an interesting analogy: "The transcontinental railroad was to the real estate of inland America as iTunes is to the music marketplace of today. It enabled people to move away from the “hits” of the coasts to the “long tail” of the interior, and many jumped at the opportunity. The middle of the country exploded with growth, which while far from being painless still allowed many who never could have imagined owning land or being a business owner to do just that."
  • New ideas in indie film financing and distribution
    Scott Kirsner reports at length on a recent meeting of the Institute for International Film Financing. Lots of good ideas, from compressed released windows and video iPod strategies to indie film "house parties." Says Scott: "The event felt especially energetic, since there were so many new ideas about distributing movies and connecting with audiences - and lots of folks eager to hear those ideas. "
  • Another example from the LT of time
    A Boston Globe story on Steve Hines, who finds out-of-copyright books and stories with modern appeal and republishes them. Excerpt: "Hines found a forgotten Louisa May Alcott story titled "Patty's Place" while looking through a 1920 copy of St. Nicholas magazine for children in the Nashville library. He published that story as "The Quiet Little Woman," along with another story he found, "Kate's Choice," and sold about 350,000 copies."
  • Another sign of the ending broadcast era
    Thomas Hawk notes another glitch in the matrix as we move from the broadcast to the on-demand era. The results of reality TV shows are considered "news" and show up in the headlines of the major portals (so too for sports scores). But many who watch via a DVR haven't seen it yet and it ruins the surprise. "I decided that the only way to prevent Yahoo! from spoiling sports and other shows was to never go to their homepage -- hence, no more Yahoo! search for me."
  • Why Hollywood is resisting LT distribution
    A good report from i2 Partners, with solid data and analysis. Summary: "Hollywood believes large-scale broadband video distribution would only destroy proven value, fail to provide alternative value, and alter a business model that is still far from being in decline. With near-total control of the most valuable program libraries and the business models governing their distribution, a shift towards broadband media will come largely on Hollywood’s terms and at an incremental pace."
  • The dark side of the Long Tail
    ZDnet finds a racist website sponsored by Zango, which is adware from 180solutions, whose sites says this: "Although 180solutions has come to realize that third-party distribution can be hard to police, we believe it is possible to properly balance who we do business with while providing monetization methods for the long-tail of web publishers and content developers." As I've said before, the Long Tail is messy and has a large dynamic range of quality. That means bad comes along with the good. Fortunately we've got better and better filters to screen it out.
  • More on the Google loophole
    Tom Elvsin extends my experiment in getting free impressions from Google AdWords and applies it AdSense, text ads running on third-party sites: "The advertisers benefit by repeat display of the name of their products. Google benefits because it does gets paid for the occasional click. The cost is my inventory of space, not Google’s. So every click is gravy to Google and every exposure is value to the advertiser. In effect, Google is GIVING AWAY exposures on my blog so that they can sell a few clicks which they will dutifully pay me for."
  • Good news: the LT isn't overexposed (yet)
    Danny Sullivan of Search Engine Watch talks about the Long Tail of Search in his talks around the country. But he still has to explain it. "When I came to this slide during my presentation in San Jose, I asked the audience how many were familiar with the long tail concept. Practically no one was. Yesterday, the same thing happened with my Chicago audience. Of about 300 people, maybe 10 percent of the hands went up when I asked how many knew about the long tail."
  • Gartner/Harvard report on recommendations and the LT
    A good 12-page report on what sort of recommendation techniques work best to drive demand down the tail. Excerpt: "As the data indicates, recommendation tools can provide important stimuli for increasing the diversity of music, from genres to artists, to which consumers are exposed. Recommendation tools can be a crucial component in driving demand for back catalogs as a source of high-margin revenue for rights holders, as well as toward niche artists and music that they otherwise would." not encounter.
  • "Google Analytics Wags the Long Tail"
    Summary of a Forrester Report (it's $49 to read the whole thing: "On November 13, 2005, Google announced Google Analytics, a free Web analytics service targeted at the long tail of small and medium-size businesses that lack a Web analytics solution. While "free" is a powerful word, the Urchin product on which Google Analytics is built is less than a Web analytics powerhouse. The offering will succeed at the lower end of the market, but won't completely ruin the party for high-end vendors."
  • The economics of downloading video
    Edward Jay Epstein writes in Slate on the economics of shifting movies TV and movies from broadcast and theatrical distribution to downloading: "The real issue for the studios is how they can dig into this potential gold mine without undermining their existing revenue streams. Since the 1980s, the studios have managed their revenue by employing a system of "windows" to release their products to different markets.... With the possibility of costlessly providing millions of downloads to consumers of both their older and new films, the studio heads, including Disney's Robert Iger, are openly discussing radically revamping the window system. "
  • LA Times on the end of the mass moviegoing era
    A fine rant that touches on many of the themes here, particularily on how the new technologies of distribution scatter audiences to the winds. Excerpt: "The era of moviegoing as a mass audience ritual is slowly but inexorably drawing to a close, eroded by many of the same forces that have eviscerated the music industry, decimated network TV and, yes, are clobbering the newspaper business. Put simply, an explosion of new technology — the Internet, DVDs, video games, downloading, cellphones and iPods — now offers more compelling diversion than 90% of the movies in theaters."
  • "Bootstrapping the Long Tail in Peer to Peer"
    Bernardo Huberman and Fang Wu from HP labs have just released a paper describing a way to help P2P networks deal well with niche content. "It is difficult to satisfy the diversity of demand without having to resort to client server architectures and specialized network protocols... We solve this by creating an incentive mechanism that ensures the existence of a diverse set of offerings regardless of content and size. While the system delivers favorite mainstream content, it can also provide files that constitute small niche markets which only in the aggregate can generate large revenues."
  • The second Long Tail IPO
    Paid Content points us to the AIM IPO filing for Opus Media, a London-based online movie company that runs the Indian movie portal Bollywood.tv. The $85 million IPO is being planned for early next year. Says Rafat: "Bollywood.tv says it has the Internet rights to more than 730 Indian films, though at any one time on its site, I have not seen more than 100 movies." (The first Long Tail IPO filing was the Digital Music Group.)
  • A short head of Internet advertising?
    PR titan Richard Edleman has a great post of media trends and their implications for PR. Two stats in particular caught my eye: "1) Every dollar coming out of print advertising revenue for newspapers is replaced by only 33 cents online. 2) The largest 50 Web companies are attracting 96% of the ad spending on line, according to Pricewaterhouse Coopers, with the majority going to AOL, Google, MSN and Yahoo." That second stat sounds like a very short head indeed, until you realize that half of the ad revenues for Google and its ilk are actually redistributed to thousands of smaller sites, via such affliate models as AdSense. It's actually a quite good long tail example.
  • The folly of zero-sum thinking
    Rich Karlgaard, one of my favorite writers, now has a blog. Here he explains why zero-sum thinking is the "world's worst disease". Excerpt: "Meanwhile, the most energetic, original and positive writing has been migrating to the Web and to blogs. No surprise here. Anybody who creates a blog is: (a) an entrepreneur and thus probably NOT a zero-sum thinker; (b) a producer first and a consumer second. These two attributes alone guarantee that the blogger probably has a more accurate view of the world, and how it really works, than does the zero-sum thinker toiling away at his Mainstream Media position."
  • Netflix KOs Blockbuster in the Long Tail round
    Thomas Hawk quotes Netflix's CFO from their investor presentation: "Historically Blockbuster has reported that about 90% of the movies they rent are new theatrical releases. They do a great job of fulfilling demand, created by the studios who spend $4 billion per year marketing new theatrical releases . . . Now they have a slightly different mix online. A couple of quarters ago they said that about 70% of what they rent online is new releases and about 30% is back catalog. That's not true in our business and it's never been true in our business. The day we came public and in the most recent quarter about 30% of what we rent is new releases and about 70% is back catalog and it's not because we have a different subscriber. It's because we create demand for content and we help you find great movies that you'll really like, we do it algorithmically and we do it with recommendations and ratings."
  • On Google, the link-rich don't necessarily get richer.
    Physicists examine the argument that Google's PageRank is a self-reinforcing hit machine (popular sites get linked to more and become more popular yet) and find it wanting. They ran the data and concluded that because search is incredibly targeted, it can find more obscure pages when they happen to be very relevent to the search term. "Search engines have the effect of counteracting the skewed distribution of links in the Web, directing some traffic toward sites that users would never visit otherwise." Phew. The Long Tail is safe from Google.
  • The new economics of TV
    A good piece on post-broadcast TV from, of all places, New York Magazine. Excerpt: "Let’s say that Joss Whedon, creator of Firefly, wanted to bring the series back to air. (Though “back to air” is a TV phrase now as anachronistically quaint as “switching the dial.”) Let’s say he found a million Firefly fans online—and, trust me, they’re not hiding—who were willing to pay, say, $39.99 each for a sixteen-episode season of Firefly. (Not an unreasonable price, given how many people pay about that amount for full seasons on DVD.) Suddenly, Joss Whedon’s got roughly $40 million to play with—and he doesn’t need a network. Or a time slot. Or advertisers. He can beam the damn shows right to your computer if he wants to."
  • The Long Tail of consulting
    Sightlines explains how the future of services is in making lots of small engagements pay, rather than shooting only for the big ones: "The big companies have mostly finished their ERP and CRM implementations, which is why Oracle has been on a buying binge. The action today is in small and medium sized businesses (SMBs). From a service producers point of view, how can we service SMBs profitably on fairly short engagements with 1 or a few consultants? And from the SMB's point of view, how can they add the IT talent that they don't have in house in the short, small doses when they need it?"
  • Midlist books: worst of times, best of times
    Five years ago, the Authors Guild issued a report about the crisis of the squeezed-out "midlist" book. More recently, things have started to pick up a bit as long tail forces kick in, but it still makes for sobering reading: "The best explanation for the leveling off of midlist book sales in the 1990s is in the rise of the superstores and other large chain booksellers. Chain-store merchandising policies help turn consumers’ attention away from midlist titles and toward an elite of books that are backed by heavy marketing budgets. Independent bookstores hand-sell favorite books to their customers, whereas chain retailers often charge publishers for favorable placement in stores, inclusion in ads, and other support. Publishers’ marketing budgets for midlist titles usually include less than $5,000 to cover the total cost of advertising, book tours and other promotions---but just to get a book put on a table at the front of the store in one of the chains can cost $10,000."
  • The incredible importance of the opening weekend.
    Adan Liepzig has a fascinating piece in the NYT about the disproportionate influence of the opening weekend (which is driven mostly by marketing) on a film's sucess. "In most cases, nearly half of a movie's total audience turns out in the first week of release, which means there has been very little or no word of mouth motivating most of the audience. In other words, many people go to a movie without any real information about it - without even reading a review. Or, put most cynically: Most of the time, there is no relationship between how good a film is, and how many people turn out to see it."
  • Tough economics makes for better indie films
    Edward Jay Epstein chronicle the lopsided hit-driven economics of movie distribution, but finds a silver lining: "Indie films are typically made before they have U.S. distribution and with independent financing. Therefore, the producer does not know when, if ever, the film will be released in theaters. So, unlike studio films, independent films cannot be conceptually geared to a marketing campaign, or used to recruit merchandising tie-ins. Independent producers therefore have only a singular product: the movie itself. To find a distributor, they often have to show their movies at film festival after film festival. At that point, if the film is to succeed, it must create its own audience through reviews, awards, and word of mouth. So, while studio films are rushed through postproduction editing to meet their release schedule, an independent producer must keep re-editing a film, no matter how long it takes, until the film works perfectly. As a result, independent films win much of the glory and awards—and studio films win most of the gold, taking in well over 80 percent of the box-office proceeds."
  • The NYT profiles IndieFlix
    "At a time when audiences are ebbing, piracy is threatening profits and at-home downloading takes gas mileage out of the movie-going equation, a company that helps filmmakers and audiences find each other on the Internet may be as natural a step in the evolution of cinema as portable DVD players or reserved seats. It may also be as close to a no-risk deal as filmmakers are likely to find: all they need provide is proof that the rights to their film have been cleared, and a master to be copied. And unlike traditional or even online distribution deals, the filmmakers retain all the rights."
  • Why Amazon should be scared of Google Print
    My favourite network economics geek, Umair Haque, explains why Google Print is more disruptive than those nice Google people are letting on: "Google Print is a killer example of an edge competence based strategy. Like core competences in the 80s and 90s, edge competences are going to dominate the post-network economy of the 21st century. By making info about books more liquid and plastic, Google atomizes upstream and downstream segments in the value chains. For example, it dilutes Amazon’s market power directly, by massively reducing switching costs – and, in general, the market power of anyone on either side of it’s value chain segment. Value shifts away from the core, and towards the edges."
  • Do authors want control or exposure?
    Tim Wu has a great piece in Slate about Google vs. the Publishers. Excerpt: "Google has become the new ground zero for the "other" culture war. Not the one between Ralph Reed and Timothy Leary, but the war between Silicon Valley and Hollywood; California's cultural civil war. At stake are two different visions of what might best promote authorship in this country. One side trumpets the culture of authorial exposure, the other urges the culture of authorial control. The relevant questions, respectively, are: Do we think the law should help authors maximize their control over their work? Or are authors best served by exposure—making it easier to find their work? Authors and their advocates have long favored maximal control—but we undergoing a sea-change in our understanding of the author's interests in both exposure and control."
  • Keyword search revenues from the Tail
    The AskJeeves blog posts some data. "The majority of revenue in search is still made in popular searches rather than the Tail. In fact, over 70% of search revenue is made on just 30% of the searches. This shows both the stiff competition that exists for popular keywords and the upside that still exists for paid search as that competition spreads to the tail." Given that there are literally tens of thousands of search terms a 70-30 Rule seems quite Long Tail-ey to me.
  • They came from MySpace!
    The Guardian UK on the rise of Internet-famous bands, such as Clap Your Hands Say Yeah and these guys: "Three weeks ago, Sheffield's Arctic Monkeys entered the UK charts at number one with their second single, I Bet You Look Good On The Dancefloor. They had just played their second London gig, before an audience of 3,000. Even by the hyper-speed standards of modern rock and pop, this was a remarkable rise, apparently made possible only because the band had posted their songs on their website and thus built up a vast virtual fanbase before even securing a record deal."
  • Warner and AOL offer Long Tail TV
    Older shows free for the downloading--as long you watch 15-second ads. Seems like a good model. From the WSJ: "In the latest sign that the rules of television are being turned on their head, the two divisions of Time Warner Inc. have formed a partnership to offer "vintage" shows, including "Kotter," "Wonder Woman" and "Kung Fu," free online. The venture is believed to be the first time a major TV studio has made prime-time entertainment programs available over the Internet at no charge."
  • Jakob Nielsen on microstars and fractal tails
    An oldie, but a goodie. Back in 2003, Jakob Nielsen was noticing the importance of microstars and minihits. In this post he observes that a niche site might not rank high in the overall Web popularity stakes, "but within their niche they dominate. A site that ranks as number 100,000 in the overall Web universe would still be the fifth largest within its niche: big enough to throw some weight around. Furthermore, niches have their own niches. Focusing on a highly targeted subtopic can make even a tiny site with a few hundred thousand page views stand out." Excellent point, but while I'm on the subject of Jakob, why is it that this supersmart guy and famed useability expert has one the worst-looking sites on the net? Please, Jakob, it's 2005--redesign!
  • Fragmenting Hollywood
    From a piece (reg req'd) in today's NYT business section on why Warner Brothers Entertainment, which is the best-performing of the studios, is laying off employees and building up a digital arm in anticipation of tougher days ahead: "The business is made much more complex by windows and audiences that are fragmenting," CEO Barry Meyer said. "The story for the next 10 years is how content is going to adapt. You won't find your audience in any one place anymore."
  • Extending the book tail, one page at a time
    Yellowhandman rightly notes that the efforts of Google and Amazon to sell book content by the chapter and even page will likely extend the tail of the demand curve. "Allow people to buy stuff the way they want to, so that you can wring every last cent out of your content, by earning $1 from someone who isn't willing to spend $10 for the entire book. Perhaps someone will shortly suggest a subscription model for online books : sign up for a membership plan and get to read as many books as you want (or a specified monthly quota) on your computer, but without being able to download or print the books. Probably too easily hackable, but much more appealing to me, because it means having a potentially huge number of books available for actual reading on your desktop, without even having to trudge down to the library."
  • A second look at the "first Long Tail IPO"
    I called the Digital Music Group's S1 filing the "first Long Tail IPO" in this post. Now people are looking at it more closely and finding some worrying aspects. At the Street.com Kevin Kelleher (disclosure: he writes for Wired, too) notes this: "The executives at DMG still seem to be in the process of choosing a business model. Last year, the company said it planned to beef up hiring so it could sign, promote and market undiscovered artists. In May, it abruptly shifted gears, laying off seven of its 15 workers, and decided to focus on buying the rights of golden oldies. Also in the second quarter, the company took a $75,000 writedown for a non-recoverable advance it made to an unnamed recording artist."
  • Peer production = "punk publishing"
    Piers Fawkes makes the inevitable comparison between today's democratization of the tools of production and yesterday's: "In 1976 punk broke onto the music scene and changed the rules of music. Music was democratized - you didn't even need to be able to sing or know how to play music--you just needed a guitar. Now blogging is having the same impact on publishing. Of course, a lot of rubbish gets produced but some great gems get created too that wouldn't have normally been produced under the old system. This is the era of punk publishing! Look around the blogosphere - can you spot the Sex Pistols? Or the Clash? Can you see a great entrepreneur like the one we got from that era: Richard Branson?"
  • The LT of Wikipedia
    Wikipedia is yet another powerlaw: a small number of contributors account for most of the edits, while a large number have just a few each. But don't confuse edits with entries. The ocassional contributors tend to write most of the zillions of more obscure articles, which is part of what makes Wikipedia unique. Are those articles better or worse than the heavily-edited ones at the head? David Weinberg elicits some useful comments, including this one: "The [obscure articles] edited by a few authors that know about the subject are honestly some of the best in wikipedia I think, as long as they are not about anything controversial. Usually they aren't though, or they would have more editors."
  • Satellite Radio = the LT of classical music
    James DeLong has fallen in love with satellite radio, which is driving his CD demand down Amazon's tail. The news for me: MP3 players don't display classical metadata right. There's an opportunity there... Excerpt: "I am wallowing in composers and works that I had never heard of: Svendsen, Vieuxtemps, Pitfield, Grieg (other than the great Piano Concerto). And Amazon is now awash in CD orders; I would not buy Mozart, usually, since I am sure of hearing lots of that, but lesser-known works of Gerald Finzi? They may never cross my path. (Downloading is not a good option for classical; no player that I know of can handle the information, and I spent several hundred $ to learn this.)"
  • Nintendo's Long Tail strategy?
    If you're interested in the dynamics of the game industry, Lost Garden has an interesting perspective on Nintendo's place in it. Stuck in third place, it has survived with a strategy of gameplay innovation and low-cost economics. Here's a factoid I didn't know: "The Xbox, which focuses on highly mature genres catering to hardcore gamers has production costs of $1.82 million a title. The Gamecube costs half as much at $822,000 a title. The real kicker is that the Nintendo DS only costs $338, 286 a title to develop for, even less than the Gameboy. Some of these costs have to do with the hardware and development kits, but for the most part they are derived from the scope of the projects. Being able to develop successful titles at 1/5th the cost of your competitors is a major boost to your bottom line."
  • Google book search favors the little guy
    Max Kalehoff considers the impact of Google's book scanning project on publishers, and predicts a tectonic power shift (free reg req'd): "A great analogy to describe the potential impact of the long tail in book search is to consider the rapid rise of consumer-created content online--including blogs, message boards, ratings sites and other forms of social media. These platforms are becoming incredibly influential, not just because of their sheer popularity, and compelling content, but because they represent a massively growing share of online content relative to all other--such as corporate, commercial, editorial and government content. These more niche social media tend to place very prominently in search engines, and therefore can achieve otherwise disproportionate exposure. Anyone responsible for the reputation of a big corporate brand is often kept up at night by that fact--the little guy's voice is being heard like never before, loud and clear."
  • Powerlaws as an indicator of website useability
    An interesting application of Zipf's Law to measure how well a website is designed. Slicecast plots the popularity of pages within a site on a log-log scale. Well-designed sites show a graceful powerlaw decline in rank. But in poorly-designed sites page rank drops off much more quickly, as visitors get frustrated and leave.
  • A fourth Long Tail force?
    NextSmallThings suggests a new Long Tail force to go with the three I've described-- 1) Democratizing the tools of production (e.g. the PC) 2) Lowering the transaction costs of consumption (e.g. the Internet) 3) Connecting consumers to drive demand to niches (e.g. Google): "I’d like to suggest that there’s a 4th ascendant force: 4) Increasing opportunities to reuse content/product/service in new and more convenient contexts." My own take: that's part of Force 1.
  • Blog archives as a Long Tail over time
    Raj Kumar Dash has a smart observation on the value of leaving your blog archives open, gradually accumulating search-driven advertising in a Long Tail of readership over time: "If your posts have contextual advertising, just because they don't earn any ad revenue right away does not mean that they will not give you a healthy return over several years. Make regular but relevant references to your older posts to help the long tail phenomenon on its way."
  • The forces democratizing moviemaking
    The makers of an "open source movie about blogs and bloggers" describe the factors that are making Long Tail moviemaking possible: "a) new low-cost hardware and software; b) cost-effective services providing next to unlimited hosting space and bandwidth costs for independent producers. c) new ways, modes and devices to access, store, retrieve and play back video content on personal, home and portable media devices; d) online content clearinghouses, search engines and human ratings and recommendations; e) P2P distribution technologies; f) powerful technology-based innovations slashing marketing and distribution costs."
  • The Purse Blog
    For those who make the mistake of thinking that niches are a cultural subclass, consider the $1,200 handbag and the women who love them: "You don’t need an Oxbridge degree, a million-dollar trust fund or a Nobel Peace Prize to earn the respect of women these days. Just head out to the shops and buy yourself a designer bag. Better yet, make it the It bag of the season." How do you know what the It bag of the season is? By reading the Purse Blog, of course.
  • The Onion as Long Tail ad network
    Kevin Burton notices that the ads in the free copy of The Onion he picked up in SF are not just for local businesses, but hyperlocal ones: "For example, I was at a popular geek hangout iin my neighborhood named Crepes on Cole and noticed that The Onion had an ad for Magnolia (a beer pub). They're just 5 blocks away from where I was having my coffee. Brilliant!" Is The Onion really mass customizing its product, or is this just a coincidence?
  • The virtues of a permanent work-in-progress
    Nellie Lide connects the dots on the air-your-unfinished-laundry phenomena (including this blog): "One notion in particular might help mainstream companies--the meme about `The perpetual beta.' We're so used to not releasing a product, a service, an idea, until it's fully baked. But with the Web 2.0, you have permission to play around with things, to work on them as people are watching, with the help of people."
  • Why a 200-year-old statistics book is racing up the charts on Amazon
    Robin Good tells the story of how the attentions of infographics guru Edward Tufte got a statistics atlas from 1796 republished--and why it's now at 5,000 (and rising) on Amazon. The author of the original book, William Playfair, "made little impression in his native land, and his impact was only slightly greater in England and France. Yet he is responsible for inventions familiar and useful to us all: he was the first to devise and publish all of the common statistical graphs - the pie chart, the bar chart, and the statistical line graph."
  • The Long Tail of programming languages
    Charles Simonyi's (ex Microsoft executive) and his team at Intentional Software collect some data on the Long Tail of programming languages and then consider the implications. "Why is there such a long tail of programming languages in the community? And is there an efficient way to satisfy the obvious need for more niche languages and promote the language innovation that happens in the long tail? The first question is pretty easy to answer. There is a long tail because the more specialized a language is to a domain, the better it fits to solve problems for that domain. These niche languages trade off generality for efficiency in a domain and they are simply better and more efficient tools for that domain. The second question is a bit harder..." Follow the link for more; it's worth it.
  • Jonathan Schwartz on open standards and the LT of citizenry
    Sun Microsystem's president blogs about how open Internet standards can help connect the Long Tail of the population: "Bridging the Digital Divide is all about serving the longest tail - by driving down price, and driving up access and interoperability. What is happening in Massachusetts is the beginning of a global realization that governments have a productive obligation to serve the longest tail - their citizenry. By deploying open, accessible standards - not the technology of a single company."
  • Cover songs and other coattailing as a LT marketing strategy
    Nick Carr notes an emergent Long Tail strategy of coattailing. Obscure bands, for instance, get free marketing by recording cover version of famous songs, which show up in iTunes searchs for the hit. "This sort of practice - let's call it "head-faking" (or maybe "head-phaking" would be hipper) - has broad applications as a sales strategy for long-tail markets. You simply give your product (whether it's a song, a book, a DVD, a software program, or whatever) some tie-in to a hit product. You might, say, incorporate the hit's title into your own product's title. Through the magic of search technology, your product then becomes a barnacle that the hit carries along with it as it cruises through the limelight."
  • Hacking the Long Tail of Google Adwords
    How search engine optimizers (SEOs) automatically create thousands of fake sites designed to rank highly in search on obscure keywords: "Just one of a Search Engine Spammer’s spam sites could have 30,000 pages. This site might receives just one unique visitor on less than 10% of the pages per day. Of those 3,000 visitors if only 2% (60) click on a 10 cent Adsense word, this site would generate $6.00 per day or $180 per month. So does the smart search engine spammer stop at 1 or 5 site? Of course not. A true SEO Black Hat has hundreds (and in many cases thousands) of these sites operating at once. "
  • The "Airport Effect" in book publishing
    An interesting history of how a drive for effeciency in the mid-90s made the book industry as hit-driven ("short head") as Hollywood: "A key result of the shift in distribution patterns was the streamlining of the way retailers ordered books from publishers. Why pick and choose among thousands of titles that might sell only a handful of copies? Wasn’t it better to follow the formula that worked so well at airports, ordering only the top fifteen or twenty bestselling books by branded authors like Nora Roberts, Robert Ludlum, John Grisham and Stephen King? As paperback publishers awoke to the new buying patterns, they were forced to choose between star authors and those whose sales performance fell below a minimum level. At first the triaging was restricted to marginal genres like westerns, but as the last decade of the twentieth century progressed the definition of “marginal” broadened to embrace every category of book that fell below an ever-stricter definition of commerciality."
  • The LT of Internet Traffic
    For those who are really into the nuts and bolts of Long Tailed distributions, an invitation from Art Zaifman: "I'm working on an R&D project at AT&T Labs that employs an in-house sampling algorithm that has been proven optimal in its ability to reduce yet retain accuracy of data that follows a heavy/long tailed distribution. We're currently using this algorithm in a product that measures IP (internet protocol) traffic volumes (which happen to follow the LT-distribution) in enormous networks. I'm very interested in applying this technology to other LT-distributions that can potentially benefit (i.e., environments that produce LT-distribution data in large volumes)." You can reach him at zaifman [at] research.att.com
  • Podcast-friendly music
    IODA, who famously have the "obligatory Long Tail slide" as part of their investor presentation, have released a library of music with pre-cleared rights for podcasts, blogging, Internet radio and the like. From the press release: "In exchange for access to the thousands of PromoTracks available in the system, qualified podcasters and bloggers must comply with a few simple rules designed to raise awareness of the artists and labels and drive sales of their music. PromoTracks must be properly identified and the sites using them in their programming must include links to the artists’ sites as well as “buy” links to at least one digital and one physical retail site for each release. IODA will provide all necessary information and assets via the Promonet site. "
  • The LT Blog...in Japanese!
    I was delighted to discover that Takashi Oguma has been translating this blog into Japanese (thanks to the Creative Commons license). He has a question about the role of language in the LT: "Japanese has a tradition of being insular--most of us don't have tendency to be passionate to niche foreign culture mostly because of language barrier. I think the language bottleneck is huge to us and thus being a counter force against driving someone to a Long Tail content . For instance, only a few people read your blog while discussing about The Long Tail in Japan. I suspect that we have "translation culture" and thus, even more hit driven for English contents. This applies to mainstream media such as books, films and games. I'd be happy to hear some discussions about bottlenecks of languages towards driving demand down the tail." You can email him at takashi.oguma@gmail.com
  • "How RSS thickened my LT"
    Alex Barnett does some analysis on his blog traffic and discovers that the RSS feed flattens the curve. Because the feed "pushes" all the posts to readers, more of them get read. So there's less inequity between the popular and unpopular ones. Also: "at least 80% of the traffic I get to posts after 3 months are via the search engines that match niche content with niche interests - the Filters of the web. The rest of the traffic comes after 3 months, from referrers from other blogs and online resources (articles, guides, lists of useful links on a subject, etc.)"
  • The connections between the LT and Web 2.0
    Joshua Porter explains the connections between the LT and Web 2.0, the umbrella meme of open technologies and empowered consumers: "I see lots of similarities between the Long Tail and Web 2.0. Both ideas are about improved access to previously unavailable content, both are about showing the whole catalog, and both are ultimately great at enabling user choice. They seem to overlap a lot. If I had to make a marked distinction between them I would say that Web 2.0 is about the access to information while the Long Tail is about the economics of it all.
  • The Future of Entertainment
    A huge package in The Holywood Reporter about how technology is changing the entertainment industry. Interviews with a score of luminaries, from George Lucas and James Cameron to Syd Mead and Judith Regan (and Wired co-founder Kevin Kelly, who discusses the LT). Nothing hugely surprising, but worth dipping into to see how the Hollywood establishment views disruptive technologies.
  • "Ambient Findability"
    A new O'Reilly book by Peter Morville, author of the seminal Information Architecture for the Web. It seems relevent to my work on filters and quotes liberally from the LT. No idea what he means by "ambient", however. Chapter one is free for online reading. From the description: "How can you filter streams of complex information to pull out only what you want? Why does it matter how information is structured when Google seems to magically bring up the right answer to your questions? What does it mean to be "findable" in this day and age? This he book defines our current age as a state of unlimited findability. In other words, anyone can find anything at any time. Complete navigability. "
  • Churchill Club speech
    A nice edit of a speech I gave at the Churchill Club a couple months ago. It was my first without Powerpoint, which was a little disorienting--I ended up drawing tails on the wall with my finger. But the feedback was that some people preferred it in words alone, and it certainly makes for a better transcript. Part 1: The origins of Long Tail. Part 2. A book tale: Writing the Long Tail story in public. Part 3. Tyranny of choice? Doesn't exist on the Long Tail. Part 4. Amplified word of mouth on the Long Tail. Part 5. The long reach of the Long Tail.
  • The LT of Linux kernel developers
    Greg Borenstein describes a Long Tail of people, in this case open source programmers: "New communication technologies and the lowered cost of participation they created allowed the Linux movement to effectively harness a large and diverse wealth of programming power that would otherwise have been unavailable to it. Further, the effectiveness of the ad-hoc Linux programming team as a whole was a product of the fact that so many of its members occupied niches. This fact ensured a diversity of talent and interest which meant that the right person would be there to take on each of the "thousand tiny projects" which Morton describes as making up the larger project of building an operating system."
  • A niche of one
    In an post that I missed at the time, Technorati's Kevin Marks argues that even I have been focused too high on the curve. There's lots of room at the very bottom: "A true long tail business is one that copes with the ultimate niches - where there are just one, or even zero customers. You need to be sure that your submission model can cope with these limiting cases and not choke, especially as you do not know a priori which ones are going to garner customers. So, what businesses fit this model? The obvious one is eBay. Omidyar's model of a perfect marketplace is tuned so that it is stable if you don't find a buyer (eBay takes a small listing fee), but works better if you do (eBay takes a percentage). Another example is cafepress. They don't even set a listing fee, working on the assumption that the effort to build a product list is enough of a hurdle, and have prices set so that a production run of one item is cost effective for them (they aggregate sales and pay monthly)."
  • Field Hockey TV
    Quite a few people have noted that sports is a classic LT TV opportunity, with lots more games played (from high school football to professional sports abroad) than there are broadcast channels to carry them to the potential niche viewerships around the world. One example is field hockey, which is big outside the US. Enter FieldHockey.TV: "Since inception, in October 2003, more than 1.5 million viewers have tuned in to FieldHockeyTV. Currently, Spring 2005, between 20- and 30,000 viewers connect weekly to the World’s Global Hockey Channel. During events, such as the Hockey Champions Trophy, our viewing numbers show a dramatic increase to 50-70,000 viewers per week."
  • Long Tail counter-insurgency
    John Robb applies the theory to the US military operations in the Middle East, and (in the earlier post linked from this post) to the insurgents themselves: " The complexity of the threat posed by open source warfare in Iraq has accelerated the US military's use of outsourcing. Traditionally, the long tail has been used to describe the number of support personnel (the tail) required to support combat troops (the tooth). Tooth-to-tail ratios have grown over the years as the complexity and resource intensity of modern combat has increased. In essence, modern warfare requires a loooong tail of support troops. The US military's tooth-to-tail ratio is approximately 1 to 10 (or more)."
  • The LT of drugs
    One the key drivers of the Long Tail is the democratizing of the tools of production. John Hagel here brings that perspective to a Peter Schwartz article on the increasing micro-production of drugs such as meth: "As in other domains, this move towards distributed creation and production is being driven by more affordable and accessible tools of production.... The backwoods meth producer is a direct descendant of the backwoods hootch producer during the Prohibition. We may not like what they are producing, but history has shown they will be quite creative in finding ways to produce it themselves. The MIT fab lab participant, the remix DJ at the local hip nightclub, the extreme sports enthusiast and the backwoods meth producer all share a common passion – producing goods and experiences on their own terms."
  • James Fallows
    Fallows has an interesting column in the the NY Times about the power of that other low-cost P2P distribution network, the US Mail. He focuses mostly on the Netflix example (mentioning Long Tail implications) and then brings in others: "Consider Postal Service fulfillment of transactions made on the Internet. About two million prescriptions a day - roughly one-fifth of the total - are delivered by first-class mail. EBay's vendors list five million new items daily, and those that are sold ship mainly by mail. One Pitney Bowes study found that online retailers were increasingly using paper catalogs sent through the mail to steer people to their sites."
  • Digital Music News
    As I was posting my case for variable pricing in the online music stores, HMV in the UK was preparing to roll out just that in its new online service. From this news report: "Some tracks will dip as low at 39 pence (72 cents), halving iTunes and Virgin price points. As part of the HMV plan, developing artist tracks and deeper catalog will carry the lower price points, while premium songs will carry higher tags. In the end, HMV will buck the uniform pricing approach popularized by iTunes, a result that major labels have been pushing for."
  • PayPal
    Lowering the economic costs of niches is key to the Long Tail, especially for small purchases such as a single track. I mentioned in the post on variable pricing that below $0.49/track the transaction costs of processing the payment can start to get in the way. So the news that PayPal is changing its policies to encourage smaller transaction is good to hear. From the report: "PayPal’s transaction fee is typically volume-based, and ranges from 1.9 to 2.9 percent in addition to a charge of $0.30 per transaction. In the case of [the new model for] micro payments, which PayPal describes as payments of less than $2, the fee is 5 percent plus $0.05 per transaction."
  • TrivialTV
    Extending on my post on a better way to find music, here's a good essay on how to find better TV, offering meaningful filter categories such as: "*by genre (gameshows, sitcoms, dramas, news, talk, animation, self-help, etc.) *by decade ('80s, '90s, etc) *by delivery time (morning, daytime, fringe, primetime, late night) *by delivery outlet (broadcast, cable, syndicated, mobile phone) *by network...and so on."
  • Media Influencer
    Classical music enthusiasts are programming software to play previously unplayable compositions, bringing them to a broader audience. Adriana puts this in LT context: "To me, this shows another crack in the traditional producer-distribution-audience models. It is obvious that scholars and professionals were not the audience. The two Beethoven enthusiasts were first doing what they wanted to enjoy and couldn't find and now they are hoping to reach the mainstream in a way academicians and virtuosos can't. As Doc Searls points out, this is the demand side supplying itself."
  • Steven Johnson
    Steven links to his Discover column, which applies the Long Tail theory to cites with fascinating result: "Urban theorist Jane Jacobs observed many years ago that, paradoxically, huge cities create environments where small niches can flourish. A store selling nothing but buttons most likely won’t be able to find a market in a town of 50,000 people, but in New York City, there’s an entire button-store district. Subcultures thrive in big cities for this reason as well: If you have idiosyncratic tastes, you’re much more likely to find someone who shares those tastes in a city of 9 million people."
  • Warner Music
    "Edgar Bronfman Jr., Warner Music's chairman and CEO, announced a download-only "e-label," in which artists will release music in clusters of three songs every few months rather than a CD every few years....The e-label will permit recording artists to enjoy a "supportive, lower-risk environment" without as much pressure for huge commercial hits, Bronfman said. In addition, artists signed to the e-label will retain copyright and ownership of their master recordings." Note that Universal has also created a digital-only label, called UME.
  • Matt McAlister
    Matt analyzes the incentives of that explain user participation in things like Wikipedia, Amazon review and Netflix rating, and why it's so smart for the services to encourage that: "Netflix makes it harder and harder for a customer to consider leaving the system for a competitor. The more the user sees benefit from participation, the more they give. The more they give, the less likely they are to leave. Even if there was a way to take your data to another service, the system builds loyalty to the brand and the user experience that they’ve spent time and energy learning."
  • New York Times
    More on the woeful economics of the new-release DVD business in a fact-filled piece on Blockbuster and Movie Gallery: "Knowing that it would be difficult to match Wal-Mart and Best Buy's prices on the sale of new DVD's without wreaking havoc on its margins, Blockbuster has instead decided to concentrate on the sales of used videos. Next year, the company plans to make selling and trading used DVDs and its video game operation priorities."
  • Arnold Kling
    A really excellent mapping of the Long Tail to politics. If today's Democrats and Republicans are the Head, everyone unsatisfied by this bipolar choice is the Tail. "The Long Tail is not the political center. It is not a third party waiting to form. It is not a coalition. It is not a "silent majority" of either the right or left. It is simply every variety of political belief, from Greens to Libertarians, that does not fit within the two major parties.... The key point is that the size of the Long Tail, and its rapid growth, represents the most significant political phenomenon of our time. What you will start to notice is the tendency for politics to reflect tension between the Long Tail and the major political parties."
  • Hollywood Reporter
    An important column on the LT forces disrupting TV. Read it all. Excerpt: "In a world in which consumers can increasingly access precisely what they want, on the device and in the location they chose, for the price they want to pay, the ability to use, repackage and market content to meet users' higher customization, personalization and functionality standards gets you a lucrative seat at the big table. But playing that game means changing relationships at every level of the media and entertainment supply and demand food chain -- from content distributors, providers and producers, as well as advertisers and marketers."
  • Jeff Jarvis
    Jeff rightly complains about the nonsense of "A lists". The point is not to be the most popluar blog on the web (about 12,999,999 blogs will lose that test); it's to be well-respected within your niche. Comparing one niche against another is pointless. "In this new world of choice and control at the edges, it’s the niches, and those who can pull them together, who win. Besides, a universal top n00 list is even a bad execution of big-media think. When Ad Age gives you lists of magazine revenue, it separates women’s and entertainment and business publications; in big-media, those pass as niches and they are far more valuable comparisons. When talking about newspapers, you don’t lump in metro papers with town papers with trade papers; it’s a meaningless lump. When somebody can tell me who the queen of the knitting bloggers is, then I’ll listen…. and so will knitting advertisers."
  • Microsoft
    If you can read past the press-release jargon, Microsoft is saying that it sees online distribution as a way to access the Long Tail of videogames: ""By making our titles available through Games-on-Demand services, we can broaden our reach to new audiences and monetize additional release windows," said Ed Ventura....Exent's distribution channels help us to extend the lifecycle of our game catalog"
  • AP (via CNN)
    Another inspirational story of finding your audience in the LT: "One by one, the big houses in New York looked at "Biology of Belief: Unleashing the Power of Consciousness, Matter and Miracles," but eventually said no, suggesting his theory that signals outside cells control genes was too radical for mainstream readers. "I wasted a whole year with them," Lipton fumed. Then he signed on with an independent press that relies heavily on Amazon.com Inc. Since then, he and his publisher say, more than 42,000 copies have sold in six months."
  • The New Yorker
    Jim Surowiecki on the rise of the DVD as a Long Tail market that favors smaller and independent films: "The new DVD audience is so diverse that companies can target niche markets and still sell millions of disks. Because specialized markets are more predictable, the risk of failure is much lower, and so small-to-mid-budget movies can be very profitable indeed. In the U.S., a big-budget epic like “Troy” may have earned nearly twice as much money at the box office as “Ray” did, but, once DVD sales are included, that ratio drops to just 1.2 to 1. And, once you take into account the difference in production and marketing costs, “Ray,” a far cheaper film to make, starts to look like a truly excellent investment."
  • Technology Review
    Another story on books that were blogged in progress. It begins as a review of John Battelle's "The Search" and then segues into the connection between search and the LT: "Battelle is interested in the application of search to untapped markets, or "long tails". In the context of e-commerce, long tails have three implications. First, via the Internet, products with little demand can, collectively, create a market exceeding that of the few bestsellers. Second, in the same way that it enables a proliferation of markets, the Internet enables a proliferation of vendors. Finally, thanks to search, a shift from mass to niche markets is likely." The author notes that "the blog-powered process that [the two writers] are using may be an effective way to refine ideas and ensure their survival" but warns that it may lead to the ideas feeling a bit stale when they finally emerge in print.
  • PR Squared
    A PR strategy for a LT world: "The PR industry is notoriously bad at “scaling;” it seems each new account creates the need for a new Account Exec. How the heck can we afford to keep tabs (much less influence) a 24x7 conversation with multiple millions of individual consumers? My guess is that we’ll adopt a hybrid approach, in which account teams continue to try to influence “old world” media and “strategic” blogs, as well as those growing numbers of niche-oriented blog aggregator sites. Meanwhile, we’ll develop “contextual strike teams” … The members of this class of “conversationistas” will be culled from across the agency, tasked with participating in ongoing dialogues in blogs, wikis, vlogs, et cetera, ad infinitum, not as PR people so much as “genuinely interested consumers.”
  • Blogarithms
    A thoughtful essay on the future of Public Radio in a LT world: "Radio and TV are going to have to adjust to a new economy: the economy in which the long tail plays a major role. The music industry is painfully making this transformation now. The movie business is fighting the change in classic innovators-dilemma style. TV doesn’t know what to do. Its viewers are leaving in droves, and the three major networks’ reaction so far is to reduce not only the cost but also the quality of programs through the reality-TV and tabloid formulas....Public radio is [in the same bind]. The real problem is coming from the fact that listeners want long-tail time-shifted content. They want to hear programs that are more meaningful to them, and they want to listen at their convenience. The entire broadcast-radio system, with its distribution, simply can’t provide what the customers want. "
  • Seth Godin
    On the appeal of free content, not just for the consumer but also the producer: "Now you have paid online radio and free online radio. Paid online video and free online video. At first, the paid stuff is good and the free stuff is less good. But soon, producers seeking an audience start to make their stuff free. Because when they do, the audience goes up 100x. And then, in order to compete, others do the same thing. Wouldn't you if you had a touring band? Wouldn't you if you had already exhausted your DVD sales and wanted a big enough audience for your sequel?"
  • OnoTech
    The LT of events, beyond the big ones: "What about implicit events, like the opening hours of the local go-kart race track? Is that an event? What about the daily classes at 6pm at Hot Yoga 101 or Fred's Karate Studio? They are scheduled for a certain time, or available any time; they are activities "to do" - the public can walk in and pay a fee - are they events? And then let's look at that 49ers game. Maybe 50,000 people get tickets. Maybe a million watch it on one of several local Bay Area TV stations. So one physical event generates multiple virtual events. 150 local bars have "49ers game Sunday" special events. When one adds all of these up -- and throws in the Meetups, the radio-controlled airplane club meetings, the church services, the Alcoholics Anonymous meetings, the extension courses at local universities, the City Council of Sunnyvale public forum for comment on the new library... I consistently get numbers like 50,000 events a week in the Bay Area. Can you say Long Tail?"
  • Searchline
    LT search-engine marketing: "The Long Tail approach to keywords advocates the use of "tail terms" - relatively low volume, low-cost phrases composed of two or more keywords. For example, in a search campaign where the term "sheets" may be too broad and expensive to compete effectively, tail terms such as "linen sheets" and "Egyptian cotton sheets" may yield a better performance. Why? Because tail terms contain more information about the query, and thus are more apt to directly meet the needs of the user. This equals more conversions and better brand stickiness."
  • Barry Ritholtz
    One of the open economics questions of the Long Tail is whether prices should go or down as you down the tail. Obviously it depends on the market and product, but Barry looks at the example of music. "The movie studios, to their credit, use a form of dynamic pricing -- they intelligently recognize that a content item's value is highest when first released, and then subsequently fades. The music labels have mostly avoided this strategy -- but perhaps that's changing. I just noticed this little tidbit on Amazon: a long list of interesting CDs for sale on Amazon for between $6 and $10."
  • P.S.
    For folksonomy junkies, an article about what happens when you display "tag clouds" as powerlaws. "We can study a culture by studying the differences in the power law approximated by the tag clouds used by people of that culture. We could even measure cultural eartquakes by measuring the difference between the tag cloud being generated before and after a certain event." [That seems like a very academic way of looking at a conventional buzz index, but it uses the Long Tail as an example so I can't resist linking to it.]
  • Pandora
    The music recommendation service formerly known as Savage Beast is rolling out a new consumer service that builds custom radio stations built around music similar to the music you like. What fascinating about the service (I visited them a few weeks ago) is that they determine similarity not by what other people listen to but what their small army of musicologists identify as related traits in the music itself. You'll get delightful stuff you never would have thought of. Sign up to the beta and check it out.
  • Willamette Week (Portland)
    A fascinating glimpse into the world of indpendent music labels, of which Portland seems to have many: "The majority of Portland's labels are "mom and pop"-sized businesses, employing up to five people while generating modest cash flow. The exception, of course, is the local swingster-lounge band Pink Martini, whose Heinz Records label has sold 140,000 of Hang on Little Tomato, the band's second self-released album-a staggering number in the world of independents, where cracking five digits for a single release is considered a success."
  • Jeff Jarvis
    Why aren't established companies able to take advantage of Long Tail opportunities quickly? Jeff Jarvis, who until recently was a colleague of mine at Advance/Conde Nast, explains that it's about the fear of hurting cash flow: "It makes them complacent: ‘Look at all the money (still) rolling in.’ It makes them think that if they just tweak this and that — if they can still get away with raising their rates even as their audience and value are shrinking — they will continue to keep milking cash from that old cow. It makes them overly cautious: ‘Nobody hurt Bessie!’"
  • Andrew Kantor
    A good USA Today column on the end of TV channels: "Compare the TV model to music. Music is released. Television is scheduled. That's going to change. Since the mid-1990s, the Internet has shown people a different model: one where you get what you want, when you want it - where the channel model is replaced by the site model. Channels are limited; sites are not."
  • DVDStation
    DVD Station, the kiosk model that's my favorite example of the Long Tail in a traditional retail environment, has released a fascinating powerpoint presentation on their strategy. Lots of data, insight and sharp analysis, including such gems as the fact that the economics of DVDs actually improve the further down the tail you go (because they're cheaper to acquire and customers are happier with them)
  • Salesforce.com
    More on the Long Tail of software. Salesforce.com's new strategy is to create a way for Long Tail developers and customers in hypernarrow industry niches to easily connect, with the usual complexity of software shielded by a common, web-based platform. From the News.com article: "At the heart of CEO Marc Benioff's strategy is the idea that companies with deep industry knowledge will have more success creating their own specialized programs than Salesforce could."
  • Bob Frankston
    In an essay titled "DRM chops off the Long Tail", the legendary co-creator of Visicalc launches one of his trademark tirades at Wintel for playing along with Hollywood and building harsh content restrictions into their next operating system: "Microsoft and Intel seem to think it is in their interest to cooperate with this approach and limit the ability of users to find new opportunities. The long tail gets truncated. It's like Cisco helping China control the spread of 'bad ideas'."
  • Bob Lefsetz (via Barry Ritholtz)
    A very grumpy music insider lets loose with a scorching screed in favor of free music: "Get your head out of your ass. This isn't about giving away music, this is about breaking bands. People have to be exposed to the music SOMEHOW! If you don't seed the system, HOW WILL THEY?"
  • Internet Stock Blog
    An analysis of Amazon's Long Tail tactics: "But Amazon has a two-pronged strategy to monetize the emergence of third-party sellers and producers. First, it has acquired two companies (BookSurge and Custom Flicks) to facilitate the direct publishing of books and movies which it can then sell. Second, Amazon is pushing third-party sales via its web site and providing e-commerce tools for large etailers. 975,000 venders now sell on Amazon's site, and 28% of Amazon's sales came from third-party sellers in Q2, up from 24% a year earlier."
  • Technogoggles
    A look at Yahoo as a Long Tail company (which, BTW, they are, from their music and video strategy to basic search): "They want to get people innovating around their products to see what they can themselves produce, to see where the market can go, to get the early developers, the people at the 'edges' doing stuff which could potentially be mainstream - because the people at the edges are are usually those ahead of the crowd. "
  • Nick Gillespie
    Nick, who's written often and insightfully about the "the culture boom" that come with abundant choice, finds upside in the dim current movie climate. "As Hollywood—always a fabulously self-involved place—worries about ticket slumps and slowing DVD sales, those of us who actually enjoy movies—and music, and literature, and art—can relax and enjoy more of what we want when we want it. And we can spend a little time musing on why Russell Crowe is so angry. He may be fabulously well-paid and world famous, but he is a movie star at a time when stars—and content producers in general—have less and less power over their audience."

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January 11, 2008

What does the "Media Business Model" mean?

image Fred Wilson says: 

Most web apps will be monetized with some kind of media model. Don't think banner ads when I say that. Think of all the various ways that an audience that is paying attention to your service can be paid for by companies and people who want some of that attention.

This is the core of FREE, at least as it exists online. Both media and most online businesses are based on "software economics", where the cost of creating something of value is relatively high but the marginal cost of distributing it to each consumer is very low. So you can look at the web as the ultimate extension of the media business model to a wide range of other industries. 

But when people think of the "media business model", they usually just think of advertising. That's a big part of it, to be sure, but as those of us in the media business know, it goes far beyond that. 

Here's my start at a list all the revenue models you can find in the media industry, all based around a core of free or almost-free content:

  • CPM ads ("cost per thousand views"; banner ads online and regular ads in print, TV and radio)
  • CPC ads ("cost per click"; think Google ads)
  • CPT ads ("cost per transaction"; you pay only if the customer brought to you from a media sites becomes a paying customer. Here's an example.)
  • Lead generation (you pay for qualified names of potential customers)
  • Subscription revenues
  • Affiliate revenues (think: Amazon Associates)
  • Rental of subscriber lists
  • Sale of information (selling data about users--aggregate/statistical or individual--to third parties)
  • Licensing of brand (people pay to use a media brand as implied endorsement)
  • Licensing of content (syndication)
  • Getting the users to create something of value for free and applying any of the above to monetize it. (Like Digg or our own Reddit)

UPDATE: Michael Cader suggests a few more good ones (some of which are exhibited in his own Publishers Marketplace)

  • Upgraded service/content (ed: aka "freemium")
  • Alternate output (pdf; print/print-on-demand; customized Shared Book style; etc.)
  • Custom services/feeds
  • Live events
  • "Souvenirs"/"Merchandise"
  • Co-branded spinoff

UPDATE2: Fred Wilson adds: (see his comments section for even more)

  • Cost Per Install (popular with top Facebook apps who can help others get installs)
  • E-commerce (selling stuff directly on your website)
  • Sponsorships (ads of some sort that are sold based on time, not on the number of impressions)
  • Listings (paying a time based amount to list something like a job or real estate on your website)
  • Paid Inclusion (a form of CPC advertising where an advertiser pays to be included in a search result)
  • Streaming Audio Advertising (like radio advertising delivered in the audio stream after a certain amount of audio content has been delivered)
  • Streaming Video Advertising (like streaming audio but in video)
  • API Fees (charging third parties to access your API)

Finally, one of my commenters gave this example, which speaks to how much more diverse the media business model is than people think:

"My main business is a site that sells classified advertisements. I can make money from any of 4 sources:
- The people placing the advertisements, or
- The people paying to see the advertisements (in my niche market, this is possible, although in most advertising markets it isn't), or
- Commission from sales for related products, or
- Direct sales of related products"

What other revenue models am I missing? Additions and other suggestion in the comments, please, and I'll update this list accordingly.

(image: GapingVoid)

Posted by Chris Anderson in FREE |

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I think a lot of free business models will depend on selling additional services beyond the basic offering (some call it "freemium"). I'm thinking of places like Last.fm, which enhances the experience for paid subscribers with better internet radio. Skype makes internet calls free but charges for landline connections.

Zecco (my company) is another example of revenue models based on providing core services for free. Providing free ($0 commission) stock trading can be made up not only by advertising revenue generated by our investment community, but also through selling additional services like tax-preparation or advanced quote streaming software.

Posted by: Tony Leach | January 11, 2008 at 05:19 PM

One thing I think you're overlooking is “associated revenue” or “single-sponsor” revenue. It’s similar to Affiliate revenue but different in the sense that 100% of the profit goes to the content provider.

Let me give you an example of what I’m talking about based on an article I’m currently researching.

An online (free) magazine called Clarkesworld Magazine publishes fiction, nonfiction, interviews, etc.. The owners of Clarkesworld Magazine also own Clarkes World Books and Wyrm Publishing. Part of their revenue model is based off the idea that SF fiction readers will come to their site for the free content and then will click through to buy the for-sale books.

This would be similar to clicking through to Amazon affiliate books, except that they keep all of the revenue from the sale. The free content then leads to paid-for content.

Also, you could probably include "reader donations" as a revenue source, since many blogs an online sites (wikipedia for instance) are able to bring in a significant amount this way.

Posted by: Simon Owens | January 11, 2008 at 08:28 PM

How about creating pages for users and monetizing it. For example, Facebook pages wherein users can add ads like blog sites in which they can choose the ads and then earn money depending on the clicks from their friends.It may work not only for SNS but also in various Web 2.0 enabled sites where active participation is high...

Anyway is there any business model on this? It can be called as CPUC i.e. cost per user click..

Posted by: Sampad Swain | January 11, 2008 at 11:35 PM

Still strange how few people acknowledge the possibility of commission instead of charging.

Commission: "I'll pay you x if you produce more."
Charging: "I'll charge you x for your 'consumption' of what I have produced."

In both cases it's a bargain: art for money, money for art.

There are very few people exploring the commission approach.

Four obvious ways of putting the reader/writer bargain (ignoring advertising):

1. Writer offers their work in exchange for the reader's money.
2. Writer donates their work to their readers.
3. Reader donates their money to the writer.
4. Reader offers their money in exchange for the writer's work.

Everyone is focussing on 1 and 2, with only a half-hearted nod to 3.

You can count the number of people looking at 4 on the fingers of one hand. And one of those is me.

Posted by: Crosbie Fitch | January 12, 2008 at 05:25 AM

How about:

-- Upgraded service/content
-- Alternate output (pdf; print/print-on-demand; customized Shared Book style; etc.)
-- Custom services/feeds
-- Live events
-- "Souvenirs"/"Merchandise"
-- Co-branded spinoff

Posted by: Michael Cader | January 12, 2008 at 08:37 AM

Google doesn't like it but you can make money selling links from your homepage and writing articles for SEO purposes. eg, http://daily.stanford.edu/

Posted by: Ben long | January 13, 2008 at 03:49 AM

The other day http://www.hammock.com/craft/2008/01/the_hammock_2008_custom_media.php
>I wrote a piece on Hammock.com's Custom Media Craft blog about "mediacasting" direct towards corporate and association marketers who have developed media channels (magazines, an array of digital media) but who are confused into thinking those formats and channels of media mean they need to apply a media-business business model to them. Most times, for corporate and association marketers, the business model -- the reason the marketing-oriented media exists -- is related to engendering loyalty (extending the relationship) or to deeping the relationship (what marketers call "share of wallet"). You may want to look at research related to what some call "relationship marketing" or research into the value of a current customer vs. the value of acquiring a customer to also understand the "Return on Free" in the context of providing media designed to engender loyalty or cause an action of value.

Another thing to look at is Doc Searls discussion of making money "with" a blog (or any medium) or making money "because" of a blog.

Also, and perhaps with great coincidence, irony or just very much obviousness, one of the most seminal essays every written on this topic can be found with a search of Wired.com -- An essay Esther Dyson wrote in Wired 3.07 (July 1995) and that still reads like it was written yesterday.

Posted by: Rex Hammock | January 13, 2008 at 07:18 AM

Oops. Sorry for that bad code on the link in the previous comment. It should have been:

http://www.hammock.com/craft/2008/01/the_hammock_2008_custom_media.php

Posted by: Rex Hammock | January 13, 2008 at 07:20 AM

Already an important business model for the tv & movie industry: product placement.
Actually in the future it don`t have to be a "secret" one... sponsoring works in the sports industry for decades now very well.

Posted by: Thomas Schinabeck | January 13, 2008 at 11:28 PM

Just a quick note: the main player in the "Getting the users to create something of value for free and applying any of the above to monetize it" model is Google with search!

Posted by: Max | January 13, 2008 at 11:46 PM

This is a discussion that is central to long concept from a business perspective. I am doing my PhD research on "how web entrepreneurs decide on a business model" - what are the factors that they consider and what drives their decision making and process defining a business model. Any web entrepreneurs willing to participate please contact me at gcfisher@u.washington.edu

Micheal Rappa does a good job of laying a foundation for helping us understand what a business model and how we can think about it in terms of the web - much of this is old but still very relevant - see http://digitalenterprise.org/models/models.html#Brokerage

Posted by: Greg Fisher | January 14, 2008 at 06:33 AM

The co-creation of value. Community dominated edge in models lead to value webs where we every member is a convergved indivdual - ie not just a consumer, but also a creator, designer, marketeer etc.
That which we create, we embrace. Beats all the wastage of mass production, too.
Lots on this on my blog.

Posted by: David Cushman | January 14, 2008 at 06:41 AM

Am I missing something? Has no one mentioned paid directory services? These have been monetized since the birth of the Internet, and can bring in some serious cheddar.

Posted by: Chase Granberry | January 14, 2008 at 08:58 AM

The problem with the list is that advertisers are now their own media companies, creating and serving content just like everybody else. What's left, then, is aggregating these forms of advertising content.

I think the ad-supported content model is adrift at sea.

Posted by: Terry Heaton | January 14, 2008 at 09:07 AM

I've create a wiki for Media Business Models
http://www.mediabusinessmodels.com

I've already added your list and Fred's additions as well, and I hope more people will contribute to it along the future.
Here's my blog post about it http://technozzle.com/?p=38

Posted by: Baher | January 14, 2008 at 10:49 AM

You could watch the metrics of giving things away and generate statistic reports on why people are selecting what they are selecting. This understanding could be sold to the people creating the content and wanting to attract more traffic by changing the content.

Essentially, it's like political consulting. The candidates say what the data tells them to say to win, so I guess you'd call the business model 'consulting'.

It would also be like like Netflix engineering their system that predicts what movies you'll like and selling that knowledge to the producers of movies by saying, 'the market is here, go make a movie that fits this'....which I suppose is an existing large industry as well.

The common point is analyzing the data flow though in a market place and providing that information to the producers of the content...I don't think that's covered in the list.

Posted by: Lloyd Fassett | January 14, 2008 at 01:12 PM

Added the following to the USV wiki:

Credit Points (think: Microsoft Points and Zune Marketplace)

Rewards Points and Conversion (e.g. frequent flier miles, contests, support rewards, etc.)

Production Points (e.g. advertiser, subscriber, and consumer subsidies to fund production)

Posted by: Vada Dean | January 14, 2008 at 05:51 PM

My addition is a Market Maker in ad exchanges (like ADSDAQ by ContextWeb, RightMedia and DoubleClick's AdX) which earn the difference between an advertiser's bid price and a publisher's ask price for online ad inventory.

I added it to the USV wiki, and a more detailed explanation is on ContextWeb's blog.

Posted by: John Ebbert | January 14, 2008 at 06:13 PM

I am not sure on how to name it, but some cell phone virtual operators have tried free phone calls in exchange for listening to an advertisement first...

Posted by: Benoît Marcoux | January 15, 2008 at 10:05 AM

Here's one for your list: health outcomes.

QuitNet is the world's largest smoking cessation program. Started as a project of Boston University School of Public Health in 1995, it was spun out as a private company in 2000 (I was President & CEO) and was eventually bought by a public company, Healthways, in 2006.

QuitNet has always been free to end users. While there is a Premium service upgrade option (which few individuals buy out of pocket), the business model is sponsor paid. Employers, health plans and public health departments pay for "their" people to use the program. The health related costs of smoking are so high that QuitNet provides a great ROI. There is a advertising, viewed only by users who have no sponsor, but it accounts for a small revenue stream. If we were solely reliant on ad revenue, we'd be out of business.

With a thriving online support community and quirky culture, QuitNet is a service that users LOVE. Who would have thought quitting could be free and fun?

Posted by: Chris Cartter | January 16, 2008 at 07:22 AM

You also forgot donations, just have a look at Mozilla Foundation ;)

Posted by: goundoulf | January 17, 2008 at 07:08 AM

What about Pay Per Post / Pay for Comments? I know this got very controversial, but with the proper disclosure, it seems to me this model could work very nicely. For example, ProBlogger has been charging bloggers for "Community Consulting", where each consulting gig is essentially a short blog post that serves as an open thread for problogger commenters to give the blogger feedback on his or her blog. I think it's fairly successful.

Posted by: shai | January 17, 2008 at 10:54 AM

My company works with a majority of B2B publishers to leverage webcasting and rich media for revenue opportunities. Some additional ones to consider are:
- Extension of live events: can be sponsored or pay-per-view
- Pre-rolls: add a 15 or 30 second pre-roll before the live webcast
- Microsites: work with sponsors to created special niche microsites that have white papers, articles, webcasts, podcasts, etc.
- Upgraded ead generation: more than providing the names, also provide lead scoring to better identify, quality and score leads

From a personal perspective, other possibilities include:
- RSS feed advertisements: text or graphical
- Subject Matter Newsletters: sponsored or ad insertions

Posted by: Cece Salomon-Lee | January 17, 2008 at 03:02 PM

At Show Farm we get money by selling extra contents through the mobile channel (m-site)

Posted by: claudio vaccarella | January 18, 2008 at 12:53 AM

As soon as one starts building a business model around the concept of "Long Tail" - The biggest question one must answer is how many niches make up sufficient revenue (measured by the area covered under "the 98% niches" in the long tail graph).

Any analysis on the numbers there? Say how many hits per month are needed to start making money in the long tail.

Posted by: Nikhil Kulkarni | January 18, 2008 at 01:47 AM

I just published on video on"paying with attention' - thanks for the inspiration, Chris, and everyone else, too
http://www.youtube.com/watch?v=Z4gPVW25nV0

Posted by: Gerd Leonhard | January 18, 2008 at 03:00 AM

Media has growing in a rapid pace. The nice point is everyone getting their peace of cake. Definitely it is not only one getting benefit, whoever participate get their meal here...
UK Breakdown Cover

Posted by: John | January 18, 2008 at 11:50 PM

> Getting the users to create something of value for free and applying any of the above to monetize it.

Why not Google.com as the best example (and every other search engine)?

Posted by: Santosh | January 19, 2008 at 10:46 PM

It is disturbing to me that many of these models violate (or seem to violate) long-standing, albeit print-centric ethical rules. The relationship of advertising to content seems to be shifting radically; I cannot see how this is good for the reader, nor, in a broader sense, for our democracy.

Posted by: Grant Alden | January 21, 2008 at 08:49 AM

Please, all you music business pros, just make sure we users have an option to pay to avoid the ads (especially in-line audio).

Posted by: Tom Nield | January 22, 2008 at 02:32 PM

Did someone already say this one? (I didn't read every comment.) If you have a site of user-generated content, you could sell spots in a 'featured' content area on the site. This is similar to Google's "sponsored links" on search result pages but applied to content within a web community.

Posted by: Marilla P. Alligator | January 23, 2008 at 11:37 PM

I head up business development for a streaming company and the answer we have come up with is, 'Drive alot of traffic.' Banners make money, pre-rolls make money in-player 'bugs' (read; ScanScout)make me money and one day in-stream ads will make money too. The point is, give the content away, make it compelling and the ad revenue will come. We have seen a drastic increase in advertising revenue in the past six months. With the maturation of the pre-roll market and improving CPM's on banners, you dont need a slew of new ideas, you need traffic. And Tom Nield, I respect you opinion as a listener, what amount would a person like you deem as an appropriate amount to pay to listen to music. I myself pay for subscription services, but would not pay for internet radio. You hear ads on radio, I view it as a different delivery method for the same product.
Thanks for listening.

Posted by: Rico | January 24, 2008 at 06:57 AM

I would add 'Cost Per Influence' on the list. The first mention that I saw of this online was with the DECK (http://www.coudal.com/deck/) which is a small ad network that runs a small 120x90 ad across line up of creative sites (37signals, coudal, alistapart etc.) This model might overlap with the sponsorship model since you are paying a fixed fee for certain length of time.

Chris, is your power point from your Nokia world talk available online??

Thanks!

Posted by: rj | January 24, 2008 at 06:46 PM

Thanks for the very informative list of media models from you and the other contributors.

Many web sites start out as a labor of love and later become monetized when they are successful. This list of media models for monetizing online media illustrates the wide range of possibilities driving digital abundance from a commercial standpoint. It would be instructive to develop a similar list of why people create media works where they are not concerned about the commercial potential. This will illuminate the strong commercial, institutional and personal driving forces that are working to create digital abundance on the web. There probably is a seperate set of models underlying the commercial and personal drives to create free software and extend digital abundance.

Can any of these models translate to the physical world and the creation of free physical goods?

A couple of other possible models are: Reduce personnel costs and increase customer satisfaction by developing online manuals and information about products and services. Create religious converts and political supporters who will work and donate to support the causes explained by the media.

Posted by: John Banfill | January 25, 2008 at 08:59 PM

Chris,
I'm sorry but IMADOOFUS and I can't figure out how to track back to you from blogger aside from HREF-ing your article.

So: http://weareindia.blogspot.com/2008/01/show-me-money.html

-p

Posted by: preetam mukherjee | January 29, 2008 at 06:03 AM

If we step back from the business model forest created by the economics of impressions, and ask is there something more. Is there something beyond our forest of impression based models? I think the answer is yes.

We can and should recast the discussion from economics of impressions to the economics of communities. And what are the economics of communities? They are micro-economies where trade, commerce and personal interaction are all intermingled with each other. Think of Second Life and their booming economy.

Read more on this idea at http://ta.gg/10o

Posted by: Alex Nesbitt | February 07, 2008 at 08:04 PM

Another way to make money from free content is to rely on voluntary contributions or 'tipping'.

Sites such as ours: Tipit.to (http://tipit.to) aim to facilitate that style of economical transactions.

Posted by: Alper Çuğun | February 13, 2008 at 05:57 PM

Many nonprofits have brought their fundraising online. Some like Donorschoose.org have gone further by raising money for others and getting others to raise money for them too (see their Blogger challenge).

Posted by: Julie | February 20, 2008 at 12:43 PM

Many nonprofits have brought their fundraising online. Some like Donorschoose.org have gone further by raising money for others and getting others to raise money for them too (see their Blogger challenge).

Posted by: Julie | February 20, 2008 at 12:44 PM

This falls under the paid inclusion model I guess... but things like Yellow Pages online (and their variants) - often called 'local search' options - still make pretty big $ today. I can only see this falling though as 'natural search' becomes more and more pervasive. The issue there is that while the consumer side to Yellow Pages is free, the advertiser side is not - unlike say, Google Maps.

Posted by: Arun | February 29, 2008 at 03:17 PM

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