Long tail, small earnings?

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Struggling producer? In a post from “The long tail” a small movie director has written an interesting e-mail to Chris Anderson.

But the reality at this time for me and my company is that I need to find multiple large national distributors if I hope to even come close to making a living at this game. And I need to produce fresh content on a reasonably frequent basis. In short, I am a much smaller and more struggling version of the giants that have preceded me.

Your Long Tail theory is a basic and profound truth that I happily embrace AS A CONSUMER. But as a producer and creator of Long Tail content it is basically spelling out my doom. Other than your book examples which are still basically about VERY LARGE entities and aggregators, I am finding very few self supporting examples of independent Long Tail producers.

The general idea of the e-mail is that the long tail with niche content is nice for the consumer but that it is hard for the producer. Fundamentally there are only a few customers in the long tail so it is hard to make money for producers. Since when you produce it takes almost the same amount of time and money to make a blockbuster than to make a niche product. It is a great niche product when you have three really dedicated fans but how much money will you make.

Most of the success stories in the long tail are from distributors for whom it does not matter what item they sell since their business model is based on the total amounts of all products sold together (in the end they are all bits on a platter). And fact is that due to small world effects it is the big “hub-distributors” that are getting bigger and bigger. This might mean that in the end we end up with only a few and powerful distributors since they are the only one with a large enough audience to make your niche product profitable. Somehow that has a familiar smell to it…

black swans

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Black SwanBill sent me this article that describes how voters have a systematic bias regarding some economic effects. The article questions the fact that voters in general have a bias for anti-market, anti-foreign, anti-efficiency loss of work and a pessimistic outlook. This systematic bias of course would lead to bad decisions since the errors do not even out. The stupidity of the crowds.

Though I think part of the bias is not completely false due the following reasons:

Not all companies are rational too. Look at some of the big mergers in the world where the merger is probably more driven by the ego of the winning CEO than by economical motives. Most large mergers fail

  • Not all market are markets where demand and supply have a more or less balanced power. Once one side creates a invincible power and becomes a monopoly the market stops. Look at Microsoft or the cartel of energy companies in the Netherlands. Health is also an example where it is very hard to impossible to establish a fair market because it involves your health…
  • Markets are driven by the opportunity to get ahead, to gain more money than the guy next to you (or more women, more free time, whatever makes you tick). But the amount extra that you can gain is not linear connected to the increase of wealth it gives to society at large. Therefore a redistribution of wealth for the automated weaving factory to compensate Ludd for the loss of his job can be done at little cost to the economy.

But still, there certainly is a tendency to underestimate the power of the unexpected. I recently have read a book called the Black Swan. A black swan is something that can not be predicted (expect the unexpected). The analogy is based on the fact that before Australia was discovered everybody (except the Aboriginals) thought that all swans are white. But the discoverers found to their amazement that in Australia there is a swan like bird that is black. In general people are not prepared for completely unexpected things to happen.

It is a bit like being a turkey. Everyday you get a nice meal so after some time you expect the future to be like all the previous days, however conspiracy driven turkey you are. So Christmas really comes as a surprise.

Crowds are often are bad at taking these unexpected events into consideration. But these unexpected events often create big changes in society. Of all the technology that is of major importance 20 years from now we only see about 50%. The other 50% we can not take into account since it does not yet show on our radar screen.

For the design of iCrowds this has big implications. On the one hand it shows that there is a limit to the intelligence of crowds and on the other hand how information sharing across the network is important.

A community of turkeys may find out that some of their cousins are mysteriously disappearing and will expect the unexpected …