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…

Conversation

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The Athens AgoraSome books are very helpful in making you understand developments. This summer I have read a book called “The Cluetrain manifesto”. Central theme of the book (which by the way is written in 2000 but started as as website in 1999) is the statement that markets (and a lot of other things) are conversations. The way companies use corporate communications and PR to tell us how we should think about them simply does not work anymore.

It makes you think. When I go to the market each Saturday to get the ingredients for a nice dinner I am in constant conversation. I tell the girl that always helps me with the vegetables how they were last week and she tells me what kind of specials she has this week. Sometimes we discuss how the ingredients are best used for the recipe I will be making. I learn from her and sometimes I can tell her new things. Same with the small butcher that I go to. In essence this is a weekly conversation that accompanies the business we do together. The one greatly enhances the other.

In a way this is the natural way people started doing business. Democracy and debate became of age in the Agora of Athens that was established as a marketplace. It is only with the establishment of big companies that we lost the conversational way of doing business. And because of this greater distance we created corporate communication to tell people what we think they should think of our company. But we stopped listening and forgot about two way conversation.

Internet and especially the social networks it supports again creates the opportunity to be in conversation with the market. Not to tell people why your product is so great but to be in conversation about the features people want. People love to help companies to improve the products they like, all they ask is that they listen and take them seriously.

I think here is a message for a lot of companies. More and more it will be needed to open up the company and invite people from the outside to help. With the development of new products, with how the product can be implemented.

The market is a conversation and conversations go in two directions (at least the nice ones, don’t you think?).

One of the other great books I have read this summer is linked, a book about the theory of small world networks. Many know about the famous Milgram experiment where he showed that most people in the world are connected by not more than six handshakes. Linked shows that this is because society has a “small world” topology, meaning that we have many closely related groups that are coupled by “connectors”, people that have many long range connections. The funny thing is that this type of network is also fairly common in nature, e.g. the way neurons are connected in the brain and the way fireflies synchronizes their lights. He describes many forms of these networks and simulations he did with this topology. I think this work has a lot of design rules in it how to create successful social networks. Somehow I think for example that the dunbar number (which relates to groups size and dynamics) is related to this. I will get back to that some other time.