Mirage of the Long Tail
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While many consumption patterns are at play in the new competitive landscape, two are particularly important: power law and social cascades.
Power law: (aka “rich get richer effect”) is a self-reinforcing positive feedback loop. For example, the more babies are born, the more people grow up to have babies; or the more money you have in the bank, the more money you earn to put in the bank.
Both of these are more volatile and less predictable online, which creates opportunities for independent media.
Chris Anderson popularized the term “The Long Tail” in a 2004 Wired magazine article that became the inspiration for a best-selling book. The concept has become the basis for countless business models. Before the term was prevalent, Amazon had already grown from the effects of a Long Tail—which describes the graphical representation of the popularity of all books available in the world, 80% or more of which are not sufficiently popular to justify the expense of stocking them in a traditional bookstore. The economics of combining broadly eclectic tastes with efficient online distribution is what make it work.
The Long Tail flips the conventional business logic of “power law” on its head by capturing value from the Long Tail of less popular, less profitable content. In recent years, the promise of The Long Tail has become a mirage for online media-makers. Successful long-tail strategies hinge on companies’ ability to provide a large scale of niche products at little to no marginal distribution costs. If the collective number of products in the tail is not large enough, it will not work. In other words, it mostly serves the interests of big corporations that can accumulate and distribute massive amounts of content, not independent producers who create the content. In fact, in his critique of Anderson in the New Yorker, Malcolm Gladwell asked, “Why are the self-interested motives of powerful companies being elevated to a philosophical principle?”
To make matters worse, since news goes out of date quickly, the value of The Long Tail is limited for journalistic organizations. Furthermore, many types of media require considerable production expense, such as investigative journalism, television dramas or console video games. Even with a long time period, The Long Tail is often insufficient to recoup these costs. For example, Netflix’s long-tail model worked for distributing other producers’ films, but when they tried to produce and fund their own films, costs were prohibitive. As a result, NetFlix closed its Red Envelope Entertainment division in 2008 after investing in more than 100 film productions and losing money every year.
The power of “power law”
“Should You Invest in the Long Tail?” Anita Elberse asked in her 2008 Harvard Business Review article. “Although no one disputes the lengthening of the [long] tail,” she wrote, “the tail is likely to be extremely flat and populated by titles that are mostly a diversion for consumers whose appetite for true blockbusters continues to grow.”
The Long Tail is much too intoxicating for media-makers, because it creates opportunities for them to find new audiences. Nevertheless, the greatest power and money are in the tall head of the curve, where most of the action happens.
The self-reinforcing value of breaking into the tall head has been reinforced in studies of online media with sites such as YouTube and Flickr. Content that has the most links to it get the most new links. Don Hazen, Executive Director of AlterNet (TMC member), described his site’s historical success in terms of power law. Since AlterNet was one of the first news portals, it had accumulated more backlinks than their peer progressive sites (over 2M on Yahoo! alone), which helps maintain their sizable traffic today (3.2M visits/month in late 2008). [i]
Shirky claims the more that diversity and freedom of choice increases, the more extreme inequality becomes. [ii] Power law is a counterintuitive notion that can offend many people’s sense of fairness. Media-makers can deny the phenomenon, ignore it, or choose to leverage it. But independent media producers should not force fit the Long Tail to justify their business models. Rather, in order to succeed, they should take advantage of volatile power-law dynamics that exist online.
Historically, media outlets manufactured popularity by pushing content on consumers by taking advantage of their lock on power-law. Now there are many fast-changing dynamics that constantly create new opportunities. As we have seen with YouTube and Twitter, new platforms create new stars, usually those who are first on the scene. Industry volatility and lower competitive barriers mean that new players can establish a beachhead on a new platform and leave incumbents behind. Yet today, more than ever, independent media has the chance to break through since dominant companies no longer have this advantage. If independent media can strategically innovate, they can leverage their existing audience to become first movers of new technologies and platforms that will inevitably emerge.
[i] Tony Deifell, “AlterNet,” independent case study, Democracy Alliance & EBS Companies, February 2009.
[ii] Clay Shirky, “Power Laws, Weblogs, and Inequality,” Networks, Economics, and Culture mailing list, February 8, 2003.
For the complete analysis, download Vol. 2 of The Big Thaw. We will post more tomorrow on the value of social cascades.
This blog is an excerpt from The Big Thaw, a guide to the evolution of independent media, written by Tony Deifell of Q Media Labs and produced by The Media Consortium, a network of leading independent media outlets. Learn how your organization can use this report. For more information and recommendations from the study, click here.
[...] manufactured popularity by pushing content on consumers by taking advantage of their lock on power law. Now there are many fast-changing dynamics that constantly create new opportunities. As we have [...]