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Wednesday, November 28, 2007

The Long Tail, 2007 Edition

Is the tail a suckers' game?

It's a critical question, which is always a good thing, so let's discuss for a sec anyways. Four very basic points.

1) There's less and less money in the head (just ask film studios or record labels). But the total pie isn't shrinking. So value must be shifting along the tail, qed. Of course, that's exactly what Google's income statement tells us.

2) It's a bit ironic for someone making money from the tail to be questioning the revenue potential of the tail. RWW is an existence proof of the economic potential of the tail, as are more and more blogs. So is, as I've pointed out before, the explosion of ad nets, etc, etc...

The real question Alex should ask is: does RWW make more this year than last year? If yes, then value along the tail is growing.

3) Discovering how to capture value from the tail will be a challenge for a generation of entrepreneurs. There are no forms of marketing which really begin to capture the value blogs are creating - yet.

It's a bit soon to write it off :)

4) Chris is absolutely right when he says there are many different ways to profit from the tail. Money is cheap; it's other kinds of capital that are more durable - and far more valuable.

Look. Though it's a good thing that Alex is asking a real - and a critical question - unfortunately, there's not a real argument - let alone evidence to back it up.

In fact, if you want to think strategically about it, revenue for players along the tail has grown dramatically in the last 3-4 years - and will continue to grow in line with the tectonic shifts reshaping the larger economy.

-- umair // 8:36 PM //


Yeah but, like I said over there earlier today... it's obvious that Google and Amazon profit from the tail.

If Amazon sells one copy of a million different books, Amazon made a bundle but each of those authors only made pennies. Similarly, I make pennies through Adsense... but Google makes millions by aggregating my pennies with everyone else's.

It's great to be in the position of an aggregator or distributor... and you can do alright if you're at least close to the head (as both yourself and RWW are) or can at least dominate your niche... but there ain't much out there for the rest of us.
// Eric // 9:29 PM

hey eric,

your argument has major flaws.

complaining about google - google in fact, google shares the *vast* bulk of ad revenue with bloggers. if bloggers can't drive traffic - it's hardly google's shortcoming.

the real questions are:

are you making more, or less?

will you in the future make more, or less?

in short - are you better off, or are you worse off?

arguing that the tail will never make a guy who sells a single copy of his book a billionaire isn't really debatable :)

instead, when you look at the numbers - the real evidence - it's immediately apparent that everyone's better off than before - and they will be even better off next year, etc.

thx for the comment.
// umair // 9:45 PM

Umair, I have a great deal of respect for you, but I'm afraid you're missing the perspective that fuels the RWW post. Many small bloggers misunderstand The Long Tail to their detriment.

Anderson himself speaks to the wisdom of aggregators who *sell* super-niche items along the long tail. But blogging free content in super-niche categories is, well... stupid.

Copyblogger is a niche blog for sure, but the potential audience is every commercial blogger and online marketer--that's millions of people. Will I reach them all? No, but you need that potential reach just to carve out an audience that can be supported by advertising or even product sales.

Read/Write Web is a perfect example, made clear by its rival TechCrunch... you need to have a uniquely-positioned niche offering that appeals to a fairly large audience.

That means marketing strategies for Bolivian yak farmers is out as a free content strategy. Right? :)
// Brian Clark // 12:09 AM

As I stated in RWW's comments, there's plenty of profit to be made in the long tail. But just as the long tail of books is made profitable by grouping a bunch of them together and grouping the profits together, blogs can do the same thing with blog networks.

To quote my comment on RWW completely:

"Three words: Networks and revenue-share.

Alternately known as "strings woven together are stronger than the sum of their parts". Twenty blogs on a variety of topics that get 10k unique visitors/day each aren't worth as much as a blog network on a variety of topics that gets 200k unique visitors/day total. Managing a network to create a circle of different but related blogging topics allows you to use blogs with topics that are interesting but don't have companies paying high-value ad prices to drive more traffic to blogs in your network that do.

For instance, a cooking blog offers great tips on recipes, techniques, grocery savings, etc. But let's say there are few ads for cooking topics. So the blog network that invites the cooking blog also invites a parenting blog and a productivity(Lifehacker-like) blog. Now, mothers brought in by the cooking blog are more likely to visit the parenting blog if they're a nuclear family mom, or the productivity blog if they're a single working mom, both of whose topics have plenty of ads available.

Thanks to the network's revenue-share, the cooking blog gets a good chunk of the change it couldn't have gotten from selling ads about its own topic, as well as the fact that being part of a network makes it more likely for the cooking blog to be discovered by someone that wants to make them a cooking TV show or book offer.

Alternatively, skip ads and sell memberships to the network that gets you premium content, like video podcasts. A blog that produces 1 video/week on a topic won't make much selling memberships. A blog network that produces 20 videos/week on a variety of closely-related topics has a much better chance."
// Jay Neely // 12:43 AM

hey brian,

i agree with you.

but the long tail doesn't imply everyone gets equally rich.

so i'm a bit mystified by the argument that the long tail is invalid because most bloggers aren't making tons of money.

hope that makes sense.

thx for the comment.
// umair // 2:27 AM

Hey there,

Thanks for the post, but I have to say that you are not reading the post right.

First of all 2 major points:

1) A lot of bloggers in the long tail think they can make money it. Its not true because there is no traffic.

2) If long tail collapses then advertising that makes money on it collapses too.

Secondly, RWW is not a niche blog and never really has been.

// Alex Iskold // 3:39 AM

Umair: I think you continue to miss the point. People hear "there's money in the long tail" and think "I, as an individual, can make money in the long tail". But if "make money" is defined as (for example) "at least minimum wage", then only a small fraction of those who would LIKE to make decent money on their blog will succeed.

It's neither about pennies nor about "equally rich"; it's about the (IMHO) false expectation of a reasonable cash ROI on time spent. I contend that most people who are blogging for the money will give up. In any case, lots of people blog for reasons other than money (including many indirect $ benefits like reputation and the like), so I don't think the net effect on the blogosphere will be large. It's just one of many churn factors.
// Scott Lawton (Blogcosm) // 6:50 AM

hey guys,

i think you need to be a lot clearer with your concepts.

what does "there's no money in the tail" mean?

the tail you're referring to is a distribution of profits.

the tail chris wrote about was a distribution of demand.

in a perfect world, the two can be largely the same.

i think jay has hit the nail on the head. as the reach of players along the tail is amplified - and as more efficient mechanisms allow smaller the advantages of biggers players - revenues along the tail will continue to grow.

fine - bloggers aren't making a "cash ROI". but the (real) tail doesn't promise everyone a "cash roi".

so, again, that's the wrong question - the right question is: are they better off than they were before, and will they continue to be.

thx for the comments - they were good ones.
// umair // 10:23 AM

This guy http://www.leemccoy.co.uk
specialises in blogs on nyper-niche stuff linked to affiliate marketing e.g. 2008 World Cup football shirts etc.
// James // 1:03 PM
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