As many of you know, I’m taking a master’s course at Clark University this semester entitled New Media Technology. Essentially the course deals with social media and how businesses and organizations are taking advantage of it. One of the best parts of the course has been the books we’ve read. Here is a list of what we’ve read that you may want to take a look at:

The Long Tail: Why the Future of Business is Selling Less of More (by Chris Anderson)

1. Also check out Chris Anderson’s Long Tail blog

The New Influencers: A Marketers Guide to the New Social Media (by Paul Gillin)

The Social Media Bible: Tactics, Tools & Strategies for Business Success (by Lon Safko and David K. Brake)

We also read a fascinating article entitled “Is Google Making Us Stupid?” by Nicholas Carr which appeared in the July/August 2008 issue of the Atlantic.

News item: we now know that Al Franken used the wisdom gleaned from Chris Anderson’s idea about the Long Tail to win his election.

The Long Tail, the idea championed by Chris Anderson, and Microtrends, the book by Mark Penn, converge in this story. And you can throw a little Seth Godin and Tribes into the mix.

You probably know the concept of the Long Tail by now. A Border’s or Barnes and Noble store will stock books that have the best chance of selling. Amazon sells the same books, and some 80% of the books sold on Amazon are stocked in a typical physical retail bookstore. But 20% of sales for Amazon are from the “long tail.” (A quick read for this idea, and it is pretty good, is the wickipedia article on the Long Tail).

The traditional way to make money was to market to the masses. But increasingly, the way to reach people is with narrower niche marketing. This is really the end game of the long tail – it enables one to market, very successfully, to an increasingly narrow niche. Mark Penn describes it this way in Microtrends: The Small Forces Behind Tomorrow’s Big Changes:

All these people out there living a more single, independent life are slivering America into hundreds of small niches. (The number of households in America has exploded, even though population growth has slowed dramatically).
This book is about the niching of America. How there is no One America anymore, or Two, or Three, or Eight. In fact, there are hundreds of Americas, hundreds of new niches made up of people drawn together by common interests.
You can’t understand the world anymore only in terms of “megatrends,” or universal experiences. In today’s splintered society, if you want to operate successfully, you have to understand the intense identity groups that are growing and moving, fast and furious in crisscrossing directions. That is microtrends.
A microtrend is an intense identity group, that is growing, which has needs and wants unmet by the current crop of companies, marketers, policymakers, and others who would influence society’s behavior.

The number crunchers keep examining the last election. Here is a revealing description about the Franken win (let me recommend, don’t let your politics, one way or the other, get in the way — – pay attention to the marketing implications). I first read this in a Daily Kos post, but the source is Long-Tail Nanotargeting from Politics Magazine.

Thanks to Democrat Al Franken’s Senate campaign, we now have a proven model to move beyond [the old campaign voter targeting] strategies. We do it by tapping into the concept of the “long tail,” an Internet marketing theory popular in the corporate world. It’s based on the idea that the Internet audience is extremely fractured. So, instead of identifying the most universally persuasive messages and broadcasting them to a wide audience, in the long-tail model you take the most persuasive messages and nanotarget each one to the right niche.
People don’t go to one place, looking for one thing. Their whims take them to a million places. The trick is to be everywhere, with tightly targeted messages. It’s about showing them highly relevant factoids/ads tailored to the whim they’re currently indulging, which if clicked, will redirect them to a relevant part of your website or related off-site content. In short, long-tail nanotargeting takes those little gems—be it an endorsement, video, news story, or ask—and shows it to the people who would care. To this end, we ran more than 30 million impressions for the Franken campaign across five horizontal ad networks, two vertical networks and dozens of local news outlets.
We nanotargeted more than 125 niche groups, with more than 1,000 pieces of creative, for less than $100,000. On Google alone, an acquisition budget of less than $20,000 got us more than 20,000 clicks, 5,500 active e-mail sign- ups, and more than 2,500 donors. We were able to reach persuasion niches (this is akin to someone opening up and reading a mail piece) for a fraction of a penny per impression, and less than 50 cents per interaction.
They targeted geographic and demographic niches online. They tested messages to see what worked best. Here’s an example:
In real terms, Minnesotans who were searching for cheap gas or researching fuel-efficient cars saw ads about Franken’s plan to lower gas prices.

The long tail has made Amazon successful, helped elect Al Franken, and, I suspect, will be the way to go for an ever growing number of businesses. It is the internet that makes this possible. But it is understanding the long tail, and implementing strategies that take advantage of the long tail, that will make people more successful.

———

You can purchase my synopses of The Long Tail and Microtrends, and my colleague Karl Krayer’s synopsis of Tribes, with audio + handout, from our companion site, 15minutebusinessbooks.com.

From The Sipa Online Publishing and Marketing Summit. I had meant to blog live, but the sound of my keyboard was distrubing the delegates! Anyway the first post from the event tries to summarise the excellent David Cushmans powerful insight into why media companies are struggling.

The opening keynote is from David Cushman of the ninety10group.com which specialises in social technologies. Grounded in consumer publishing as a senior exec at Bauer he should be well placed to see the world of the new with a good understanding of the world of the old. His premise is that long tail demand may have been a disaster for traditional broad based media companies, but it creates exciting opportunities for specialists.

This is a structural change. There may be a bounce back but lets not forget this is the biggest structural change in media since the invention of the press. In the early days of the press, control of the means of production was the key to the power of information.

The future if digital is what people do together and how they self organise themelves. What used to be in the control of the publishers but is now in the control of us all.

Framentation means you can,target all the niches. but although the impact of the long tail is a disaster for traditional mass media models it is a huge opportunity for specialists. In a world where no one wants to pay for content and no one clicks on ads we have to think about media as a “social object” and this can reveal where the roi might come from. Cushman goes on to argue that everyone is apublisher now as the media world moves from the one to the many. With over 300m blogs and 50m twitter users peer to peer interaction is the most important behaviour change you can imagine.

He claims that 70% of pruchase recommendations are peer recommended which undermines the power of mass media to be influential in the purchase process. The user is the destination, not the media company. There is no point in waiting for users to come to us.

Buuilding lots of hits for the sake of it is a pointless strategy. Cushman argues that the majority is now made of people who don’t want the thing that the largest single group want – the power of the long tail. In a world where there is only “broadcast” or mass media, the audience for the broadcast is the largest group. In a social media world, the largest group is the world of one to one communciations. The implications of this are important. In the broadcast world the value was where the hits were. In the narrow cast world all the tiny niches are collectively bigger and more important and valuable than the largest of the lowest common denominator single group. Therefore, if you want to be a business of scale you must pursue the niches.

There are three key disruptions for media companies. Whow creates content? Any and everyone. Who gets to distribute the content? Any and everyone. Who controls the user experience? The user.

Cushman users a theatre analogy to make his point. In the old media world we were on the stage, broadcasting our message and the audience was looking quietly up at us and hanging on our every word. A big audience gave us scale and influence. If an adveriser wanted to speak tot he audience they would have to join us on the stage. The audience would not talk to each other. In the networked world the message from the stage doesn’t reach the audience. They are not even looking at the stage they are looking at each other and building there own networks of interest in niches and communities of purpose. They share messages anongst their groups – ther groups that they decide to belong to.

Media companies have to understand that we don’t own or contril these groups. Communication is not done to them but by them.

So what should media companies do?
Make it easy for users to connect and interact.
Encourage users to act – people who care act so find the social objects that they care about.
The actions of users attract more people by amplyfying and sustaining the converstion,.
Whatever your pay model is (eg click to buy) it has to be portable so users can take it with them into their own networks.

So finding the right social object is key. Get this right and users will care enought about it to tell their friends about it.

Cushman says we are just at the beginning of the disruption. By implication he is saying that the old broadcast model can never work in the long tail social netwrokoed world. Users aren’t look at the stage. No wonder ad click thrus are low! He concludes by reminding us that if the world outside is changing faster than the world inside, something is going to tear – and it won’t be the world outside! Almost everything you try as a mass media broadcast solution – or possibly naything you try at all will be disrupted by the network. The future isn’t digital – it is the network.

In questions, Cushman was asked what about thought about the rush to put content behind paywalls. His reply? Its insanity. Its a strategy designed to make as much money as you can from teh old model while you can. It si not a building block for the future

You can see the presentation here

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• A new era for specialist media? (fasterfuture.blogspot.com)
• 90:10 a company purpose built for the networked society (smlxtralarge.com)

“Putting the Public Back in Public Relations: How Media is Reinventing the Aging Business of PR” was appropriately the fourth and final class reading. In many respects, Groundswell, Here Comes Everybody, and The Long Tail should be  prerequisite reading requirements for anyone who is about to read this book.

 Brian Solis and Deirdre Breckenridge have written a “how to manual” for today’s public relations practitioners. This book is a must read for public relations professionals that wish to survive in the Web 2.0 environment.  Solis and Breakenridge use their own experience in the PR industry coupled with their knowledge and understanding of the new age of communication to lay out their suggested framework and recipe for PR success in today’s digital market.

Groundswell set the stage regarding the current state of play, Here Comes Everybody explained the social and human behaviors in this new age of communication, and The Long Tail explored the emergence of niche consumption.  Putting the Public Back in Public Relations is a “nuts and bolts” user manual for PR 2.0 sucess.

 
The landscape has changed

 Part 1: The True Value of New PR

Along with identifying what is wrong with current PR practices, Solis and Breakenridge challenge the status quo and explain the difference between PR 2.0 and Public Relations.  They discuss the emergence of blogs and compare new journalism to traditional journalism.  Like Chris Anderson, they contend that bloggers are just one example of mass democratization and publication.  In the final chapter of this first section, they discuss the importance of personal relationships in PR.  This is important, because regardless of technological advances, personal relationships remain the most critical ingredient.

Part 2: Facilitating Conversations: New Tools and Techniques

Solis and Breakenridge introduce the reader to a myriad of new tools and techniques that exist in Web 2.0.  More importantly, they introduce innovative tactics to successful operations.  Some of these tactics include: blogger relationships, social media releases, video news releases, and corporate blogging.

Part 3: Participating in Social Media

Solis and Breakenridge explain that engagement with social media is essential, but will involve new and innovative approaches.  In other words, just because you’re using social media, doesn’t mean you can employ tired and outdated tactics.  These new tactics must not be confused with standard marketing and PR tactics of the past.  Solis and Breakenridge provide advice and examples of how to integrate a successful social media plan into any PR strategy.

Part 4: P.R. 2.0: A Promising Future

Here they explore community managers and customer service 2.0, socialization of communication, breaking news and metrics for PR 2.0.    Again, they discuss the new challenges with respect to new influences vs. traditional journalism.  Specifically, they explore how bloggers are involved with breaking news stories and the role of social media and the news process.

Part 5: Convergence

Finally, Solis and Breakenridge explain how the practices of PR 1.0 and PR 2.o can converge into today’s new environment and allow PR professional to succeed in this changed landscape.   As the other readings focused on Web 2.0 from a macro level, I found this reading to be a micro view for the individual PR practitioner.  This book relates to changes that each individual professional must proactively take to steer their respective company towards PR success.

The Coast Guard PR Professional

A rare benefit that the Coast Guard has related to PR is that generally public affairs officers complete graduate work in communication before they are assigned to executing any PR responsibilities.  As such, many of the officers stepping into PR roles are well-informed with respect to PR 2.0 through recent advanced education.  In fact, their overall inexperience doesn’t come with any of the PR 1.0 “baggage” and thus there really isn’t a status quo to change or overcome.  I believe the Coast Guard is well suited to succeed with PR 2.0.

Don’t Bury The Blockbuster Yet. The Most Popular Digital Tracks Account For More Sales Every Year
GLENN PEOPLES/ 11/14/09 Billboard

The great hope for digital music was that it would make the recording industry more egalitarian—that up-and-coming bands with pluck and a knack for promotion would be able to get their work to the masses without the backing of record labels. According to “The Long Tail: Why the Future of Business Is Selling Less of More”—a 2006 book by Wired magazine editor in chief Chris Anderson—hits dominated the market mostly because shelf space in stores was limited. Digital retail and online media would exponentially increase the choices available to consumers, who would then use online tools to discover products that appealed to them more than the biggest hits.Anderson’s “Long Tail” idea comes from a sales graph that looks like the letter “L” with a curve instead of a corner. On the left are the hits, the 5,000 best-selling titles that would typically be carried by a national chain; on the right, further down the curve, are less popular titles that sell fewer copies. In the physical world, few stores have space for these niche titles, which don’t sell well. But in the digital world, where space hardly matters, Anderson suggested, these titles would collectively account for a far greater percentage of music sales—and of movies, books and other consumer products. The ways we think about popular taste, he writes, “are actually artifacts of poor supply-and-demand matching—a market response to inefficient distribution.”

For an industry that coined the term “hit parade,” this would amount to nothing short of a revolution.

So far, at least according to Nielsen SoundScan data on U.S. music sales from January 2004 through October 2009, that revolution hasn’t arrived—although the demand for albums has changed. Sales of albums, especially digital ones, became significantly less concentrated around hit releases since 2004. But sales of digital tracks—which this year account for 56% of digital sales by track volume—have grown more concentrated in hits during the same time period.

Essentially, hit songs are becoming more important while hit albums are becoming less so.

Although “The Long Tail” discusses the waning prominence of hits, Anderson would prefer to look past the top of the head of hit singles at a larger group of tracks to gauge broad shifts in demand. “In short, this isn’t enough data to draw any proper ‘Long Tail’ conclusions about,” he wrote in an e-mail, “since it doesn’t use Head and Tail the way the theory does.”

Since the publication of “The Long Tail,” some studies have confirmed the book’s thesis, while others have cast doubt on it. In a 2008 paper, Harvard Business School associate professor Anita Elberse found that hit titles still dominated sales even though some consumers were venturing further down the tail. This year, two researchers at the Wharton School of the University of Pennsylvania, Tom F. Tan and Serguei Netessine, examined Netflix user data from 2000 to 2005 and found that new titles are appearing faster than customers can discover them. Perhaps more surprisingly, a study by PRS for Music chief economist Will Page and BigChampagne CEO Eric Garland found that the demand for songs on file-sharing services—which offer users almost unlimited choice—closely mirrors that of purchased tracks. Only 5% of songs accounted for 80% of downloads, resulting in what the authors called a “hit-heavy, skinny-tail distribution.”

One thing that hasn’t changed since the publication of “The Long Tail” is how hard it is for artists to sell a meaningful amount of music—whether or not they’re signed to a label. From 2004 to 2008, the number of new albums released per year has more than doubled. And although digital retail is taking market share from the most popular titles, the sheer number of unpopular albums available means that each of those titles doesn’t benefit much from their collective increase in market share. The millions of units that are shifting from a few titles at the head of the tail are migrating to a few hundred thousand at the end of it—each of which doesn’t sell much more.

THE POWER OF HIT SONGS

So far digital retail is less about albums than individual songs, which account for 57% of all purchased tracks so far in 2009. And in the last five years, track sales have become increasingly more concentrated, so that hits matter more each year. This trend was first noticed by Elberse, who pointed out that it was happening even as the number of tracks available continues to increase.

The change is significant. From 2004 through October 2009, the most popular tracks have steadily and consistently grabbed market share—and tens of millions in unit sales—from less popular songs. The growth is slight at the top of the chart and more noticeable further down. The top 10 increased to 3.1% from 2.1%. The top 40 increased to 8.3% from 5.9%. And so on. The top 200 tracks—that’s just 0.002% of the nearly 9 million currently listed at Amazon—have a market share of 18.7%. In 2004, their share was 14.5%.

At a time when more music is available than ever before, why do so many consumers buy the same few songs? It may be because popular taste tends to reinforce itself, especially in an online world. Or it may be because buyers of single tracks tend to be casual fans who are more inclined to buy songs they hear on the radio and TV.

“One aspect of word-of-mouth online is that it can be an effective discovery technique, driving demand to titles that don’t have traditional marketing,” Anderson said. “But the other side of it is that it can lead to herd behavior, with ‘winner take all’ effects. It’s possible for both to work at the same time, with some word-of-mouth boosting niche acts, while other word-of-mouth creates bigger hits at the very top of the curve.”

Weekly sales figures show just how important hits have become. Since iTunes launched variable pricing in early April, the top 200 tracks have retained their market share even as the number of tracks purchased each week has fallen by about 6%. (Some of this decline may be due to a midyear weakness in digital track sales.) From April to July, the top 200 averaged a 24% share of each week’s total track sales. In the same period in 2008, the top 200 averaged just 22.2% of each week’s track sales, even though most of the top 200 songs were less expensive.

Although higher prices have depressed sales of hits—in terms of units, not revenue—consumers haven’t been spending their money on other songs. “The Long Tail” suggests that consumers will use increasingly sophisticated digital tools to discover, sample and buy music that appeals to them more than the biggest hits. But in the case of digital tracks, that hasn’t happened. Consumers who are turned off by a $1.29 price point for the track they came to buy don’t seem to seek out less popular alternatives. In other words, many music fans aren’t shunning hits because they don’t like them but because the price rose by 30 cents. And if they don’t find the hits they want, they forgo a music purchase altogether.

THE LONG TAIL OF ALBUMS

Overall, album sales don’t look that different from five years ago, at least in terms of the demand curve. The most significant change has been the overall decline in album sales: 32% from 2004 to 2008. As everyone in the industry knows, it’s tough all over.

As “The Long Tail” predicts, the most popular albums fared the worst, losing market share to less popular titles. From 2004 to 2008, sales of the 5,000 albums that make up the head of the demand curve dropped 40.5% while sales of the million-plus albums that make up the tail declined 27.4% And not only did sales of popular albums decline more than those of others, the most popular ones declined the most. Unit sales of the top 1,000 albums of 2008 dropped 41.7% from their 2004 levels. The second thousand most popular albums dropped 36%, the third thousand fell 33.2%, the fourth 31.2% and the fifth 30.9%. Five years ago, the top 5,000 albums represented 74.4% of total sales; in 2008 they accounted for 70.2%. Some of this comes from the sheer number of albums that now make up the end of the tail.

The marketplace for digital albums is also taking shape according to the theories in “The Long Tail.” At a time when the big-box retailers that now account for so much of the CD market have cut the shelf space they devote to music, the number of tracks available from online services keeps rising. And digital retailers make it easier for consumers to sample music and use various other filters and discovery tools that “The Long Tail” predicted would distract them from the hits.

Just as “The Long Tail” indicated, demand for digital albums is moving further down the tail than that for albums overall. In 2008, the top 5,000 albums accounted for 64.7% of digital album sales, as opposed to 70.2% of album sales overall. And the market share of the top 5,000 digital albums is shrinking as niche products take away sales from more popular titles. But the rate of change is slowing—the head lost three percentage points in 2007 and 2008 after shedding more than six points in 2006, which means that the demand curve could settle in something close to its current shape.

Within the head of the demand curve, which represents a wide range of popularity, albums have been affected very differently. In 2006 and 2007, the most popular 100 albums lost the most market share in absolute terms. The three percentage points of market share they lost represented about 1 million units. In 2008, albums from No. 101 to No. 200 lost the most share in absolute terms. But in relative terms, the albums in the middle of the head fared the worst in terms of losing share. From 2004 to 2008, albums from No. 301 to No. 400 lost the greatest percent of their market share—34%. From 2005 to 2008, Nos. 401-500 suffered the most—22%. From 2006 to 2008, albums as far down as No. 4,000 lost a greater percent of their market share (7%) then the top 100 ranks (5%).

As “The Long Tail” predicted, sales will disperse across a wider range of titles as consumer choice increases. Within the tail of digital albums, the truly obscure albums seem to be pulling sales away from those that are merely unpopular. In 2008, even as the head of the tail shrunk more slowly than in previous years, albums as unpopular as those around No. 8,000 gave up market share to titles that were even less popular.

LIFE IN THE TAIL

Life in the long tail can be difficult for any individual artist. One such album—former Afghan Whigs frontman Greg Dulli’s “Live at the Triple Door”—sold 1,400 digital copies in 2008 and ranked at No. 6,736. As “The Long Tail” would have predicted, an album with that sales rank benefitted from the effects of widespread digital distribution. But during the past three years the gain for an album at No. 6,736 was nil: around 75 additional copies.

Dulli is the type of artist who might be expected to benefit from the economics of the long tail. Signed to a major label in the early ’90s, the Afghan Whigs released some moderately successful albums, and Dulli has enjoyed similar success as a solo artist. But now Dulli and artists like him now face more competition, simply because so many more albums come out each year—”Live at the Triple Door” was one of 50,000 digital-only albums released in 2008. Even if Dulli keeps cracking the top 10,000 albums, his market share is likely to be smaller than what it is today. And market share is important because it influences other revenue streams, such as touring and merchandise sales.

In terms of overall album sales—not just those of digital albums—the greatest changes may be taking place in what might be called the middle class: albums ranked from No. 200 to No. 2,000 in terms of sales. Many of these are catalog titles that benefited from year-round price-and-positioning programs at retailers like Virgin Megastore and fye. Sales of these albums dropped as much as 34% from 2006 through 2008, compared with the 27% decline in overall sales.

Most likely because so many music stores closed, catalog chestnuts like the Phil Collins collection “Hits” have stayed close to their overall sales rank while selling far fewer units. In 2006, “Hits” sold 116,000 copies, enough to rank at No. 699 among the best-selling albums of the year. By 2008, “Hits” sold 82,000—a 29% drop—but ranked at No. 703.

In the digital world, which relies less on merchandising programs, “Hits” is all but absent: It hasn’t cracked the list of the top 10,000 digital albums since 2006. Bargain catalog makes an appealing impulse buy at physical stores, and since many retailers can’t carry all of Collins’ albums, they focused on a hits collection. In the digital world, consumers have many more options for Collins’ catalog. In addition to “Hits,” shoppers can choose from his studio albums like “No Jacket Required” (No. 3,273) and “But Seriously” (No. 9,652) or buy their favorite tracks individually.

ARE THERE RICHES IN NICHES?

So how can music companies adapt to this new world? “The Long Tail” urges businesses to “think niche.” Since the future is “selling less of more,” it makes sense to make available every product possible. And since niche titles are rarely discounted, Anderson argues, online retailers like Amazon are wise to use recommendation engines to subtly nudge their consumers toward relatively unpopular items.

At the time “The Long Tail” came out, this was smart advice—and it still is for online retailers like Amazon and Netflix, which sell physical goods. For years big-box retailers like Wal-Mart have used popular CDs as loss leaders to drive sales of more expensive, high-margin products. So far, however, pure digital retailers work differently, and iTunes, which typically has the highest prices of any online music store, still has the highest market share. (iTunes also sells more expensive versions of some albums.) And as long as the most popular titles command the highest prices, as they now do on iTunes, retailers would be wise to steer consumers toward them in order to maximize revenue and, presumably, margins.

There is also evidence that a retailer could alienate consumers by steering them toward niche items that don’t appeal as much as hits. Anderson wrote in the book that, as listeners stop buying CDs and explore the tail, they are “typically more satisfied with what they find.” But Elberse studied user ratings at the Australian DVD rental service Quickflix and found that the more popular titles also received the most favorable ratings. Users who rented obscure titles tended to rate them less favorable than they did hits.

“No matter how I slice and dice the customer base, customers give lower ratings to obscure titles,” she wrote in her article for the Harvard Business Review. “There are signs that if you keep pushing people into the tail because the economics for you are really good, that might actually hurt you in the long run.” “That may be true for the specific example of the Australian DVD data,” Anderson wrote on his blog, “but it is not clear from the paper why she feels able to extrapolate that to all Internet commerce.” In their analysis of Netflix user ratings, Wharton’s Tan and Netessine also found that consumers tend to be more satisfied by hits than niches.

While it’s easy to see how retailers could adapt to the world of “The Long Tail,” what about content creators and the companies that fund and market their work? Any label or artist that stopped trying for a hit in order to focus on a niche is almost certainly doing the wrong thing, at least in economic terms. Although niche titles collectively account for a greater percentage of sales, no individual one accrued any meaningful income—and few have received the attention their creators would need to perform or sell merchandise at a time when those revenue streams are becoming more important.

Major labels and independents that are run as serious businesses should continue to focus on how to reach a mass audience—especially on how they can do so using new digital tools and the advertising and sponsorships that are becoming increasingly important in the music businesses.

Indeed, labels have continued to focus on finding hits for a reason: It’s almost impossible for them to make real money any other way. (Even if a company or act decides to give away music in order to play live or sell other goods, they still need to reach a significant audience to make that pay off.) Elberse, for one, doesn’t think content companies should focus on hits any less than they do now. “I don’t think they need to go about their job any differently now than they did 10 years ago,” she told Billboard. “They will still bet on a few projects more than other projects in their portfolio and hope they will become the winners that pay for the majority of things that don’t make a profit.” ••••

Editor’s note: This story was edited by Louis Hau and Robert Levine; Levine several years ago worked with Chris Anderson, the author of “The Long Tail,” at Wired magazine.

Once upon a time, that was an ant named Ben who lived in an anthill with lots of other ants. Ben’s job was to find breadcrumbs at the home of Widow Jones. He was paid for each crumb he found.

Then one day, Ben stumbled upon some kale at the widow’s house and tried it. It was delicious.

“Can I sell this kale and make extra money?” he asked the ant boss.

The ant boss laughed. “Go ahead, you silly ant. Just understand that no one is going to buy kale, not when they can have bread crumbs.”

But Ben was not deterred. “Do you want to try a sample of my kale?” he said to nearby ants hoping they would like it and then buy from him.

But, they all hated the kale, just like the ant boss said.

Ben was disappointed, but thought there must be other ants among the millions of ants in the anthill who would like the kale. “But my voice is too small to carry over the voices of all the other ants. And if I can’t find fellow kale lovers, I can’t sell to them my kale.”

Ben was out scouting one day, when he found an ant-sized megaphone. “Hello,” he said into the megaphone and found that even ants a long way away could hear him. Suddenly he had an idea. “Maybe I can use this megaphone to locate ants in the colony who like kale.”

So Ben went to the anthill and shouted into the megaphone, “Does anyone here want to buy some of my kale?”

A few ants responded and Ben sold the kale to them. Soon, he had ants buying kale from him on a regular basis. There were not many ants who liked kale, but there were enough so that Ben was able to make some extra money. Eventually he branched out into broccoli, old meat and dead bugs. For each of these items, he found a few ants who would buy the items from him. Soon Ben was the richest ant in the colony.

Moral of the story: There is money to be made in niches.

I’m reading a fascinating book called “The Long Tail,” by Chris Anderson. The sub-title is “Why the Future of Business is Selling Less of More.” One chapter is entitled The Ant and the Megaphone.”

The chapter relates how the internet (the megaphone) allows businesses and individuals to find and sell into small market niches they could not reach before. As Anderson puts it, “In short, though we still obsess over hits, they are not quite the economic force they once were. Where are those fickle consumers going instead? No single place. They are scattered to the winds as markets fragment into a thousand niches.”

There is money to be made in those niches. Just ask Ben.

Halloween is over, and let’s face it- Thanksgiving is simply a minor road bump on the snowy trail to the holiday season. Most of us are already imagining candy canes and christmas cookies, but many businesses are dreaming of other things: holiday marketing.  This year’s biggest tool for companies and brands looking to market their products to a large customer base?  Social media of course!  

This post will extend a touch beyond my normal Twitter and eHow updates, since the topic applies to multiple social media platforms.  Twitter  and Facebook seem to be the largest arenas for holiday marketing, since the number of users has skyrocketed in the past year or so, and many people rely on these media bases for news and networking.  Facebook, for example, has a fan page for practically every company or brand, most of which have thousands of followers.  Through this application, companies can update their customers on sales or message fans about product events, which is seen in the YouTube video below.  Companies can reach out to new fans by making their pages global and open to everyone on Facebook.  Customers can also send fan page suggestions to their friends, increasing the number of people the company reaches.  And it’s not only large brands like Target or Victoria’s Secret PINK that have pages.  One application called Promotions allows any business or agency to run promotions for their products that include formats like sweepstakes and prize giveaways, free coupons and contests.  All a company has to do is become a fan and then post their website or facebook page with a line about their product or what’s going on with their business at the moment.  Once again, social media pulls through with the ability for amateur marketing, just like Chris Anderson discusses in his book, The Long Tail.  

Create a Facebook page for your business here!

Twitter is another great tool for business marketing, and this year we’re going to see a whole lot of tweeting during the holidays.  For example, Best Buy created Twelpforce to offer technology advice to customers in tweet form.  This season, Best Buy plans on using Twelpforce to help customers decide what gifts to buy.  

In an article from Reuters, Starbucks’ vice president of brand, content and online was quoted, “This is going to be a really interesting holiday season with social media.  It just wasn’t this far along last holiday season.”  Companies like Starbucks will use Twitter to interact directly with customers and get feedback on products, events and ad campaigns. 

This holiday season, keep tabs on your favorite companies and brands by following them on their social media sites.  You’ll find lots of great savings, and you can give customer feedback to see your visions come through in their product lines!

[embed]http://twitter.com/twelpforce?s_kwcid=TC|9005|twelpforce||S|b|4447510275[/embed]

Context

There has been a lot of debate after Chris Andersons article “Free! Why $0.00 Is the Future of Business” and the following book “Free: The Future of a Radical Price”. After reading the article and listening to some of the presentations available online I feel the need to structure some of the argumentation to highlight what I think is important.

I do not think “Free” is a full-fledged economy, that it is very meaningful to embrace waste or that all product and services offered over the Internet will be free, but I do think there is an growing importance to carefully consider your product mix, and to consider if the lowering of cost induced by the Internet makes some of your product lines easy to outmaneuver by competition (even amateurs).

Thoughts

For increasingly more products there is a move to either a digitalization of the core product, using the web as sale/marketing channel or enhancing the core product attributes/mix with online features.

In general Chris Anderson in his article points out that using the internet one may get a marginal cost near zero for electronic products and services. Adding additional customers does not need to imply additional operational cost, giving a great opportunity to scale, even without careful consideration.

This also makes it easier to consider free products as part of the product strategy.

Offering something for free is psychologically very different than charging anything for it.

This makes it increasingly more tempting for marked challengers to use free products as a strategy to gain new customers in established online marked segments products/services or enter/create new supporting online marked segments.

In his article Chris Anderson identifies six broad categories of free business models:

1. Cross-subsidies
2. Freemium
3. Advertising
4. Zero marginal cost
5. Labor exchange
6. Gift economy



Cross-subsidies are a well established model where the customers are offered a free product with a strong incentive to buy another product establishing a distinct relationship between the two actions & products.

The classic example would be to get a free cell phone if you at the same time buy a one year subscription. In this case there is a direct agreement forcing the customer to buy the other product to get the free product, but there may be a weaker incentive.

A critical task in this model is to create a strong incentive using explicit agreements/contracts, packaging or routines, without severely reducing the value. If the incentive is not an explicit agreement/contract, one probably has more tools online to enforce a strong incentive (besides a strong personal salesperson).

The described Freemium model is associated with media subscription models frequently used online. Associated with this are the 1 percent rule; 1 percent of the users (buying the premium version) is support the rest.

For this to be a solid business there is a high probability to get reasonable sale of the premium model to cover initial investment at the same time that adding free customers should have a marginal cost near zero. Business success would be based on increasing the percentage of users moving to the premium version further, driven by the strongly related value propositions enforced by the packaging of the free version. Keeping a sustainable link between the two versions are usually easier to support online than other media channels.

Advertising is a well-established model for media channels. Not all channels are Free, but many media channels are indeed.

For this to be a solid business there has to be a identifiable alignment of customer interests between the users of the free channel and the customers of possible advertisers to establish a visible probability that some of the channel customers actually will buy some of the products advertised. The business prospects will be greatly strengthened by the ability to measure if customers buy something as a result of the exposure to ads in the channel.

For further business success one has to either increase the number of users in the channel with the requested interests or increase the measurable probability of these customers wanting to by relevant products. Measurement is usually much easier in online media favoring this media type.

I have grouped the last three categories into one. To me it seems that both “Zero marginal cost”, “Labor exchange” and “Gift economy” are based upon the concept of amateur suppliers that do not need any money for their products. They are motivated by other rewards like attention or reputation. And they probably have another job that enables them to buy what they otherwise need. They may alternatively have another set of products that is sold based on the reputation gained by giving away free products, but then this is just another version of the cross-subsidies model probably with weak incentives (reputation).

For this to function there must be consumers that actively support this reward system, and there must be an established channel for this to take place smoothly.

To finance a feature rich channel this may be supported by the advertising model.

This collaboration may support the financing for the amateur channel giving the advertising supported channel possibly a great growth opportunity. It may also offer a possibility to focus and add value added content to the interests of the channel users enhancing the value for the advertisers. The amateur content may even be directly linked to the advertiser’s products or even sponsored by the advertisers.

These four models give several possibilities to enhance product offerings in many businesses.

Considering these possibilities online there seems to be tree very important considerations:

• Are the competition offering competing free products or are they able to do so in the near future
• Would introducing free products cannibalize on your current product lines
• Are you able to enforce such a strong relationship between free offerings and payable offerings that you can sustain a solid business

These “Free” models offer new competitive tools to challenge established markets that will be explored.

If not by you, then by your competition!

Föreläsning med Fredrik Hertzman, universitetsadjunkt i medie- och kommunikationsvetenskap, den 3 november 2009.

Har vi ett globalt samhälle på bekostnad av det lokala? Vad ersätter radio och TV som referensramar på ett nationellt plan?

Har vi skapat oss globala eliter? Är det en form av informationsprotektionistism vi tillämpar idag för att utestänga forna tredje världen från våra rikedomar? Den informationstillgång vi har i västvärlden (främst Europa) idag har medfört faciliteter som Schengen och extremt förenklad biljettbokning, något som vidgat våra vyer och ökat vår möjlighet till kulturellt utbyte. Detta blir något som tas för att vara en mänsklig rättighet i vår del av världen vilket absolut inte stämmer. Vart kan det leda till i det långa loppet? Från flera håll, i samband med FRA-debatten i våras, hördes rädslor om att Internet kommer utvecklas till ett sorts pay-per-view (Hvitfelt & Nygren 2008: 32) Det pratas om att Internet ska bli tillgängligt för alla, vilket både innebär för synskadade och människor som inte kan engelska. Nyligen har det beslutats att Internet ska kunna användas av människor som kommunicerar på annat sätt än med latinska bokstäver (Dagens Nyheter 2009-10-26) – trots att Internet funnits i över ett decennium och att hälften av jordens befolkning använder annat skriftspråk än det latinska! Vi borde alltså i västvärlden inte bara tänka över de tullar på varor vi har i världen utan också de tullar vi har på information.

När frågan om nationella referensramar slängs ut kommer det inte ett direkt svar bland mina studiekamrater. Istället för att ge exempel på vilka typer av medier man kan tänka sig så nämner vi istället ämnesområden som ”sport”. Internet är det enda mediekanal som i våra kritiska ögon tycks ha en chans att överleva i framtiden. Är det vi som är navelskådande eller är det så att mediepreferenserna tycks ha blivit mer och mer individualiserade, eller kan i varje fall uttryckas på ett mer individualiserat sätt än tidigare? Det handlar mycket om vilken självbild man har och vilka medier man anser passa denna bild. Massmedier har alltid varit dåliga på att ge ett brett utbud till den enskilda mottagaren, menar Hertzman och säger att Internet vinner mark just eftersom dess styrka är att erbjuda en enskild mottagare ett stort och brett utbud. ”The opportunities for more personalized media consumption are forcing media companies across the board to consider how to adapt their business” (Doyle 2002: 150) – för att över huvud taget överleva måste företag fundera kring hur de ska anpassa sig till sin målgrupp bättre. Det är inte det faktum att målgruppen är okänd denna anpassning handlar om, utan att graden av interaktivitet ökat något så enormt och att målgruppens minsta önskan blir tydlig. Och ska såklart uppfyllas, om man vill behålla kunden. Vi lever i ett århundrade med de mest bortskämda kunder någonsin.

Hertzman återkommer ständigt till musikbranschen för att jämföra tidigare hitlistor med dagens nischmarknader där lyssnaren själv får bestämma och hitta något som passar ens egen smak. Han presenterar ”the Long Tail” (en kurva som kort sagt visar utbud och vad det säljs mest av och att det är i slutet av svansen (kurvan) nischade och smala produkter återfinns) och visar på att dagens ökande distanshandel över Internet lett till ett uppsving för smala produkter, när frågan om att ha produkter i lager inte är lika viktig som tidigare. Tyvärr befinner vi oss i tidsskedet med den historiskt lägsta transportkostnaden någonsin och vi får inte ha inställningen att det är försvarbart att transportera saker tvärs över klotet bara för att det är billigt, eftersom det miljömässigt är förkastligt. Kanske inte en helt relevant tanke för kommunikationstanken, men att hela världens geografiska avstånd kommer förminskas till storleken av ett kvarter är en utopi som inte är önskvärd på så många sätt.

För att lyckas gå ”långt ner i svansen” och ändå tjäna pengar på att sälja smala produkter uppmanas man indirekt av Hertzman att gå helt digitalt. Detta är föga förvånande eftersom vi uppfostrats med tanken att det går att tjäna pengar på allt. Intressantare är att se till den individualisering som sker och fråga sig vad som kommer ske med generaliserade produkter, hits och listettor. Bruset har ökat och att hitta ”sin grej” (något som stämmer överens med bilden man själv och andra borde ha av sin person) blir svårare. Därför nämner Hertzman så kallade för- och efterfilter som ett sätt att sålla i bruset, då förfilter utgörs av gatekeepers som redaktörer, talangscouter, varuhusinköpare – kort sagt de som direkt eller indirekt väljer ut vilket material som ska få publiceras eller distribueras. Efterfilter är istället de bloggar, journalister, kunder, spellistor och rekommendationer som uppmärksammar vissa artister framför andra, filter som vi idag blivit beroende av. Detta system är ingen konstig uppfinning och heller inget något farligt ifall vi inte översvämmas av för mycket ryggdunkningsjournalistik à la Nöjesnytt, där recensenterna av en händelse ofta råkar känna krogen eller musikgruppen som de ska skriva om. Svårt att vara elak kritiker då. Å andra sidan är min oro för denna sorts journalistiks inverkan inte så stor, då mun-till-mun-metoden har starkare påverkan om man nu tvunget vill hålla sig uppdaterad och ”ha koll” på vilka de största snackisarna är (även kallat ”att finna sin grej”).

Källförteckning:

Dagens Nyheter: ”Språkrevolt på ínternet” (2009-10-26) http://www.dn.se/kultur-noje/nyheter/sprakrevolt-pa-internet-1.982716 (2009-11-04)

Doyle, G. (2002) Understanding Media Economics. London: Sage Publications Ltd

Hvitfelt, H. & Nygren, G. (2008) På väg mot medievärlden 2020 – Journalistik, teknik, marknad. Lund: Studentlitteratur

Trechos da palestra em que Chris Anderson fala sobre A Cauda Longa (The Long Tail).

Nesta palestra ele comenta sobre o mercado de escassez e abundância (do consumo em massa para o mercado de nichos). Vale a pena conferir.

Abraços e bom feriado

The Long Tail, by Chris Anderson, is an explanation of human behavior as a result of unprecedented levels of choice and variety in the era of the digital age. Anderson tells the story of the Long Tail by using economic theory and corporate case studies. In comparing it to other books read for Social Media, it is more like Here Comes Everybody than Groundswell; it seeks to just tell its business-minded audience the way things work in the new media environment, and let them make their own conclusions as to how it can be leveraged to positively impact their business. In fact, Anderson seems to suggest that while The Long Tail can be explained, it cannot be predicted.

The Long Tail refers to those who are operating at the part of the graph that is flattest, where variety is high and popularity is low.

However, this theory is effectively the result of the incredible technological innovation of the last few decades, not one of the components. For example, Netflix is one of the companies that is most often referred to by Anderson, specifically because of its variety of products, and the algorithms by which the website recommends future movies to subscribers based on current movie choices. So there is no question of “which came first, the chicken or the egg” when it comes to the Long Tail – the suggestive nature of Netflix would seem to have come before the innermost movie interests of people could be revealed.

While reading the book, I couldn’t help but thinking (at first) that it flew directly in the face of everything I had ever read out about branding. And while social media is definitely hijacking some of the aspects of the world of branding, companies are still building and maintaining brands by developing a promise, values, or a mission. When I thought of the variety that is present on a Amazon or a Netflix, it seems to contradict the principles discussed in some prominent books on branding. Yet, it became clear as Anderson developed his argument, most of these companies who are taking advantage of the Long Tail are still staying on message and remaining true to their brand. Amazon is a bit of an anomaly – but that is the privilege of creating a brand that serves as a a great “aggregator”.

There is an aspect of many of these social media books that is incredibly satisfying to the consumer – the fact that the power of choice seems to be back in the hands of consumers. Anderson’s anecdote about Bonnie McKee and My Chemical Romance is one such example. Yes, to some extent, the music industry has learned the power of social media and harnessed it to its advantage. But this time, if we as consumers don’t like the new Miley Cyrus album, we have the opportunity to go to one of the great aggregators and find a new artists. And while an algorithm on Amazon may suggest artists based on common purchasing patterns, we can ignore those suggestions and still have a wealth of options that we can decide to explore.

New online technologies affect our lives in innumerable ways.  In his book, The Long Tail, Wired magazine’s editor in chief Chris Anderson discusses how these technologies are opening doors for niche business markets.  Central to Anderson’s theory of the changing business landscape is the Long Tail.  In the past, the only products made and brought to market were the “hits,” those products following the established road to mass popularity and high revenue earnings.  Hit makers staked large amounts of capital, talent, and their reputations on the success of these products.  It was too risky to try wander into new territories they may not yield the same financial rewards.  The resources needed to compete at this hit level also limited the number of products created.  Stores, radio stations, and theaters used to distribute hits to the public are also limited in number and space in which to display products.

Anderson presents three forces that are responsible for the creation of the Long Tail.  The first of these is the democratization of the tools of production.  New technologies now enable amateurs to create video with their cell phones, bands to record their music, and ordinary people to express themselves on blogs.  Producing no longer requires large capital investments or professional training, which has led to more products in the market.  The second force is the democratization of the tools of distribution.  Not only are people able to create, they are also able to share those creations with larger audiences.  The third force is the connection between supply and demand.  Previously, hits were pushed out to the mass public audience.  The widening variety of new products appeal to different subsets of that mass public audience.  Search filters and product recommendations allow individuals to seek out as well as be exposed to items further down the tail.

The 80/20 Rule refers to the old business standard that 20 percent of the products sold account for 80 percent of the profits.  Anderson suggests that the Long Tail will equalize these percentages, with the hits generating lower percentages of profits while the niches generate more.  Nine rules for creating a consumer paradise are also given.  These rules include avoiding one size fits all, sharing information, trusting costumers and markets, and understanding the power of free.

To listen to Anderson discuss the Long Tail in his own words click here.    

It is clear to me that technology is changing how both businesses and customers operate and interact.  Given the breakdown of the barriers of production and distribution, more products are on the markets and appealing to niche audiences.  People no longer need to have the limited number of hits handed to them.  This is the same idea explored by Charlene Li and Josh Bernoff in Groundswell, the first book in this review series.  The old way of doing things is just that, old.  I do, however, take issue with Anderson’s assertion that more options are always better as long as there is a good filter to search through it all.  Sure some talented individuals may create valuable and/or entertaining material, but after how much junk?  Are those fragments worth the piles of frivolous videos and blog posts?  Professionals are generally trained in their areas of expertise and make a living based on the success of their efforts.  By spreading out audiences and lowering the revenues of niche products, it is increasingly likely that products are produced by people in their free time, without expertise and experience.

I bought my copy of Chris Anderson’s, “The Long Tail” on Amazon.com. If you notice at the bottom of the page displaying Anderson’s book, “The Long Tail” you will also find recommendations for “Groundswell” and “Here Comes Everybody.”  Amazon.com has revolutionized the book industry and is a prime example of a long tail company.

Amazon is just one example of the long tail and their inventory goes far beyond the recommendations mentioned. In fact, Amazon’s inventory dwarfs that of any ordinary bricks and motor book store. According to Anderson’s theory, infinite shelf space is key in applying long tail principles to business.  This is just one example of the long tail in action and proof that Anderson is on to something with his notion that the traditional 80/20 power distribution law is a thing of the past. As Anderson puts it, our culture is a massive popularity contest and the world is built around blockbusters.  He explains that the blockbuster culture is starting to fade to a culture driven by smaller niches vice large-scale hits.

Online recommendations are changing the way people shop and without shelf space constraints, there are no limitations to what is available for consumption.  Amazon.com’s recommendations for books associated with “The Long Tail” were incredibly insightful as Li and Bernoff set the stage in “Groundswell,” laying out the foundation or basic enabler for Anderson’s theory. Likewise, Shirky explores the human element of the equation as he explains the new dynamics of group interaction and behavior in today’s world. Each book serves as a layer of knowledge that is necessary to truly understand how Web 2.0 is changing our culture and how the long tail works.

Anderson touches on some common themes from the two previous readings as he explains the three forces of the long tail: (1) democratize production, (2) democratize distribution, and (3) connect supply and demand. The very exercise of reading his book and writing this blog employed all three forces. Using my home desktop computer to blog, purchasing the book on eBay, and checking the subsequent recommendations, and eventually posting my blog entry are all examples of democratizing as Anderson explains.

Once you understand the long tail theory you quickly realize that long tail businesses are everywhere. Amazon, iTunes and Netflix are just a few examples that Anderson explains in detail. As he puts it, we live in a “seamless digital marketplace” where content can move from the very bottom of unviewed material to the top, with changes in public interest.  The legacy logistics of the bricks and mortar model don’t need to catch-up because the inventory already exists in a virtual endless fashion.

With all of these forces of democratization the keys to the market are in the hands of the consumer. This leads to an overwhelming amount of data on the Web. In Anderson’s words, “You Tube is full of crap!” One of my favorite case studies in the book explores some of this (data) crap in explaining how an online video loaded to You Tube was a catalyst to rejuvenating dwindling Saturday Night Live ratings.

Anderson explains how a December 2005 Lonely Island crew “white-boy” rap video spoofing on the Chronicles of Narnia become an online sensation and made the once popular show relevant again with a young generation of viewers.

This content managed to resonate with a new audience – a younger one that grew up online. Anderson contends that the days of everyone watching the same show and recounting the previous night’s episode over the water cooler are gone. The internet has democratized distribution and changed the architecture of participation putting the consumer in control.

Anderson does a remarkable job explaining his theory which makes this book an incredible read. To summarize at the risk of oversimplifying, Anderson drives home the point that niches add up. These narrowly targeted goods may seem like a relatively small portion of the market, but the sum can be significant, particularly on the scale of iTunes or Amazon sales.

For the Coast Guard the long tail may serve as a way to strengthen the workforce. With limited funds for requirement and a need to grow a diverse workforce with talented recruits, the long tail may serve as a way to reach niche markets. For example, the Coast Guard could target professional Hispanic engineers at a specific university through the use of social media. Recruiting commands could also use online videos to reach specific audiences. While, the organization must be careful so that their content is not viewed as spam, there remains an incredible opportunity to capitalize on this new distribution law to sell less of more.  The Coast Guard is small and in many ways offers niche services to our nation.  As such, the Coast Guard must be a long tail organization.

It was not too long ago when those that didn’t follow the mainstream crowd were labeled something less-than pleasant. Think “loner”, “looser”, “emo”, “goth”….

Do those words conjure a vivid image of someone who wears eyeliner and listens to mopey music alone in their bedroom? Probably.

Previously, these groups would have been ostracized or would have been the butt of countless jokes. However, now, these groups and many, many others are an important facet of society and directly inform what products and services are offered.

By separating out groups with various interests, the “mainstream” has become far less black and white. “Popular” is a now a relative term in each aspect of society.

The book, The Long Tail, by Chris Anderson examines how our economy (and culture) is shifting from mass markets to millions of niches. This paves the way for you to break through the clutter and find what you are looking for, regardless of how specialized your interest is.

I think the most important section in this book is how the long tail affects the niche market. The consumer world as we know it can no longer be only defined by the mainstream.

The medium by which I am writing now—a blog—is a perfect example of niche media at work. With the power of blogs and other social media applications, everyone can be an author. Better yet, everyone has a voice. To find out news about a current event or even your favorite type of music, you don’t necessarily have to watch mainstream CNN or download a song on ITune’s top 10 song list. Instead, you can find something that appeals to you and some of your closest, like-minded friends (friends that you never knew existed).

This notion brings us to what I liken to the “Small World” phenomenon—it’s a small world when you can find someone with your interest even if it’s highly specialized.

Mass culture was previously glued together by certain ideas, products, services etc. Those interests kept everyone together on a like-minded wavelength. The Long Tail suggests that society is more complicated than what was previously thought. There are so many different people out there who each have their own interests, niches, etc. This book suggests that society has the possibility to become “unhinged” since everyone is focused on doing their own thing. While I find it liberating to know that just because I like to do something—like make independent movies—there are probably pockets of people all over the world that share similar interests. I disagree with the “worst-case” scenario that this book illustrates. Rather than becoming “unhinged” I believe that society still has a tendency to follow what is considered popular or trendy.

I believe the whole concept behind viral videos perfectly illustrates this notion. Who hasn’t seen the wedding in which the bride and groom dance down the aisle? I can say with confidence that me, my mom, my best friend, even my best friend’s grandma has seen that video. All of the people that I just mentioned fall at different places on the long tail but are still aware of what is happening in mainstream society to a certain extent.

In this book, one of the concepts that I like most is the notion of the virtual watercooler. Personally, I find this to be true. Everyone can relate to the image of coming into work on Monday morning and gathering around the watercooler to talk about what happened over the weekend or at the very least what happened on HBO the previous night. It only makes sense that as society continues to have more options technologically speaking, that would inform how we relate to each other virtually. Personally, my “communities” are highly virtual, especially since my boyfriend lives in Dublin, Ireland and my best friend moved to Texas. If it weren’t for Skype, Facebook, etc. we wouldn’t talk nearly as much…and the cost would be double.

This concept is applicable to my company, Pixar. Especially since the Pixar brand is comprised of numerous digital images, it makes sense that Pixar has a strong digital community and therefore can use many sources and tools to appeal to its customers all along the long tail. As the book describes, there is “infinite shelf space” in this ever-growing digital world. Therefore, with more customers and “infinite” space, new technologies help a company like Pixar appeal to the millions of niches that are out there.

The meteor shower that occurred early this morning was not only all over the sky, but all over Twitter.  Star gazers tweeted their reactions and thoughts on the event using the hashtag #meteorshower.  The responses were varied: some people very disappointed with the show, complaining that they stayed up late for nothing.  Others were very impressed.  One user tweeted “Staying up late to watch the #meteorshower makes everything ever seem worth it.”

Most users referenced an article from the LA Times Travel Section in their tweet, since the article directed people to use this hashtag.  It also recommended using the Twitter Search “Orionids.”  

While American Amateur Astronomers (or just plain star gazers) are making strides to connect to the public and share their experiences with other watchers, one British group has developed their Twitter usage to include video footage and photographs  in their meteor shower watching.  The Newbury Astronomical Society (NAS) has made Twitter a central part of their membership activities, using the social network as a form of communication between members, as well as the public.  The group succesfully tweeted their way through the Perseid meteor shower this summer, and has plans to tweet about two upcoming events: the 2nd Moonwatch at the end of October, and the Geminid meteor shower in December.  A great benefit is that enthusiasts can take questions, or simply have discussions over the Internet using Twitter.  It reminds me of some of the examples seen in Chris Anderson’s book “The Long Tail” we recently read.  Because of social media, amateur astronomers have access to display their thoughts and footage from the meteor shower now, not just professionals.  And anyone can view this footage.  You don’t have to be in a classroom, or at a space convention: you can simply sit at your computer and see everything- even if you missed the metorshower.  

This YouTube video illustrates exactly what the NAS is aiming to do, and Dr. Robert Massey from the Royal Astronomical Society explains how Twitter is a great format for discussing and showing footage of the meteor shower:

This very dramatized trailer created by Adrian West of the NAS acts like a movie preview for the two upcoming events that the society plans on covering through Twitter, where “Amateur astronomers and the public will join together” to “Share images, information and knowledge.”  If you can get over the Star Wars-Esc aspect of the trailer, it’s a great video for conveying exactly how Social Media sites like Twitter aid public awareness and knowledge:

Context

This started out as a book review of “The Long Tail: How endless choice is creating unlimited demand” by Chris Anderson (now in new edition), feeling the need for a simple model of forces central to the book. But as I read the book, I missed some reflections on how internet communities affect “The Long Tail” niche markets.

In the book the core concept is that the reduced cost of distribution and production in internet based markets makes untapped niche market segments economic feasible, creating basis for more variety.

I think online communities are an important force driving consumers to the niches as well as they may strengthen the hits/brands of the big sellers, in both axes increasing demand based on virtual group dynamics.

Thoughts

The core concept of the book “The Long Tail: How endless choice is creating unlimited demand” by Chris Anderson (now in new edition) is that new marked dynamics (primarily supported by the internet) give the possibility of significantly reduces cost of product distribution, marketing, sale, storage and production. This gives the possibility for a reasonable economic margin even when selling niche products to a small group of consumers, opening up a marked segment previously not exploitable in traditional marked models.

I have in my figure used the term marginal cost, as I think the initial investment in general still may be of significant size. I have illustrated how I think the elements relate to each other. I have then categorized these by basic actions on the bottom to results and showing contributing tools like the Internet and filters, catalogues and search engines, tools that may be used actively by business to gain competitive advantage in new areas.

The Long Tail - Basic

One challenge that is mentioned shortly in the book is choice overload. I find this to be a central inhibitor of increased demand induced by the internet. Mostly because the enormous amount of dynamic information are hard to relate direct to your preferences.

To avoid the challenge of choice overload customer may stick to previously established brands/hits, but even good search engines and catalogues can dramatically reduce and even reverse this choice overload.

Erik Brynjolfsson, Yu (Jeffrey) Hu, and Duncan Simester did in their paper “Goodbye Pareto Principle, Hello Long Tail” verify that, by greatly lowering search costs, information technology in general and Internet markets in particular could substantially increase the collective share of hard-to-find products, thereby creating a longer tail in the distribution of sales.

I think that easy accessible online (virtual) communities may further strengthen the demand for niche products (as they increase the demand for hits).

The opinions of people one share common interests with are a strong driver for demand. It is in the human nature to align oneself with the opinions of others traditionally in local communities.

In online communities this drive may be significantly more focused based on written text.

Online communities are also a lot easier to establish/join than physical communities creating a new level of dynamics. This is further enhanced by the possibility of easy links to related interest/products directly encouraging exploration of the niche markets.

Online communities are global in reach and may establishing significant support for interests that in a local marked did not get critical mass to support a product niche.

Online communities can be monitored for ideas on which niches that could have a customer base or be tailor made to support specific products niches.

These communities may even lower the operational and support costs by enabling shared discussions, faq and q&a further enhancing the rationale for the long Tail niche markets.

The Long Tail - Extended

As a summary I think online communities drive consumers to the niches as well as enforce the hits/brands of the big sellers, in both axes increasing consumption because of increased consumer demand, triggered by the increased scope of social interaction.

As for the book “The Long Tail: How endless choice is creating unlimited demand”, I find it inspiring and well reflected on the typical internet markets. The book illustrates some examples of wider application of the core forces rooted in the basic actions. Still it builds primarily on the increasing effect of the internet on marked dynamics, of witch online communities is becoming an increasingly important part.

To begin with author Chris Anderson is the editor of wired magazine, and he has written articles about the long tail for a long time, and he decided to compile these articles in a book.
Chris Anderson illustrates how our buying habits have been shaped by the economics of big business, creating the blockbuster culture; the selling of a narrow range of products to the biggest possible group of consumers. Anderson shows how the Internet, through companies such as eBay, Google and Amazon, radically changes that, allowing us to be more exploratory and specific about what we buy. “The theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of “hits” (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail. Because of online delivery (digital delivery), the costs of production and distribution fall. In this new era everybody can create their own content easily, and they can deliver it online. These niches allow its owner to make more money than hit products. Anderson provides and eloquent and detailed analysis of various aspects of Internet culture and business, he illustrates how the explosion of niche markets and filtering tools will allow us to zero-in on things that interest us, potentially shattering the hold that large manufacturers and retailers have exercised since the mid 20th century.  This affinity towards niches created worries over marketing people and advertisers, and nowadays they are thinking on finding new ways of advertising and marketing strategies.
Additional to that, author also focused on limited physical shelf space at the retail stores, when you go to retail stores you can only find hit products on the shelves, because of limited shelf space, however internet has no limits. You can find whatever you want; it is like a data ocean. If you want to listen 1970’s music or a specific album you are eligible to find it online but there is no way to find it at retail stores.
Although The Long Tail is a business book, it is also about culture in general and how it’s changing. Freed from the constraints of the blockbuster culture, the consumer is able to dig into niches he never knew existed and also to contribute in a way that was not previously possible. The success of social software services such as Flickr and YouTube has allowed the audience to create and share their own material generating a genuinely new, interactive media which is actually competing in some respects with mainstream broadcast media.
In conclusion, author gives example about long tail from different aspects, these examples can enhance readers’ thought, and I definitely recommend this book to everybody.

I worked all day getting the front wall of my new kiln in today thinking about an article I read about the long tail.

Do I believe it?    The simple answer is yes I do.

Do I think it takes into account all the variables that make up life?    No.

I think the reasons that keep any artist from finding 1,000 true fans are many. Finding  1,000 true fans without the help of a marketer is a difficult prospect. Not impossible but something that needs a lot more fleshing out as far as methods, tactics, goals, etc., in other words a good marketing plan. Where does the conflict come in? I think in my case as is probably the case with a lot of artists is that marketing is something I enjoy as much as digging the large trench my new kiln is being built in. That isn’t to say I don’t think it isn’t necessary. Absolutely necessary. I think artists are excellent executors but poor on strategic planning. I speak more about my self. I am a good strategic planner but not when it comes to marketing. It is like I feel like I can do most things I put my mind to but when marketing comes on the radar I lose my Buddha.

I have been reading up on marketing, mainly at this point Seth Godin. I am a native English speaker but most of the marketing terminology is really like a foreign language to me. One of the reasons I have taken to the Seth Godin “Tribes” thinking is it makes a lot of sense to me. There are points in the articles I have read I think the “concept” of building the tribe is taken a little too far but overall it is common sense put into writing with a focus on marketing. Maybe that is why it is so valuable. It is common sense.

Regina Spektor

If you watched the music videos, did you noticed the pattern? All three are solo singers or bands in which the main singer is a strange talented female. I didn’t consciously choose these artists because they are female led. I chose them because they are the music artist I’m listening to these days. Talented female singers have proliferated on the pop music charts and underground scenes. The new singers or musician, which apparently are bringing the money for the record labels, are girls, either as lead singers of traditional bands- bass, drummer and guitar- or solo singers. However, I don’t listen to the most widely known female artist like, Lady Gaga, Beyonce, Britney Spears M.I.A., etc. because they don’t assuage my musical taste in continuous seduce listening track by track. This is not because I a music snob and only prefer the artist who can at least prove they can play live without lip synching or backed up by a phony electronic band. It’s because I like this particular new music; it’s my musical penchant.

When I was in my teens I really liked rock music which was strange for me because most my kid friends were listening to hip-hop. Rock music served as an escape and release of frustration and anger induce by an upshot of testosterone. It was the same for the hip-hop listening crowd; the boys needed to lose themselves in aggressive lyrics. I prefer Nirvana, Pearl Jam, Weezer, Guns and Roses, and Radiohead,  what is categorize as grunge rock now. Moreover, as my musical hunger for rock increase, I dove into the back catalogs and history of Rock & Roll. I began to listen to what music critics, music magazines; like Spin and Rolling Stone, revered as the Legends and the major influences of the early 90’s rock music zeitgeist. From the 80s: The Pixies, Leonard Cohen, The Cure, and The Smiths. The 70s had Television, David Bowie, Led Zeppelin, Brian Eno, and The Ramones. And, of course, from the 60s: Bob Dylan, The Beatles, The Who, The Kinks, The Velvet Underground, and The Rolling Stones. Yes, I did devote many leisure hours tracking their music catalog and absorbing their lyrics and melodies-call me obsessive. However, it’s a lot easier to find and enjoy their musical works because it revolved around the album not the single therefore you can pick the Beatles’ Abby Road and not be bore by one single track. Surprisingly enough, I didn’t want to become a musician myself although I did try to learn the guitar once. I was more concerned with listening to the music rather than learning how to play it.

I submerged my ears in a myriad of guitar melodies, killer solos, beat lyrics and pounding drums. I was enjoying the best rock music had to offer and thanks to the internet, what constituted its past. But time and experience catches us all and I became interested in other subjects. Older Rock and even Rock music from my time, the nineties, doesn’t hold as much sway as it used to. Also, I don’t take part in ridiculous music debates about the validity of certain music, you know; the sixties were the best time in music; using synchronizes suck; Metallica sold out. It’s all hogwash to me. My only concern is if I like it or not. I don’t align myself with genres, like classic or country, or with affinity groups like punks, goths, grunge, emos or metalheads. If by whatever means, radio, Itunes, NME, Pandora, or a recommendation, certain music reaches my ears then I pause, empty my mind of other real concerns, and either nod in agreement or not; sometimes I even dance.

I have become a passive consumer of music like most of us, unless you’re an avid musician and are in the business. Otherwise, just push play on whatever is popular or hot at the moment and enjoy. Ok, I won’t take it that far, I still discern my music by practical criteria. Mostly, if is kind of underground, has some hype or is something new and different. These filters explains the three musical acts. La Roux are massive in the U.K., the band has hype and they are doing 80s synch-music in a new modern way plus their self title debut is full of catchy songs and Elly Jackson is very eccentric. The Yeah, Yeah, Yeahs, have been hype, since the turn of the century, have some great singles and Karen O is the epitome of New York City chic style. Regina Spektor, perhaps the more popular one of the three, made it out of the indi-anti-folk scene with her single Fidelity-great song by the way- and has churn out piano center exquisite songs ever since.

Yet, music is different now, it’s more dynamic, niche, and there is more choices. The advent of computers has made it possible for the vast availability of different kinds of music through numerous mediums. And if so much content is bidding for you attention, it kind of hard to be listening to the same music as your friends. The communal hit everybody knows is still there somewhere, but I don’t think it can be easily identify as before. I still don’t know what was the one hit this summer past, maybe Lady Gaga’s poker face. Of course, its kind of hard to talk about music like it’s some utility product obeying the laws of supply of demand. People take to heart their favorite musicians or songs, some even worship them. Although, music as a whole doesn’t quite respond like oil prices- up when demand is high, down when demand is low. It actually works like Hollywood movies. Whenever a studio produces a movie they don’t know exactly if it’ll be a hit or not and the payoff is uncertain. Or to use another example: Regina Spektor could spend three months of writing, recording and producing her album but does the effort equal success?-not really. The label can spend tons of money in marketing the album but the consumer, the buyer, is a highly fickle being with unpredictable tastes. The album might be a smashing success or make barely a ripple, who knows. These ideas were explored by Chris Anderson in the book “ The Long Tail” He is a great music aficionado and I recommend this book if you want to explore the music economics further.

Technology, the quantity of artist, and the ease in which we can acquire this music has made it niche centric and person taste specific. The only salient pattern is that more female artist are emerging or being push by the labels. Is like when Nirvana became popular, all the labels went to Seattle to find the next grunge super band. I think more females are being nurture and promoted in the rock world than ever before or maybe it’s just me. Before, all the artist on my list were males, now I’m listening to more females. Or, maybe, I’m just more mellow now and appreciate the soothing sounds of a female voice better-at this rate I’ll be listening to Chopin and Horowitz in my middle age. Whatever is the reason, if there is one, I have found it a glorious joy to listen to La Roux, Yeah Yeah Yeahs, and Regina Spektor. And did I mention these voluptuous female wonders of mother nature are beautiful in their own special talented way. Indeed.

Here’s my approach.   First, I think we should let the words of an author speak for themselves.  When I present a book synopsis, it is my job to say, as clearly as possible, “this is that the author is saying.”  And then, and only then, do I have the task of wrestling with, arguing with, running with the ideas, pursuing the many and multiple implications of an author’s words.

Free: The Future of a Radical Price

I just presented my synopsis of Free:  The Story of a Radical Price by Chris Anderson.  Yes, I have read much of the controversy surrounding the book, including Malcolm Gladwell’s smack-down against and Seth Godin’s defense for the book, which includes Godin’s smack-down of Gladwell.  (Juicy fun — but quite serious, also).  I blogged about this here, and it has all of the links — Gladwell, Godin, and Anderson’s response to Gladwell.

But now I have carefully read and presented the book.  I’m still undecided about Gladwell’s ultimate point/criticism, that Free simply fails to provide a viable working business model.  I do see the dangers and difficulties of implementing Free as a business model.

(And, I learned something in the process:  I offered a “free” offer – truly free, no strings attached, at the end of my presentation, and I’m not all that sure that very many will take me up on the free offer.  We’ll see).

But I think I am persuaded by Anderson’s case that everything digital wants to be Free, and that even other more “physical” commodities will inevitably move to, if not free, the lowest, then even lower, possible price.  His section on corn, ethanol, and the rise of switchgrass was especially provocative.

Anyway, here are a couple of excerpts from the book that especially ring true.  He describes how, as digital Free arrived, those who thought that Free could be defeated went through the five stages — from Kübler-Ross:

• Stage 1:            Denial
• Stage 2:            Anger
• Stage 3:            Bargaining
• Stage 4:            Depression
• Stage 5:            Acceptance.

I think this is accurate, and I suspect we are seeing/will see this played out in the battle over the Kindle/e-books.

One other part that was especially interesting was this.  We really are in a period of great volatility, in all areas, including the arena of how companies will be organized and function… This chart, directly from the book, was clear, and useful, I think.

I think Free is potentially as instructive as The Long Tail was.  It is certainly worth a more careful look.

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My synopsis of The Long Tail is available, but the synopsis of Free, with audio + handout, is not yet up on our companion www.15minutebusinessbooks.com site.  Look for it in about three weeks, or so.