A 4th Long Tail business category: Tools

Danny Kim makes a good point in this comment:

I think that there is a fourth long tail business: tool-makers. For a long tail to have niche content producers, like amateur bloggers or podcasters, they need tools which will lower the barrier-to-entry to content-producing for those niche producers.

You could say long tails might be a natural byproduct of those already-existing tools, including gadgets like camera phones and mp3 recorders. But in reality, there's a good number of companies that are jumping into the business of making tools so that "we" can produce content easily. Some examples from the blogging world: Movable Type, Typepad, Blogger, Odeo (podcasting).

I think he's right. It also dovetails nicely with a point I've been making in speeches of late (and fleshing out in the first chapter of the book): there are three ascendant forces that are creating an era of Long Tails.

They are:

1. Democratizing the tools of production (example: the PC)
2. Lowering the transaction costs of consumption (example: the Internet)
   
3. Connecting consumers to drive demand to niches (example: filters)

The first extends the tail to the right, the second raises the volume of sales/use in the tail, and the third drives demand down the tail, from hits to niches. Like this:

In the past, I've correlated each of the three main Long Tail business categories to one of these forces:

    Force                                                  Business

1)  Democratize production                          Long Tail producers
2)  Lower the cost of consumption               Long Tail aggregators
3)  Connect consumers to drive demand       Long Tail filters

Now, although it's less neat, I should probably revise that to this:

    Force                                                 Business

1)  Democratize production                         Long Tail toolmakers, producers
2)  Lower the cost of consumption               Long Tail aggregators
3)  Connect consumers to drive demand      Long Tail filters

Thanks, Danny!

Comments

[Barry Ritholtz]

There's yet another source that is helping to give rise to the Long Tail: The continual consolidation and commensurate decline in quality of mainstream media content output. This is especially true for music and radio, true of some journalism, and (partially) true for film.

Let's look at few examples: The quality of music found and promoted by big labels has, over the past few decades, dropped precipitously (think insipid boy bands); Making matters worse, the major radio companies use shorter playlists to play less and less (payola funded) music.

[David Palmer]

Barry, I agree that the consolidation of record labels has somewhat reduced the quality of music put out by the big labels. But there's always been a lot of insipid music out there; we just tend to forget it. I think your second point, about the big radio companies and their playlists, has had a much more devastating effect on the music world. Thanks in part to the lowered costs of recording, there's plenty of good content out there, much of it released by small indy labels. The hard part is getting any airplay.

[Danny Kim]

Thanks for the post! I didn't think it was gonna be THE 4th long tail business :)

Anyhow, I think once those businesses mature in each segment, there are going to be a number of hybrids of businesses creating more opportunities for further growth. For now, I can think of two kinds of hybrids.

The first category includes hybrids of two or more of these businesses, such as toolmakers combined with filters or aggregators. Because for toolmakers, in particular, if they provide a tool or a platform on which users can just come and create lots of contents, why not just take the chance to build their own filter on top of all the contents they already have through their tools.

The second category will emerge in the form of meta-businesses. What I mean by meta-business is that once each of the four business segments gets saturated, these businesses themselves will start forming LTs themselves, so we're going to need more services that'll help us explore these LTs. For example, though it's usually only Google or Amazon that get mentioned in LT, what if we have thousands of those search engines/recommenders esp. with the rise of the vertical search engines for each field. Then we'll definitely need a "meta" search engine which runs on top of all of these search engines. Once this layer of hybrid market is mature again, the same pattern repeats. And the same thing again on another layer. I don't know, but maybe we can even observe some kind of fractal patterns down the road. Who knows? :)

[Rafael Torres]

To me the notion of a progressive decline in the quality of mainstream media is unfounded. First, as David says, there has always been bad music but we tend to forget it, so you are comparing all the good and bad stuff from today with what you consider to be the best from yesterday. Also note that many people associate their lifestyle to a particular style of music, especially in their youth. So when that type of music falls out of favor with the mainstream, they tend to lose interest and blame it on a decline in quality. Third, music, as any other type of artistic expression, has always been about movements; for example, Punk came up as the antithesis of big stadium Rock in the seventies, Alternative/Grunge practically destroyed the hair metal of the 80's, etc. Basically an artist or a group of artists come out with something that revolutionizes the music landscape, then that gets watered down for mainstream consumption, until someone else revolutionizes and the cycle begins again. Finally, the concept of quality is too subjective to discuss in general terms (isn't that one of the core concepts of the long tail?). Hey, I know many people who would punch me if I said Punk or Grunge is quality music...

[John "Z-Bo" Zabroski]

When I first read Chris Anderson's article on the Long Tail featured in Wired Magazine, I printed out copies for all my favorite professors. Only one of them really analyzed the article and came up with his thoughts on the article, and as a moralist, perhaps he best addresses the concerns of Barry Ritholtz and David Palmer. The comments peculiarly came from my English professor, and he wrote on the print-out I gave to him and gave it back to me, "What about the mass obfuscation of knowledge that comes with the obliterration of value?" I did not give full thought to what my professor meant when he said this, and at the time disagreed with his comments and told him I did not believe moral issues applied here.

My stance changed when I finally spoke to a business professor at my college about topics for my Business Policy Seminar thesis, and the challenges I would be facing when collecting and analyzing the massive data set I have thought about using. While the issues this other professor raised were not persuant to the topic of the paper, his heavy concerns about digital piracy connected well with the moral concerns of my english professor: Many people commit online piracy and this piracy is a reflection of how people view laws as merely suggestions and that they are unconcerned so long as their level of risk in getting caught is minimal. The professor made the comparison to a person rolling through a stop sign while casually looking for a police officer that is hiding somewhere to sandbag the driver for his/her violation. Many people peek around to see if there is anyone who might slam them with the hand of justice for there unethical actions. So long as Big Brother is not watching (or so they assume), people are willing to commit piracy.

I now realize there is a correlation between "mass obfuscation of knowledge" and "the obliterration of value," although I am say this with cautionary reserve as correlation does not equal causation. Even if one has an effect on the other, it's not clear which might be the cause and which might be the effect.

[csven]

That curve showing the impact of tools to minimize production costs was part of the 3D Long Tail geometry/images I generated earlier and posted a comment about.

It's interesting to see what happens when you look at a pre-Industrial Revolution shape, and then evolve through the post-WWII boom and into the future.