Kevin Kelly: The Three Tails

If I wait long enough, all the smart things about the Long Tail will be said by other people and I can just quote them here. Today's installment is by none other than Kevin Kelly. If he will forgive me reprinting his post in its entirety below, I will forgive him the cringe-making term "long tail of the Dragon of Love" ;-)

Over to Kevin:

"Seth Godin recently posted a dissection of the three "profit pockets" within the Long Tail, which he illustrated like this:

There's a blatant switcheroo that Seth (and almost everyone else) makes when explaining the Long Tail. In pocket #1 of the curve, Seth talks in terms of a creator of a work. In pocket #2 of the curve, he also talks in terms of the creator. But then when he gets to the long tail, he switches away from a creator, to talk in terms of an aggregator of other creators' work. Why is that? What happens to the creator? The creator is dropped when we get to the long tail "pocket of profit" because the long tail is not profitable for the creator. It's profitable only for the audience and aggregators.

I'm not really sure the "fractal long tail which operates within a long tail" (every subject has its own long tail) mentioned in Seth's previous post helps a whole lot either, other than to say you want to be as close to the head as possible even in your niche.  That is a no brainer. Being an aggregator is not an option either for a creator. Almost no creators I know are productive enough to create sufficient quantity of new things to aggregate their own work. Aggregators are by definition not creators.

So as one crosses the sections -- going from the short head to the long tail -- one should be consistent and view it from the aggregator's point of view or the creator's point of view. I think it is a mistake to conflate the two view points.

I've been wrestling with this for a while and I think the only advantage to the creator that I can see in the long tail is that aggregators can invent or produce a long tail domain that was not present before.  Like Seth's Squidoo does. Before Squidoo or Amazon or Netflix came along there was no market at all for many of the creations they now distribute. The proposition that long tail aggregators can offer to creators is profound, but simple: you have a choice between a itsy bitsy niche audience (with nano profits) or no audience at all. Before the LT was expanded your masterpiece on breeding salt water aquarium fishes from the Red Sea would have no paying fans. Now you have maybe 100.

One hundred readers/watchers/listeners is not economical. There is no business equation that can sustain profits for continual creation from so few buyers. (It can of course support the business of aggregation above the level of creation.) But the long tail niche creation operates perfectly well in the realm of passion, enthusiasm, obsession, curiosity, peerage, love, and the gift economy.  In the exchange of psychic energy, encouragement, meaning of life, and reasons to live, the long now is a boon.

That is not true about profits. Economically, the more the long tail expands, the more stuff there is to compete with our limited attention as an audience, the more difficult it is for a creator to sell profitably. Or, the longer the tail, the worse for sales. But if we view the long tail as a market of a different type, as a market of enthusiasm and connection, then as the long tail expands, this increases the chance of two enthusiasts meeting, and so the longer the tail, the better. The first two pockets of the curve are trying to maximize profits; the last pocket of the long tail is trying to maximize passion and connectivity.

There is one further indirect advantage to the long tail. Since your creation now exists in a market (where it would not have existed at all before) it can, if you are lucky, start to migrate uptail.  With creativity you may be able to move your creation out of the economic doldrums of the long tail up into section #2, where 1,000 true fans and other mid-level success lies. As I argue in 1,000 True Fans, this is where you want to be as a creator. Seth calls it the pocket of " the profitable, successful niche product" and I agree with him that this pocket #2 rather than pocket #1 is where you want to aim for.

But if you fairly evaluate section #3 according to the same metrics as section #1 and #2 -- the dollar value to  the creator -- then the long tail is a desert for profits. It makes sense to pursue this pocket only if you switch. You must switch in pocket  #3 either to looking at it from the perspective of an overlord aggregator, OR, you need to switch to looking at this territory as an alternative economy, one that is not running on the dollar. A new region with its own dynamics.

In other words, Squidoo and Amazon and Netflix make the profitable long tail very happy. But happy long tail does not make happy creator.

I prefer to think of the Long Tail as being a tail to a different animal. We've misidentified the intangible being it belongs to. It is not the long tail of the Beast of Commercial Profits. Rather it is the long tail of the Dragon of Love. The love of creating, of making, of connecting, of unreasonable passion, or making a difference, or doing something that matters to ourselves, the love of connecting, giving, learning, producing, and sharing.

It is important to know which tail we are wagging."

Comments

[Panayotis Vryonis]

Chris, two observations, you may find of some use.

The first one is personal. I'm a popular blogger in Greece. You could definitely say that am very close to the head of the greek tail inside the bloggers tail. Even so, I often miss the time my audience was small and focused, when only friends and fellow geeks visited my blog. I had much more freedom then. Lately I find myself writing posts that will drive people away. Posts with a lot of technical jargon, without any effort to make it friendly to non-techies. You may say, I'm trying to get away of the head :-)

The second one is that even though the long tail is not profitable for the creators, it's the first time they are part of the economy! I mean, making $10 or $20 per month from a long tail blog or book is negligible. But it's the first time in history someone CAN make some pocket money from his notes or diary, or humming tunes.

In a strange way, the fat head is "binary" (you're either part of it or not), while the long tail is "analog" (where all values between millions of dollars and nothing, are valid).

[Joel Haas]

Kevin mentions but does not seem to fully emphasize the "incubator" aspect of the long tail section 3. In the internet age, it is easy for somebody to use the technology to publish their book on Red Sea salt water fish as (Kevin's example,) and then to use the experience gained to improve future techniques and products to move up into the profitable niche section. In Kevin's example, if a person lays out money for the software and takes time to learn to use it and then publishes their book on Red Sea salt water fish, they have gained experience to do another book on fish or aquariums, so that the second, third, fourth, umpteenth books are easier to do AND create an aggregate themselves which can move as a body into the second section of the tail.
A real world example would be decades ago a gentleman name Dave Gingery wrote a book on how to make a hair dryer and charcoal fired aluminum foundry in a back yard. He went on to write a series of books on how he created an entire machine shop of tools cast parts in the foundry. No one book of the series is particularly interesting or useful by itself, but the collection is still in print and made Gingery a celebrity among specialty and hobby machinists.

[Paul]

I have a question: Is it possible to aggregate the spot #2? How profitable is it to the agregator?

I think SGN and Zynga try to do it. I just wonder if it is really viable.

[Chris Anderson]

Panayotis,

I can see why you're such a popular blogger in Greece:

"In a strange way, the fat head is "binary" (you're either part of it or not), while the long tail is "analog" (where all values between millions of dollars and nothing, are valid)."

That's really insightful. Many thanks for smart contribution to a debate that is improving in signal/noise ratio, which is not always the case.

[Venkat]

Curiously enough, I just crossed a 100 RSS subscribers on my blog, and about $100 in organic revenue and proudly announced to my 'happy long tail' audience that I was off the D-list. So Kelly has something there -- as a direct market, it is a market of pay-it-forward gifting and passion. AdSense isn't going to pay my rent at the 100 level.

But the world does not run on love alone, and I am not doing this enthusiastically for love alone (though that's a factor), dragon or otherwise. I am doing it for what I call IIR: inorganic indirect returns. Here is my categorization:

Direct revenue (DR): advertising, affiliate sales; almost by definition organic. This only works as an income in Pocket I for creatives, since it is a pure volume play.

Organic Indirect Revenue (OIR): "obvious" indirect up-sell channels like t-shirts, books, speaking events, short 'seminars' and creation-related consulting etc. A plus market to the creative career. I think of this as a yard-by-yard rush offense. Here returns are directly proportionate to effort, and take deterministic/deliberate work. This just barely works to support Pocket II creatives. David Pogue rightly notes that attempting to survive like this (on 1000 raving fans) is rather like programmers giving their work away for free and trying to make money selling mouse pads to trusted clients. If it works at all, it is a very very brittle business model, and one bad quarter, one lousy seminar, can wipe you out. If I add revenue uncertainty to Kelly's view, I'd have to increase 1000 true fans to more like 5000.

Inorganic Indirect revenue (IIR): Economic value here is inorganic and opportunistic. You create a Pocket III level presence, and gradually you'll start seeing a richer opportunity stream come at you, for enough inorganic wins to bring you the total value. For example, you may get cold-called by a reputed publisher (I recently got a couple of such calls related to my blog); an interesting biz-dev lead may fall into your lap, a business interaction may be accelerated very rapidly in terms of trust by your new partner reading your blog. Stuff like that. I can count off at least a dozen such high impact events that have added enormous value to my day job. Played right, IIR can provide a great worth-doing-it ROI even for Pocket III creatives.

The right way to value IIR economic value is to compute how much work it would take to get the same returns without a Pocket III creative presence (or as I call it, being a 'silent' creative). I have huge fun writing my blog, and got 2 cold call publishing inquiries within a year. NOT doing the blog would have required me to generate a manuscript with no audience feedback and do a lot of unpleasant soliciting of rejection slips to get to the same level. The value to my regular career has been very significant. My relationship with a manager who was known to be hard to connect to, changed dramatically for the better when she found my blog.

But this isn't the panacea people want: you obviously need what Marci Alboher of the NYT calls a 'slash' career to make this work -- a second locus of value addition.

Can pure creative careers survive at the Pocket III level on DR and OIR? No. Period. That isn't something to lament -- it is just the value of creative work finding its true value level in an economy with information transparency.

I haven't finished this analysis, but I'd say a properly handled IIR presence can work out to match your hourly pay rate in your regular job, in terms of ROI.

[JB]

I'm going to disagree with some of this. If you as a long-tail creator spend an hour on something and then sell it to 100 people at $5, then you are looking at $500 per hour.

That is the real power of the long tail. Creators of any sort (artists, writers, musicians, etc.) don't need to spend 40 hours per week dedicated to a job. They can create pieces that appeal to niche markets (1 market, 2 markets, 50 markets), and sell to each of those markets.

[San Diego Photographer]

Great article! I saw Seth's post as well, thank you for sharing.

[Computer Forum]

Amazing article! Detailed and very interested. I am going to recommend this blog to my friends.

[Paul Soldera]

I am a huge fan of this debate and saw Seth's post as thought and at the time remember having a similar thought. He did pull off a subtle shift when talking about the #3 section. Looking back, while I think Seth's distinctions are useful guides, for me the Long Tail is anything past the previous physical limitations of brick-and-mortar distributions. Anything past that point is gravy for creators. They've never really had it before. If you are good enough, and your niche is large enough, the Long Tail affords you relatively frictionless scaling from Love to Profits. Or if you are in a market with no other aggregation mechanisms other than Google - from Love to Profiting from FREE.

[Panayotis Vryonis]

Chris, thank you for your kind words.

I would be very interested to hear how the long tail theory could be applied to politics. Is there an area of politics (not political blogs, or political publications) where we could talk about a long tail?

Some thoughts:

The Long Tail is important for things that are not popular. Democracy is about things that are popular, the fat head, right? Democracy is about agreeing on something (or at least a couple of similar positions). If we have a long tail of political parties, or political opinions, there is a vertical line that leaves the (agreeing?) majority on the left of the graph. If we have a long tail, this point shifted to the right. What could this mean for a democratic institution? Are political parties the aggregators?

Is the parliament or senate the limited shelf space supermarket of politics, and if so, is the internet creating a long tail there too?

[HotPluto]

[IMG]http://i34.tinypic.com/24fyzy9.png[/IMG]

[Tom Lee]

I am getting a lot of traffic to my site from LTKW, it is a great way to get highly targeted traffic :).

[Dave Andersen]

Thank you, Chris and Kevin, for more insightful writing on this valuable and fascinating subject. You know, there actually is a way to integrate all three pockets, such that a creator can profit from Pocket 3. That is, if the creator's efforts are engaged in defining and establishing a platform, rather than an individual component. Apple's latest extension of its iTunes platform, the iPhone/AppStore, is a great example. While Apple is only on v2 of the iPhone, eventually, subsequent releases will decrease in drama, both in features and unit sales acceleration. By then, however, Pocket3 revenues to Apple in the form of dividends (rev sharing) through their establishment of that infrastructure will enable them to handsomely co-profit with their developer community.

[Simon Deane-Johns]

Fascinating, thank you.
It occurred to me, however, that there are creators making money out of the long tail of personal loan products in prime consumer credit markets, e.g. Zopa in the UK, where returns to lenders are about 7.8% on a default rate of under 0.1%.
http://uk.zopa.com/ZopaWeb/public/lending/lending-at-zopa.html

The long tail of products represented by online social lending did not really exist before (except perhaps more informally, off-line). These products are being created by the individual lenders offering their money, and the borrowers who post their requests for money (depending on the model operated by the relevant facilitator). Successful social lenders, in particular, therefore challenge the notion that creators can't make money out of the long tail.

Best
SDJ

[Eben Carlson]

100 readers/watchers/listeners isn't profitable because we've decided (rather arbitrarily) that it's not. Nowhere does the universe say that all content must be sold at fixed/socialized prices.

Content suffers because it goes directly to the long tail and never has a day (or month) in the head or middle section--it never has the opportunity to be sold at a premium when it's most valuable. It's the last sector that's significantly disconected from consumer demand--which is why it's failing in all areas that have both digital distribution and production (music--soon to be movies and tv too).

In every other sector--cars, ball bearings, jeans, lattes--creators have the opportunity to capitalize on innovation, pent up demand, and affluent consumers. Not so in the content sector, the only game in town is the (extremely) mass market, which is the 18-34 demo.

Which is why youth culture is robust and omnipresent and mature, relaxed, adult culture is nonexistant. It's simple math.

Buggati doesn't sell 40,000 cars a year, but would we be better off, car-wise if they didn't exist? Same with Ferari, Maybach, Lamborghini and even the better Mercedes, Porches and Beemers. It's entirely unpopular, especially on the internet, to discuss premium markets, but in this case, I believe the lack of a premium content market hurts us all.

What's the point of saving a few bucks when there's no creative enjoyment or meaning in your life. And we're not just consumers, no premium sales also means that none of us can be paid to create premium, meaningful, creative content at work or on our own.

If you are truly interested in the plight of content creators, and truly interested in enjoying a rich, robust, adequately funded culture, then your one issue is the development of new, higher, price points for content.

The current "give it away and then run ads" (or make the musicians tour and advertise Coke) makes available only the bare minimum of cultural offerings. Essentially the fast food. All creators are fast food workers and all consumers in the developed world are content bottom-feeders. The Stones may be shift managers instead of line cooks, but they still don't make anything off of their primary value--writing and recording songs.

Artists make peanuts compared to individuals who create far less value but operate in free markets.

[Eben Carlson]

PS: Love isn't an intangible, it's an UNtangible--something business doesn't know or talk about yet.

The physics version: Matter is tangible, energy is intangible, dark energy is untangible.

The human version: Body is tangible, mind is intangible, emotion is untangible.

The business version: Physical product is tangible, the technology/expertise/management/resason and design is intangible, the creative content is untangible.

There is creative content, love, or untangible value in all products and things--it's often not adequately recognized on the manufacturing side of things but as your post suggests, that's what people are actually paying for.

PPS: Regarding democracy--at fixed prices, content creates a tyranny of the majority. Democracy isn't a fat head--it's everything. But only when coupled with with free markets.

The content market isn't externally socialized but it is internally socialized, which yields the same result--inefficient supply, waste and dissatisfaction. Or--in untangible terms--a stark, arbitrary, and entirely unnecessary lack of love.

[Louis Steinberg]

On the Long Tail and democracy: The Long Tail is not the legislature, the Long Tail is (enabled by) the Bill of Rights. In a society that does not have freedom of speech, religion, etc., it is easy for a popular (or otherwise powerful) orthodoxy to freeze out competing niche beliefs. The power of "free X" where x = markets, speech, religion, etc. comes from the Long Tail acting as an incubator, where many alternatives can be born and be tested, with the best migrating up towards the head.

[Abe]

Interesting, but I do have to disagree with you partly.

Aggregators and creators have a symbiotic relationship. The aggregators provide access to customers that were not present before the aggregators lowered search costs through their various filters and consequently diminished barriers to finding the creators' products. True, if a creator is way out down the tail, he may still be unable to make ends meet. But, higher up in the tail there are many people who are making a living that could not do so before.

[Nick The Geek]

After reading the above comments, I feel a little out of my depth here intellectually, but what the heck ... :)

As someone who sells products in multiple small niches, it's actually not that difficult to make an income purely using The Long Tail - in fact, I'd say is far easier than in a mainstream market.

Firstly, in most cases there's less "noise" to differentiate yourself from.

Secondly in my experience most businesses don't have the first clue on how to market their products and services correctly. Just being a little better and a little different can sometime be enough.

Thirdly, if you go vertical in a niche, I believe you're more likely to sell multiple products on the same subject to the same customer, because they have an interest in the subject.

Taking Kevin's example again "Red Sea salt water fish", the first item might a free special report that builds a related list of people to follow up with.

Then there's the $9.95 audio CD or book, "7 Baits Guaranteed To Catch All The Red Sea Salt Water Fish You Could Ever Wish For!" (crap title, but you get the idea)

(The trick here is to not expect to make serious money from your "entry level" product, but to use it as a lead-generator for more profitable products and services in the niche)

Like a Monthly Newsletter @ $19.95/month with tips, tricks, stories and pics ... and so on and so forth, right the way up to 3 day fishing holidays in the Red Sea for $1,495 with the top 5 Red Sea Salt Water Fishermen/women in the world.

Simple. Then rinse and repeat with another niche if required.

If you have proven, demonstratable(?) knowledge in that niche, you could probably skip the book/CD and jump straight to the monthly program using a free blog as the teaser to get them in.

It's a little more difficult with people in creative, subjective occupations, like artists and musicians - but people like Trent Reznor have consistently proved, it *is* possible.

Follow what they did and all things being equal, you should be OK.

Apologies if this is a little more "commercial" in nature that your regular posts, but I just wanted to show that it's possible - you just gotta "go deep!"

[Mikkel Breum]

Vryonis: I've posted some thoughts on the long tail model as applied to politics here: http://www.confo.org/blog/2008/long-tail-politics/

[chrismartin]

Thanks.That really is an interesting article.But I agree with you partly.
-------
chrismartin
-------
link building--link building

[kabin]

thanks...
Kabin
Konteyner

[Account Deleted]

hello
long tail is very good for long description and people should easily understand all the topics what you want to say.
long tail is very understandable for reach at right path.
and i like your opinion,it is very nice article.
thanks for share.
---------
namisha
------
Attorneys--Attorneys