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Wired's Chris Anderson recently published "The Long Tail," which discussed one of the most important aspects of the Internet Age: that customers for entertainment products are digging deep into the catalogue, and that the non-hits are actually more important sources of revenue than the hits.
When you think about it, most successful businesses on the Internet are about aggregating the Long Tail in one way or another. Google, for instance, makes most of its money off small advertisers (the long tail of advertising), and eBay is mostly tail as well -- niche and one-off products. By overcoming the limitations of geography and scale . . . Google and eBay have discovered new markets and expanded existing ones. In today's TechCentralStation, economist Arnold Kling ponders the implications for the productive process, noting that the existence of such aggregating businesses as Google or eBay, or iTunes, can lower the cost of entry for many types of businesses and facilitate the creation of "capitalism without capital," a development of immense importance for the structure of economic activity.
Anderson and Kling are indeed onto something here, and they could have multiplied their examples almost endlessly. The same issue of Wired examined satellite radio, which can free us from the hit-driven playlists and maddening commercials of conventional broadcasting, to the great benefit of listeners and artists. Microsoft attained its market position by providing a platform for thousands of software developers to use to market their own creations.
To go further afield, look at the auto industry, where the Japanese techniques of lean production described in The Machine that Changed the World (published 15 years ago, but readily available on the Net) have resulted in the proliferation of models tailored to every possible taste, or at the pending Supreme Court case on wine shipments, triggered by the anger of oenophiles subjected to corrupt state-enforced liquor monopolies that deny access to interesting small wineries.
The ramifications are endless, and endlessly beneficent in the long run. But there will clearly be considerable pain in the adjustment process, and, in consequence, many battles yet to come as the Old Order resists by trying to enlist governments to suppress the New.
Update (01/04/05): See subsequent post.
posted by James DeLong @ 10:31 AM | Internet: P2P, Search Engines...
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