Archive for March, 2006

The Long Tail of the Power Law

March 10, 2006

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Finally we, the users of Userland, have found our home, our place. It’s somewhere on the Long Tail of the power law distribution. The distribution qualified as power law presents the following pattern: small number of HUGE hubs with an endless other nodes connected to them. That’s how most complex, organic systems are built and that’s also the structure of the soon to be organic Internet: some relatively few sites are those which are most linked to (as demonstrated by A.L. Barabasi, Linked).

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Traditionally the Long Tail has been ignored. Focusing on the pareto, the 80%-20%, has been the rule. If 20% of my customers are responsible for 80% of my revenues – that’s where I’m going to spend my attention. That was true in the Brick and Mortar days – the time of no access or a highly limited one to alternatives, when one was entirely dependant on “what’s in stores today”.

But nowadays, the ubiquitous broadband Internet provides us with an ACCESS to an endless number of possibilities. The Long Tail of the power law can finally express itself and name its heroes. More importantly, the Long Tail can be monetized.

What Chris Anderson, the Editor-in-Chief of Wired magazine, showed in his research was that:

1. When ACCESS exists, the Long Tail of the past is no longer a Long Tail. Money – great deal of money – can be done by monetizing the Long Tail. From an economical perspective it is no longer a pareto, 80-20, but rather 50-50: revenues are almost evenly distributed between Hubs and Long Tail (endless nodes).

2. The Long Tail itself has its own power law distribution – it is an endless recursion. So if the traditional news providers – NYT, Le Monde, Der Spiegel etc. are the News Hubs of the World and the Blogosphere, on its 30 something million blogs is its Long Tail, this doesn’t imply that the Blogosphere has random distribution of popularity. Technorati’s Top 100 are the Huge Hubs of the Blogosphere. The rest of the blogs are this 100 Long Tail. Anderson provides one more statistic – an encouraging one: any dot on the Long Tail is approached if there’s a way to access it. Translation: any blog (pot) on the blogosphere will find its reader (cover), with a viable opportunity to become, one day, a mega-pot-hub on its own.

3. Finally, web2.0 is the technology of the Long Tail. Google, Amazon and eBay have all made their money by creating a formidable infrastructure that digs into the Long Tail and accumulates the insignificant cents into multi-billions of dollars.

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podcastIcon1.gif Chris Anderson: Economics of the Long Tail 00:38:30, 17.6 mb, March 17th, 2005

Original Podlink: Chris Anderson: Economics of the Long Tail

References:

Chris Anderson’s article on the Long Tail

Chris Anderson’s Blog: The Long Tail

technorati1.jpg Technorati the Long Tail, Technorati the Podlink

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