The Now Economy Items
October 7, 2004

The long tail of ecommerce

The Now Economy By: ams

In February, Dave Sifry talked about blog popularity by link count, which his company Technorati tracks:

“Everybody talks about the power law. Fuck it, I’ve got the data.”
All the power law says is that when it’s easy to publish that you’ll
have a relatively small number of things (compared to the entire space
of options) which are linked to by a lot of people. The important
part is not the top 100 (bfd) but what happens in the top 100k when
there are five inbound links, which is significant because it means
that there is still a community for people.

Here’s what’s interesting. If this was broadcast and only the big
guys mattered, the graph would look the same. But what we’re seeing
is that the aggregate number of links in the lower portion of the
graph greatly outnumber the links into the top 100. There are lots
more little clusters than big clusters.

(I haven’t been able to find a transcription of the actual talk, so I’m quoting notes.)

In April, David Weinberger wrote an article arguing that the blogosphere isn’t an echo chamber for this reason:

David Sifry, the creator of Technorati.com, a site that indexes and
ranks 1.6 million weblogs, points out that even though there is a
power curve, if you rank blogs by how many sites link to them, the
100,000th blog has five links pointing at it. Five isn’t a thousand,
but it still means that five people with sites think enough of that
100,000th blog to recommend it to others. Presumably, that site is
important to a small cluster of people. That’s a readership that
didn’t exist before the Net. Further, if you add together all of the
blogs in the “tail” of the power curve, it’s a hell of a lot of blogs
and a hell of a lot of readers. So, while the head of the power curve
feels familiar to us because it’s essentially a bunch of online
columnists, the long tail is something new and unfamiliar: a galaxy of
people who are finding constellations of readers, ready for ideas and
conversation.

It turns out, though, that the internet is enabling long-tail popularity to take off in many different spheres. Wired just published an article entitled “The Long Tail”, which talks about aggregate popularity in power-law distributed populations such as songs, books, and movies.

What’s really amazing about the Long Tail is the sheer
size of it. Combine enough nonhits on the Long Tail and you’ve got a
market bigger than the hits. Take books: The average Barnes & Noble
carries 130,000 titles. Yet more than half of Amazon’s book sales come
from outside its top 130,000 titles. Consider the implication: If the
Amazon statistics are any guide, the market for books that are not
even sold in the average bookstore is larger than the market for those
that are (). In other words, the
potential book market may be twice as big as it appears to be, if only
we can get over the economics of scarcity. Venture capitalist and
former music industry consultant Kevin Laws puts it this way: “The
biggest money is in the smallest sales.”

The Wired article talks about how this phenomenon makes eBay and Amazon much better than traditional books-and-mortar equivalents, who can’t afford to stock nearly as many items. What if we take that to the next level? eBay’s auction model works for a pretty broad spectrum of person-to-person transactions, maybe broader than any other kind of transaction, but there are surely more transactions that can’t fit into eBay’s model than those that can.

Imagine a fully decentralized eBay-like marketplace, where eBay would just be the biggest participant among many others; where you have the freedom to build any search facility, any reputation system, any auction terms you like — and participate seamlessly in transactions with millions of other people, but without having to use eBay’s one-size-fits-all terms. eBay could make more money in this
marketplace than by going it alone, and many transactions eBay doesn’t even consider supporting could take place in the same context.

October 4, 2004

Halsey’s new $50M OnDemand fund for GC apps

The Now Economy By: ams

This is pretty significant news, as the wheel of creative destructions cycles around yet again — this new fund certainly is fueled by some of the gains from the success of Salesforce.com. Now, he’s in a position to invest in yet further iterations of these ideas: “The fund is specifically for companies who develop services and applications that are developed and delivered via Grand Central’s Business Services Network.”

Halsey Minor’s new fund commits $50M to develop companies on top of Grand Central

Grand Central’s Minor announced that he has personally created a $50 million On Demand venture capital fund. Minor established the fund to accelerate the development and deployment of On Demand applications that don’t require the use of software or hardware and are delivered as subscription-based services over the Internet. On Demand solutions deliver the same functionality as traditional enterprise software applications but cost significantly less, are less complex to implement and deliver a faster return on investment. Grand Central’s new developer program provides the ideal platform for entrepreneurs to build and launch these on demand solutions and then submit them for review and funding. For more details on this announcement see http://www.ondemandventurefund.com/.

September 26, 2004

The Internet As Platform

The Now Economy By: ams

Tim O’Reilly writes,

The trends that are emerging today are at least as earth-shaking as the web and the open source movement turned out to be. I’m talking about the emergence of what I’ve started to call Web 2.0, the internet as platform. We heard about that idea back in the late 90s, at the height of the browser wars, but that turned out to be a false alarm. But I believe we’re now starting the third age of the internet — the first being the telnet-era command line internet, the second the web — and the third, well, that tale grows in the telling. It’s about the way that open source and the open standards of the web are commoditizing many categories of infrastructure software, driving value instead to the data and business processes layered on top of (or within) that software; it’s about the way that web sites like eBay, Amazon, and Google are becoming platforms with rich add-on developer communities; it’s about the way that network effects and data, rather than software APIs, are the new tools of customer lock-in; it’s about the way that to be successful, software today needs to work above the level of a single device; it’s about the way that the Microsofts and Intels of tomorrow are once again going to blindside established players because all the rules of business are changing.

Web 2.0 forms the foundation on which The Now Economy will develop — although I don’t know how I like this idea of “network effects and data [belonging to centralized services] [being] the new tools of customer lock-in” — wasn’t the internet supposed to free us from lock-in?

And by the way, in Web 2.0, people have a choice of browser. Internet Explorer is no longer as innovative, secure, or stable as Safari / Konqueror, Opera, and Firefox (the beta of which passed 1 million downloads in 100 hours. I use Firefox as my default browser now, and it makes me verrrrrry happy… 🙂

September 17, 2004

Open Source and Offshoring

The Now Economy By: ams

Tim Oren writes in Be Careful What You Wish For: Open Source and Off-Shoring:

I am bemused by folks who can simultaneously cheer the global spread of the Internet and the beneficence of the open source (OS) movement, and decry the offshoring of IT jobs. Whether they’re naive, or disingenous, or took Emerson a little too seriously, they are missing the correlation: Open source and IT offshoring are the products of the same driving forces, two faces of the same coin. And they are feeding off one another.

If IT does matter, then IT has to deal with increasing commodification. Tim adds,

If you’re competing with free, you’ve got to be – well – cheap. And that’s not available in Silicon Valley. Even if you are building on free, or adding value through services, you get to cope with customer expectations for cost set by deployment of things like the LAMP stack in enterprise environments. Guess where you get cheap?

And the debate of IT doesn’t matter rages on, as offshoring and open source keep pushing the free part of the “free, perfect, and now” that are the forces driving The Now Economy…

August 26, 2004

This Blog = Google(“Now Economy”)

The Now Economy By: ams

In only a few weeks this blog has become the #1 entry in Google search for Now Economy.

On the other hand, we’re not even in the top 20 entries of Yahoo! search for Now Economy, though we are #2 in the Yahoo search for “Now Economy”, and we are #1 in the AlltheWeb search for “Now Economy”.

And, we’re not even in the top 20 entries of MSN search for Now Economy, though we are #7 in the MSN search for “Now Economy”.

The biggest hit for Now Economy that isn’t us is this Line56 piece by Max More on the Now Economy, followed by the earliest reference we can find to the Now Economy (namely, the GBN report from January 2001). I did also find this FoRK article by Rohit Khare in March 2002 about the “Now Economy”, as being pushed by McKinsey:

>it’s time to say hello to the “now economy.” Never heard of it?
>You’re not alone. Even technology gurus sing different tunes when
>describing the newest buzzwords.

I will continue to egotistically arrogate the neologism “now economy”
to myself and track its adoption 🙂

This is particularly cool to see in the McKinsey Quarterly. One of
the class act aspects of the firm is that they track down even people
who turn down a job offer and send out issues of the McK Q. Of
course, now, it’s a lot cheaper favor that it’s electronic…