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.

  • blog

  • companies & initiatives

  • November 2018
    M T W T F S S
    « May    
     1234
    567891011
    12131415161718
    19202122232425
    2627282930  
  • archive

  • categories