The Idea Dude


Monday, December 03, 2007

The difference of being IN versus ON

Alex at Read/WriteWeb says there's no money in the long tail. His point is extremely subtle but one worth noting, i.e. the difference between existing IN the long tail versus making money ON the long tail. 95% of websites and bloggers will secretly agree that making money through Adsense is really tough. If you're like the other 100 million bloggers out there, you can hope for a fist full of dollars a month. If you're doing it seriously (writing content daily, doing all the SEO goodness etc), you may at best make a couple hundred dollars. 1-2% will make thousands sometimes spending just as much to drive traffic through pay-per-click or other online marketing schemes. When people tell you how much revenue they are making, ask them about their cost of sales, their keyword spend, affiliate network. In reality, for most, the profit margins are far less stunning than the revenue they claim to make.

You see, folks like Google and Amazon make money ON the long tail. They are aggregators of the long tail. Taking 10c from a billion clicks is pretty good money, so is making a dollar or two off a million obscure books and DVDS. Not so for each contributor to the long tail who adds 100 clicks to the pool or manages to sell 100 books. These folks live IN the long tail.

There is pretty neat slideshow by 0'Reilly about Facebook. The long tail is just as evident there. 87% of usage goes to 2% of the applications. There are 5,000+ applications on Facebook. Those are pretty daunting odds to build a business. Sounds like a lottery to me. There's always a lucky winner who will tell you the system works but the only people that are guaranteed a payout is Facebook, the rest of us are really just buying tickets. Of the 2% that make up the lion's share of usage, messaging, dating, video, alerts and just for fun are the most popular by far. O'Reilly claims that less 1% (about 50) of the applications have more than 100,000 users.

I do love what social networking is doing to the way we connect to each other. I marvel at the Wikipedia and secretly hope it never dies. The web today is the Cluetrain Manifesto come to life. We're building conversations everywhere we look.

But at some point, you have to ask, are these really conversations or just noise.

Unbridled anarchy is not necessary a good thing.

We truly live in exciting times. Instead of a saddle, I have a keyboard. Instead of a six shooter, I have email, IM, LinkedIn, Facebook, Myspace, MSN. Oh, and my horse's name is Digg'er.

See you at the Facebook corral!


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