Ascription is an Anathema to any Enthusiasm

I’m thinking that it might be more useful to use the term El Curve rather than Long Tail when we talk about the things with a power-law like distribution. Long tail is a useful term when our focus is reaching out into the long tail; but it frames the discussion in a manner that ignores the role of the vertical portion of the distribution in the architecture of the systems we build.

I’m reading the cheerful provocative book “The Fortune at the Bottom of the Pyramid,” which is about this very question. How can we architect business models that span from the vertical edge down into the horizontal edge to create economic growth thru-out. The book is targeted at the leaders of multi-national corporations. It wants to sell them on the idea that selling into the long tail of the world’s poor is a great business.

Without question the most politically charged power-law curves are the distributions income/wealth curves. The data is sobering. If I pluck the data out of the book’s pyramid drawing and split the world population into two camps about .1 Billion (1.7%) make more that $50 dollars a day and 5.5 Billion make less. It’s easy to become hysterical.

This book declines to partake of that temptation; his audience doesn’t respond well to that. Instead it’s a set of case studies in classic B school style along with the grand rules of thumb required of such books.

The business models all involve elements all along the power-law curve. A distribution channel if you like, though he calls it a process design. Value generating activities along the curve are orchestrated by the firm that designs, builds, and owns a economic network implicit in the business models. This is analagous to the way a fanchise resturant chain architects a value chain that reachs from the individual store up and into centralized production and marketing facilities. Like all economically stable systems some customer problem is resolved and value is captured in exchange for solving the problem. The captured value is spread along the various stages along the power-law curve.

This book is facinating if your interested in business models that reach into the long tail. In spite of it’s overwrot enthusiastic MBA tone, I’m enjoying it.

Man! Whisky Bar’s star is burning bright over on there on the left side of the blogging sky!

This chart shows the data from here as of around 3pm 3/28/05 EST plotted on a linear scale and a log-log scale. Each dot shows how many times a particular media source was selected by the news AI at Google for inclusion on their news summary page. The data doesn’t cover a very long period of time so as you get out on the long tail of sources it gets grainy.

There are 1123 sources in the list. The top 64 sources account for just under 50% of stories posted. To say that another way the elite top 5% of the news outlets generated half the stories the AI selected. The elite 1% of the sources account for 20% of the stories. The #1 source provided 4% of the stories.

Two Washington newspapers are in that top 1%. The Moonie owned and operated Washington Times out scores the Washington Post. Silly AI.

This blog is totally on a roll!

For example this wonderful example of how one metric could lead you to entirely the wrong conclusions.

What, if anything, can be drawn from any of this? Not to put too fine a point on it, but people are scandal-mongers in private and they are helpful prudes in public.

Of course this morning my questions is: while a snarky blog about silly patterns in the world of business is certainly able to attract an audience can Google’s ad placement AI find a group of advertisers that actually garner click thru? I’ll admit I was slightly tempted to click on the link offering to let me start my own hedge fund.

I was raised by wolfs, well academics, so it was only very late in life I learned (from Doc. Searle actually) that all stories are required to have three legs: problem, hero, and movement toward resolution. The power of this rule is demonstrated by how far some authors will stretch to fit; the piece in the current New Yorker where the heroine is ad advertising professional! Her problem is the end of the Golden age of advertising.

To hear tell in the golden age of advertising little shoppes of advertising artisans lined the streets of Manhattan. Desperate mouthwash manufacturing industrialist would travel into this village and select into one of the shops. He would, of course, be carrying a few million dollars. In the second act the shop owner would craft a campaign and place it on the three television networks. In the third act the American public would tune and discover they had an unfulfilled desire to gargle more. As the curtain goes down they are all placing bottles of mouthwash into their shopping carts at the A&P.

This golden age amuses me. On the one hand you have numerous little firms and on the hand you have three huge television networks. It’s the canonical industry structure. On the one hand you have a highly consolidated distribution channel and on the other hand you have a long tail of tiny producers. In the nostalgic telling this is a beautiful thing. The small firms were wonderful because it they gave free reign (free-range?) to the heroic creative folk. The big networks were wonderful because they had aggregated the audience in a so convenient a package that it took one dance number late in the second act to deploy your campaign (and a small bucket of money).

To hear tell the golden age has ended. The advertising industry has condensed and the entertainment industry is more of a slush.

The article fails, in the end, to fit the template. The article is an enumeration of the various species emerging in the genus advertising. This kind of butterfly collecting is something the child of academics can appreciate.

I was surprised that 20 seconds of in show product placement costs about the same amount as a 30 second ad; I’d have assumed it costs more. About 40% more is spent on internet advertising than on product placement, but both are growing fast. Some newspapers are custom printed at the granularity of the postal code.

Distribution channels fascinate me. Part of my fascination is the way they are fundamentally two faced; the distribution firm is torn by two strong forces. So an entertainment/advertising channel is trying to find a balance between the desires of it’s advertisers and the desires of it’s audience. Actually it’s got three faces, which is even more fun, but let’s gloss over that today.

Bewitched, the old sitcom about an ad executive living in the suburbs married to a witch, must be the perfect example of what emerges from an environment with such forces. It’s a show about the customer on both sides of the advertiser/audience channel! It’s also the perfect venue for product placement.

Each channel in the advertising universe is defined by the advertisers and audience it attracts along with the balance it strikes about between them. If it’s true that network power has declined and advertisers have consolidated since the golden age then I suspect that a modern remake of Bewitched would have much more product placement. The article tells a story of a TV show in which one of the characters takes a job pitching a product at the local mall, his pitch is identical to the ads spots broadcast with the show.

Billions and billions of ad channels are emerging. Google’s adsense is an example of that. That creates a bloom of new species of advertising channels. Some venues try to maximize how much they server the advertiser, some try to maximize how much they serve the audience. Some venues don’t even choose to play in this game. The nostalgia for the golden age of advertising is the usual nostalgia for a time when the rules were well understood. The networks defined the audience and the manufactures and advertisers created products and campaigns to fit. Diversity is so confusing.