Tail wagging

Something has been bugging me about Chris Anderson writing on the long tail. Part of what helped to clarify my concern was the recent postings seeking a fun short definition for the long tail. Most of these are economic – so that’s part of my problem the long tail isn’t just about economics. It arises in all the social sciences. Mapping all the social sciences into economics is lame. It arises outside the social sciences as well, in physics, geology, in network systems, to take a few examples. Of course it’s fine if he want’s to focus on the long tail as they arise in markets and pseudo-markets; it just makes me a bit uncomfortable.

If you focus down in on power-law distributed systems that appear in economic frames there are at minimum four flavors to be taken seriously. Consider the supply chain: producers, consumers, distributors, and standards. All four are power-law distributed. All four have long tails. You need to think thru all four. In this case my discomfort is lame. You have to start someplace, so starting out by noticing the long tail in the suppliers is as good as anyplace to start.

Failing to think thru the four players leads to a blind spot about the architecture of the emerging market.

The internet is disrupting existing distribution channels. I believe that when the dust settles the distribution channels will be much much more concentrated than they are today. That the power-law’s slope will be much much less egalitarian. If true the distributors will capture most of the revenue enabled by the supply/demand found in the long tails. That will create some really cruel power imbalances. For example; if the only way to get your back listed catalog into the hands of consumers is Amazon why wouldn’t Amazon demand a large share of the sale price. To put this another way, I suspect that Amazon’s margin is much higher on long tail sales. Such sales are a double win for Amazon.

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