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.

I was raised by wolfs, well academics actually, and so it was only very late in life I learned 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.  An example is a piece in the current New Yorker.  Where the heroine is an advertising professional, and 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.  As the curtain rises, desperate mouthwash manufacturing mogels would travel to this village and step into one of these 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.  During this scene money would rain down upon the stage.

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

The article fails, in the end, to fit the required story template.  The article is reduced to an enumeration of the various species emerging in the genus advertising.  Not that, a kind of butterfly collecting, is something the child of academics can appreciate.

Here’s an interesting butterfly: 20 seconds of in-show product placement costs about the same amount as a 30 second ad.  I would have assumed it costs more.  About 40% more is spent on internet advertising than on product placement, but both are growing fast.  Here’s another butterfly: 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 must balance between 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.  This tension is the ecology within which these butterflies evolve.

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!  And, it is also the perfect venue for product placement.

The channels in the advertising universe  – defined by the advertisers and audience it attracts – must strike a balance.  Here’s another butterfly: 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 serve 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.