Daily Clerks

Scott Karp at Publishing 2.0 came up with a thought provoking discussion on why content businesses don’t scale any more; together with his discussion on the Long Tail of Revenue, there’s some insights that any Web 2.0 venture needs to think of.

Last spring I wrote about the Long Tail of Revenue 2.0, observing that the most of the revenue goes to aggregators in the head, and the rest is spread very thinly across an ever growing and ever thinning tail of content creators.

Reading through both pieces, the following points appear to be of value, in planning any web 2.0 / user generated content style venture :

• In general, being the aggregator rather than the generator of content brings higher revenue; seems intuitive, given that it takes more effort and time to create content, whereas cherry-picking or crowdsourcing doesn’t suffer from the same scale or time limitations
• At the same time, both providers and consumers have multiple alternate options when it comes to providing or consuming content; hence, there’s only so far you can go to “control” the business
• You can make a lot of money off a long tail; but not as long as you’re in the tail yourself.

Yet another part of the discussion gives another interesting insight

I started thinking about the long tail this week after Publishing 2.0 cleared the (completely arbitrary) bar of 500 blogs linking in:The number of sites linking here seems both large (after only 5 months of blogging) and extremely small, if you consider that Technorati is tracking 41.4 million blogs. But that was still enough for Publishing 2.0 to break into the (also arbitrary) top 2,500 of Technorati.

If you base the math on 41.4 million blogs, Publishing 2.0 is in the top 0.006% of all blogs based on being linked to by only 0.001% of all blogs! That’s some wacky math.

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That seems to suggest that it isn’t too difficult to move further up, near the head; not because of your absolute success, but because the others are relatively further behind. YouTube’s success seems to provide some corroboration - with a few million viewers out of the estimated 1 billion plus Internet users, it’s regarded as the top video sharing site. I’d guess Digg or other Web 2.0 sites share the same characteristics.

If that’s the case, it could mean that disproportionate rewards accrue as you manage to scale up; the same kind of thinking that drove a lot of Web 1.0 sites to invest in mainstream advertising to attract a sufficient user base. Bubblemania?

Long Tail, user generated content, web 2.0

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