a lot of bloggers talk about the amazon/netflix phenomenon called the long tail, which is [a different] chris anderson’s theory that the future of commerce is selling a lot less of a lot more.
on the surface this sounds logical. netflix rents out all sorts of films, and their warehousing costs are nominal, so they will do a small business on a large number of items, instead of the bestbuy model which is to do big business on a small number of items which are mostly current releases that end up in the bargain bin once their popularity gives out.
amazon has observed something similar to the long tail and supposedly makes about as much on its obscure sales as it can with its hit products.
i have had a couple of friends who worked at big box retail stores complain that the automated supply chain management system floods them with shipments of blank CDs, meanwhile, customers riot over the lack of stock on a hot new video game. this is because only reinforcing success by selling only what is hot, leads to a marketplace that is flooded with lots of recently-hot-but-rapidly-cooling products all competing for the same limited attention and resources.
the idea sort of comes from the power law distribution, or the 80-20 rule: 80% of some quality will come from 20% of some quantity.
the long tail is basically a paretto distribution:
which states that when you measure the relationship of popularity to sales, the area of the curve where the products sold are popular is roughly equal to the area of the curve where the products sold were considered to be unpopular.
so, with this in mind, then digitally distributed goods should make this sort of long tail business model even more successful, right? storing things digitally is really inexpensive, so there is no reason not to offer everything digitally, dump physical media and the logistics that come with it, and make money selling the popular stuff when it is popular and then continue making money on that stuff once they are considered to be un popular.
except that the media companies are reluctant to let all of their wares go digital due to piracy concerns.
so where does piracy come into the continuum?
like retail stores, file sharing communities tend to focus primarily on what is popular and recent, and there tends to be less emphasis on older, more obscure works. piracy itself has a long tail as well, where the back catalog of once-popular but now un-popular downloads live on with relatively small numbers of loyal seeders.
the classical argument against piracy is that creative works cost money to create, promote, and distribute and piracy circumvents the sale of media, which is how those costs are recouped. the new argument is that business models that embrace free promotion and distribution can help producers compete with piracy. in the olden days before the internet, you made a movie, book, TV show, or music album with the idea of having the broadest appeal, and then marketed it to the widest audience possible. today you need to reach an audience that wants to support your production.
the old way meant hiring the best known and [presumably] best performing, and therefore [probably] best paid, actors/performers, directors/producers, and designers/creators. this meant putting them to work on something that follows some sort of formula that appeals to a large audience. the result is a work that took a lot of money to create and looks a lot like all the other stuff that’s out there. this decline in quality and originality is ultimately what undoes a production.
in order to make as many people as possible aware of your work, you have to spend as much or more on promoting the production in the media as you spent on the production itself. in other words you are investing lots of money hoping to guarantee popularity, and therefore guarantee a return on your investment. the problem of course is that your product cost a lot to begin with, and spending an equal amount on promotion means to have to do twice as much in sales before your product breaks even.
my assertion in this is that, with regards to creating and promoting big hits, the investment in popularity creates the kind of positive pressure behind the product that drives piracy as well. a product which has mass marketing and mass appeal has mass demand on the file sharing scene. in the figure below, the red line indicates what i call the “piracy line”, where a work gains enough popularity to be massively downloaded:
the actual location of the line could be much lower on the popularity axis and the result will still be the same: there’s way more area of the curve *below* the piracy line than there is above it. the popularity of your product is working against its profitability.
let me say that again: all the advertising that you do is basically saying “go pirate this thing now!”
when you couple mass promotion of a product with a general decline in quality you create risks for your consumers. the odds that your album, movie, book, or TV show will be at least sampled via the file sharing scene increase with every corner you cut in development and every dollar you spend on promotion.
the other way to look at it is that if your product had less universal appeal, and more niche appeal, the impact of filesharing would be significantly lessened because there would be significantly fewer marketing costs associated with such a project. you could probably spend less on production as well, especially if your production is targeted at a smaller audience who will be more enamored with your work being targeted at them. this exuberance can also translate into sales: if your production becomes part of the community, then people will want to buy stuff associated with it in order to identify themselves as a part of that community.
in fact, i have downloaded and watched films for no other reason than they were highly supported on the file sharing scene and the comments on the torrents made the film sound compelling. one such example is amish grace which was some lifetime made for TV film that would never have shown up on my radar otherwise. it was good story and a neat look into a culture i know nothing about.
large scale productions cost a lot of money to produce. productions like a top 40 album, summer block buster film, or a network television series need to be made to appeal to a large audience. they also need to be heavily marketed so that a large audience can be made aware of the production’s existence. the cost of the production requires many sales (CDs/tickets/ads) to be made before the project breaks even. the product is just too expensive to be sustainable in an environment of rampant file sharing.
a small scale production costs less to produce. an independent film or album doesn’t need as large a budget. independents also don’t need as big of an audience, hence they require less marketing. most importantly, independents don’t need as many sales to turn a profit. what hollywood doesn’t realize is that less marketing also means fewer downloads and more people who are willing to support your work.
another advantage that an independent project will have in the new piracy landscape is more loyal fans. i don’t mean a larger number of fans who are loyal, i mean greater loyalty among the small number of fans that you have. in terms of filesharing, independent works are more likely to be supported by their fans because the work is more likely to mean something to them. examples abound, but the humble indie bundle is probably the best one.
in music, a catchy, highly produced, but ultimately forgettable radio tune will be downloaded extensively and deleted to make room for newer, also forgettable tunes. back catalog tunes that have stood the test of time will probably also be downloaded massively but may also see merchandise sales from a small percentage of downloaders who really love the song. a musical act that makes the music that helps define a sub-culture will get not just merch sales, it will get people who are not just willing to help, but wanting to be part of the experience. this fanatical loyalty is where production costs can really lower as people donate time, money, and other resources to make the production a success.
nothing makes me happier than finding some new thing on the internet and jumping into it. this has happened with music in the form of grime; it’s happened with movies like the millenium trilogy (funny story, i heard about “the girl with the dragon tattoo” from the list of movies that feature nmap); and even television shows like insecurity. note that in all of these cases, the works are from other countries and that distribution and promotion in the US is just virtually non-existent.