The “long tail” — the idea that (largely thanks to the Internet) distributing large numbers of obscure items can be as profitable as delivering only “the hits” — has had a broad impact on all aspects of the digital economy.
It’s an idea that throws a wrench into many of the traditional ideas about how to make money serving customers. Or as one Amazon.com employee has been quoted as saying: “We sold more books today that didn’t sell at all yesterday than we sold today of all the books that did sell yesterday.” That’s a game-changer.
The long tail has important implications for the service provider market, where the economies of scale of public networks and subscriber-driven distribution have always focused strongly on delivering hits. Unless a carrier can sell a service in the millions (or even better, bill for individual instances, such as a text message, in the billions) it hasn’t been worth pursuing.
Of course, one of the big questions as networks “open up” and Web 2.0-style app and service distribution comes to the telecom market is whether traditional carriers can — or even should — focus on the long-tail of services and service revenue.
There’s no easy answer. Carrier billing systems enable billing for long-tail products in ways simply not possible on the Web, where micro-payments have always been a non-starter. That’s largely why, of course, that advertising is the major revenue stream on the Web. But just because they *can* bill for long tail services — or provide elements, such as location or QOS-guaranteed call completion, of a mashed-up long-tail service — doesn’t mean that service providers *will*, largely because it so goes against their service heritage.
Because the long tail has such implications for service providers, it’s important to notice the attention a new idea — to me, a clear cousin to the long tail — has gained across the blogosphere in recent days.
The concept: 1000 true fans.
First introduced by former Wired editor Kevin Kelly on his blog, 1000 true fans describes how content providers can make money in a long tail world, where massive distribution brings with it constant downward pricing pressure and a free, pass-along P2P economy. While Kelly focuses on “artists” — – the concept really can be extended to anyone producing a long tail-style product.
The core idea of 1000 fans:
A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, videomaker, or author – in other words, anyone producing works of art – needs to acquire only 1,000 True Fans to make a living.
A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can’t wait till you issue your next work. They are true fans.
An example makes it clearer. Music artist Trent Reznor recently launched his new Nine Inch Nails album online with a variety of packaging options. One was the “Ultra-Deluxe Limited Edition Pacakage” — targeted at True Fans. The package included high quality downloads, two CDs, a data DVD, a Blu-ray high def DVD and assorted extras, all signed by Reznor. The offering was printed in a limited edition of 2500 and quickly sold out, grossing $750,000 in just a few days for the “true fan package” alone.
While the long tail focuses on how distributors or aggregators make money via the long tail, 1000 fans is about how the individual content creator can survive and ultimately thrive. If long tail entrepreneurs can’t find a reason — not just the thrill of making art, but a living too — to produce their content, the long tail economy will ultimately flounder as well.
So again: what are the implications for service providers?
One clear take-away is that 1000 fan/long-tail content providers need to control their own customer base and have a tight connection to those true fans. What they need in a distribution platform is one that a) has broad reach and b) has little interest in playing a mediating role between an “artist” and its fans. Content providers must own that relationship themselves. If they don’t, there’s absolutely no way they can turn casual fans into the types of obsessive fans they need to make the 1000 fan model work. Distributors don’t have the incentive or passion to convert fans — only the content-makers themselves do.
It’s hard to see service providers rolling out new services 1000 fans at a time. The bigger question is: will they play a role in enabling the 1000 fan model?
Clearly the Web is such a platform.
Will service provider networks and services be a 1000 fan platform as well? Will addressable IPTV networks be a conduit for 1000 streams for 1000 fans? Or will they focus on hits? Will wireless networks and decks move away from the mass-market on-deck portal model to enable 1000 devices customized to the needs of 1000 fans? Or will they drive usage to hit-making search boxes and content widgets?
For service providers wrestling with their long tail strategies, the concepts and impact of the “1000 True Fans” model need to be strongly considered as well.
UPDATE: I was amiss not to mention that Chris Anderson, whose Wired article, book and blog launched the popular concept, of the Long Tail is working on a new book, recently publishing a kick-off article:
Free! or Why $0.00 is the Future of Business
Talk about your downward pricing pressure….
