The IPPR and Reuters held a seminar on Tuesday 4 July about the ‘long tail’ and niche marketing, and how it relates to IP. Speakers were Shaun Woodward MP; Chris Anderson, Wired; Azeem Azhar, Reuters. As usual, I took copious notes, a habit which will become redundant if all organisers provide the level of recording that the IPPR has for this seminar. You can read the official summary, and you can listen to Part 1: Shaun Woodward MP, Chris Anderson, Azeem Azhar (21.1MB), and Part 2: Questions from the floor and responses (16.8MB).
Meantime… my notes. EAEO.
Shaun Woodward MP
One of my most cherished positions is a cutting i have from the Sunday Times best seller list, from 1984, because for a few weeks with a co-author Esther Rantzen was top of the best seller list for book on Ben Hardwick, a small child who needed a liver transplant. The story changed pediatric liver transplants in the UK, and the profits of the book went to supporting parents.
That was 20 years ago, because now he has a chance to look back on the media and consider how it has changed. The idea of a programme pulling 20 million viewers on a Sunday night, like That’s Life did. Even when it was axed it had 5 or 6 million viewers. In the 90s, it seemed like that was a good idea. But in the future, how will the media create a programme with that kind of market share?
Media couldn’t see the future then, couldn’t see how it would develop. In the 80s there were just four channels and no one predicted that there would be things like Sky. If you wanted mass entertainment, there were only two places to go, BBC or ITV. It was supply lead, and you had two choices of channel, or nothing.
You could put together a schedule that would grab a third of the population. A winning evening’s schedule would clean up, and the challenge for the BBC was just to keep That’s Life ahead of Coronation STreet.
Now it’s multichannel, 24 hour broadcasting, and more choice than ever. Revolution in content and form, because of digital. Prospect of convergence between content and context. Trying to see the future is like trying to see round corners. You can only speculate.
The Long Tail is part of the informed speculation you can do, as opposed to the wild speculation. Need to find a grammar and a lexicon to describe what is happening across the creative industries.
Chris Anderson’s book puts on to the table some very important issues, that everyone in the creative industries need to take on board. He says that the emergent market is going to be radically different, which is right. He says that the market was about hits, but is now about misses. But what is the nature of those misses.
Advertising on TV and in newspapers is down, and they need to find somewhere else to go. This isn’t just about lower audience share and declining sales, it’s about the consequences of choice; but it’s also about new and emergent markets and services. In the old linear economy, it was controlled by the supplier and retailer. You have to sell a certain number of books/cds/cinema seats to be economic, and the key thing is space. You need enough space to break even.
In the 80s, the BBC didn’t even broadcast for 24 hours. Look at music, digital downloads are now 80% of sales; cost of digital film print is much less (1/5th?) traditional prints.
Need to be prepared for niche markets. 31 million hours of original video programming are already being produced every year and as it’s cheaper to make there will be more. Internet is incomparably cheaper than satellite or terrestrial, so will be central to this explosion. Even major film studios are considering the net when thinking about how they release film products. How you watch, where you watch, will change, but that mass market product will be up against huge competition.
This new market is about putting the power in the hands of the consumer instead of the producer. and the producer has to adapt to this. All we can be certain of is that the demand will continue to change. New markets not driven by scarcity.
This presents a new set of problems. How do you navigate through 31 million hours of video programming? Search engines are going to be very important. Whether it’s collaborative, recommendation or affinity filters. We need to recognise the enormity of the challenge that’s upon us.
There’ll be local sports clubs, theatres, schools, streaming their content. These opportunities we need to be taken in the UK. We’ll see more and more people creating their own product. Put together with prices falling for technology, wider access to more material, unlimited storage, unlimited bandwidth. This is all happening now. But we don’t know how it will unfold. The net has changed everything. And it’s going to change our broadcast services.
Mass markets of a million have changed to markets of one. But there is still a mass market, there’s still a place for the BBC, but there will be very important discussions about content, censorship, regulation and legislation. The EU want to introduce a directive called TV without Fronteirs, which wants to police content put on the web. There’s a huge growth in opportunities, in jobs, and there is a risk that a directive born of dire to protect an on-demand video market in Luxembourg, has all the hallmarks of the French wanting to protect their farmers by introducing the CAP. This directive is well intentioned, but the consequences are vast.
Have to look at the UK’s position in this revolution. 75% penetration of digital TV and by 2012 we will switch of analogue all together. Broadband three years ago was 27 pcm, now it’s 24 but 48x faster.
Have a problem with the digital divide, people with access and people without. But the truth is bigger than that. And we will look back and think that switching off analogue will prove huge foresight.
Big question is, are we ready? Challenges to content, copyright, intellectual property. Work of Andrew Gowers is important, but may be out of date in a few years. But whatever we produce now or early next year will itself need revision in a few years.
831 billion in the world creative economies. That’s 1.3 trillion now, 50% increase in five years. by 2100, 2 trillion dollars. UK employs millions in these industries.
Chris Anderson, The Long Tail: Who needs megahits?
We grew up in the era of the blockbuster. We see the world through hits, but it wasn’t always this way. in the 19th and 18 th C, culture was fragmented by geography. It moved at the pace of people.
High speed printing press, then photography, changed that. But radio and TV then changed the whole natures of culture. We were suddenly watching the same thing at the same time. The idea that you could come in to the office on MOnday, and talk about what was on TV Sunday night, we were linked by a common culture.
this defined the era I and most of use grew up in. Peaked in March 21, 2000. First day of spring of the new century, shortly after the dotcom crash. Launch of the Nsync album, No Strings Attached – sold 1 million copies on the first day, 2.4 million in the first week. This record will never be broken.
Chart of hit albums shows a peak around 2001. Number of hit albums has fallen by 50%, despite music sales being steady if you include digital. More music than ever, more artists, but fewer hits.
For TV, number of broadcast channels increasing, but network share for top four networks fell.
Ratings of top TV shows, shows a peak in the 50s for I Love Lucy, but decreases steadily as choice increases. Number 1 show wouldn’t have made top 15, 50 years ago.
Shape of 21st C is a power law – big peak where a few things are very popular and a lot of things are not. There’s a bottleneck – bookshop shelf space; spectrum for broadcast etc. When you have limits you have to be selective, and when you are selective you pick the most popular things.
Net has no limit. Infinite shelf space. So can provide for everyone.
All markets show a straight line when you show sales vs products on a log scale; same for earth quakes; same for city sizes.
Should be a straight line… but not for American box office. Around the 900th film the cinema’s run out of films. Megaplexes can show 250 films per year, so as soon as you run out of screens, films that aren’t shown start grossing much, much less. Cinema’s distribution channel can only show a limited numbers of shows, and ergo they are the popular ones. Thus there is latent demand for product suppressed by the distribution model.
Long tale is not a concept I invented, but it’s been around for a long time. All I’ve done is give it a name.
Music data for Rhapsody, 2005. Walmart is the largest music retailer in the US. If you remember real music shop, Walmart is a soul destroying experience. last year 65k new albums were released, but only 700 made it to Walmart. It only sells a tiny sliver of what’s out there, because it’s inefficient distribution and limited shelf space.
The long tale is, therefore, huge. Compares what’s available in
1.2 million tracks sold in Rhapsody; 55,000 sold by Walmart
40% of total sales are in offline retail stores
55,000 DVDs on Netflix; 3,000 held by Blockbuster
21% of total sales are in offline retail stores
Amazon/Barnes & Noble.
3.7 million books on Amazon; 100,000 books in Barnes & Noble
25% of total sales are in offline retail stores.
These numbers for online are growing dramatically.
What’s driving it?
getting more stuff, democratise the tools of production; blogs democratise publishing result: more stuff.
Democratise distribution; the net gives everyone access, result more sales.
connect supply and demand; results;d drive business from hits to niches.
Google provides long tail advertising. Hyperfocused ads on hyperfocused blogs. Google scaled their model down to the small people who were neglected by the old advertising models.
Ebay is the same. Allows small vendors to have global reach.
CapitalOne: long take of credit cards; people who either had great credit ratings or really bad, no middle ground. Now we have the ability to fine slice the market and offer the right credit card by offering different rates depending on individual credit rating. Lead to a huge pile of debt, but…
Open source: long tail talent. Some programmers come from odd places, like madagasgar.
Long Tail libation: “Tale Ale”. No choice in beers – have had just four national beers, but can now provide more variety on the same shelf due to stock management software.
Small is the new big.
Many is the new few.
10 Fallacies of ‘hitism’:
1. Assume everyone wants to be a star.
2. Everyone’s in it for the money. Average books sells 500 copies. Average expectation is not that they will make money – lots of reasons to write books.
3. The only success is mass success. Can be an artist with small number of fans, but be true to yourself.
4. “Direct to video” = bad. But allows you to get the right audience the right way.
5. “Self published” = bad. but allows you to reach your audience more easily.
6. Amateur = amateurish. It really means people do it for love. Knowledge, experience, wisdom, is much more widely distributed than our professional ranks would say.
7. Low-selling = low-quality. Sometimes the most refined, most perfect items are the ones that are aimed at a niche audience. The best researched book will not be a best seller. There are gems, there are diamonds in the rough. The thing is not to give up because the signal to noise ration is bad, but to look for the diamonds.
8. If it were good, it would be popular. Instead, it’s just not for everyone.
9. The economics of the head apply to the whole market. They don’t.
10. You can focus on strong signals and ignore the weak signals. Rise of the bottom-up hits, where bands that didn’t go the traditional route are burbling up from below; now the top down marketed hits aren’t doing so well. Have to listen to the weak signals because that’s where the innovation is coming from.
1. Don’t confuse limited distribution with shared taste
2. Everyone deviates from the mainstream somewhere.
3. One size no longer fits all
4. The best stuff isn’t necessarily at the top
5. The mass market is becoming a mass niche market.
He then shows the ‘Day of the Long Tail’ video.
Azeem: Can government help or hinder giving access to the long tail content?
Chris: Biggest barrier is rights. That’s the elephant in the room. Those rights were cleared for one form of distribution – broadcast, but need to clear the rights for redistribution. Given up on congress in the US, because disney controls that issue. Is there a way to do batch processing to clear the rights?
Shaun: This is at the heart of the whole deal, because the consumer has a right to access stuff, but the producer has a right too. It’s interesting to see how the BBC is changing it contracts. When you were a reporter, you signed over everything but that’s changed. I think that one of the things that … I think that the BBC is doing some interesting things, I say this because I actually think that the BBC is really looking at the 21st C, in a way that is responsible and innovative and about opening up markets to enable competition. In the management rights and repeats etc., I think they’re going down the right way.
What Chris has referred to is coming up in our program, and he’s on to something when he says copyright law in America is written on behalf of Disney. How do people with ideas for games, for e.g., develop those ideas when MS or Sony own the means of distribution. It should be ownership for everybody, because it’s access for everybody.
Larry Kay, Solicitor: Would ask Chris to turn his idea about copyright on its head. His idea is about minority interest things. IN the era of the long tail the blogger is as powerful or as powerful as bit industry and there’s a great danger that we risk throwing out the whole frame work, because it’s built on rights and if we have a problem it’s how do we efficiently identify, say, orphaned works. Need solutions at a practical level.
Chris: For books, there are 32 million title in the US libraries. 20% are explicitly out of copyright. Vast majority, 75 – 80% are in a grey area. They are probably in copyright, but the copyright holders may not be interested in upholding those rights. So if we don’t know, we default to not taking the chance. And as the result the vast majority are unavailable. This is the Google Books problem.
The thing is different rights holders, and different people have different views. At the head, you want to control the rights and exploit. The majority want readers, so they are happy to neglect the copyright if it means more readers. And then there are people who renounce copyright and use a CC license. There’s a spectrum of people’s views, but there’s no mechanism for clearing rights.
Paul Sanders, PlayLouder: We do have these two uses of copyright, two traditions – one protects the creator and the other protects the distributor. I wonder whether that can be sustained. Whether we should be using copyright rather than other rights to protect the distributor.
Chris: Right to point out that. The distributor was the necessary path to market, to rights of the creator got subsumed by those of the distributor. Creator can express their own rights now.
Shaun: It’s a fascinating question. It’s equally true in the film industry. We’re going to need to have some debates about what we value. There are things that are going to be lost. Interesting to put this in context of broadcasting and film. Good tradition of making public service broadcast, some of which is very expensive. Do we value that? Do we want it? If you value ‘stars’ in films, you’re going to have to pay for it. Now we can lose stars, or we can have them, so then you’re in to the business of who’s going to fund that? So we need to find the right questions and get busy asking them.
Simon Walker, EMI: Chris, you seem to be setting an ‘either/or’, either you are big or you are long tail. We have a long tail model, we put out lots of stuff, but we know not all will be hits; plus we have a back catalogue. Can see who business models emerging. Do we need to adapt the model.
Chris: It’s not that you have hits retailers and niches retailers, but online you have retailers who have hits and niches. In the 90s you had niche-only retailers but there was no way to start, just a big undifferentiated mess. Rather than an either/or, it’s an and business.
How do you deal with this? You scaled down. The old model involved a large advance and an asymmetrical royalty model, but the new model is people go straight to consumers on their own. So whilst it might be advantageous for you to be on our label, but we’ll do something smaller, just sell digitally, not use our sales force to get you into WalMart, and give you a bigger cut.
Azeem: Is there a consolidation of the market?
Chris: Are seeing more and more independent labels.
Shaun: Creative industries are also about risk, and some of these products take a lot of money to develop, and one of the things we have to balance here is what are we trying to protect? Have to get it wrong because, if you get it wrong it’s hard to recover.
Anon: Yes, there are many more small labels, but consolidation in things like eBay, PayPal, etc.
Chris: Many have noted that there is a short head of aggregators, like Amazon or iTunes. We’re at the first day of this. One size doesn’t fit all, but iTunes is a terrible way to get music – it’s all oriented around pop. In search, Google has a dominant share, but you have lots of different ways to search, and they realise you want different forms of aggregation for different markets. But we’re so early in this market we haven’t seen the diversity.
[My notes end here, although the debate did go on.]