Will the burden of the Long Tail kill Internet commerce?

Will the burden of the Long Tail kill Internet commerce?

Summary: I've been thinking about the economics of Long Tail businesses. Check my math:Long Tail businesses are based on aggregating huge numbers of micro-markets.

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TOPICS: E-Commerce, Browser
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I've been thinking about the economics of Long Tail businesses. Check my math:

Long Tail businesses are based on aggregating huge numbers of micro-markets. GOOG, Facebook, YouTube, and many other online businesses are Long Tail businesses--they make money from servicing micro-markets.

The content needed to attract traffic to micro-markets is free (harvested by servers scraping sites as GOOG does, or content is user generated and uploaded.)

The traffic to the content is free, users want to find something, or they send links to friends and family to content they've uploaded, such as pohtos and videos.

The costs of maintaining micro-markets is very low, data storage and servers are cheap and getting cheaper.

The number of micro-markets is increasing at a tremendous rate. The increase is greater than the increase in traffic.

The cost of storage and serving Long Tail micro-markets is is a micro-cost per market but it soon adds up. There will come a time when maintaining mountains of Long Tail markets will exceed the profits that can be generated by all those markets.

There will come a time when companies will have to dump unprofitable micro-markets. They will dump photos of grandma, they will dump videos of grandma. That will cause millions of broken links, the permalink culture of the Internet will be dead.

This will dry up user generated content. Why spend hours creating and uploading and linking to your content if it might not be there in a year or more? Will this kill a Long Tail business such as YouTube? It could...less new content means less reason for return visits.

For a company such as Amazon, why support a micro-market of people interested in an obscure episode of a TV program? Etc. The burden of supporting many hundreds of millions of micro-markets will have to be lifted because profits will suffer.

Culling the Long Tail will be necessary to preserve the profitability of Internet commerce. Otherwise the Long Tail will kill Internet commerce.

Here is a longer essay on this topic: Saturday Post: Choking On The Long Tail - The Unbearable Burden

Topics: E-Commerce, Browser

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  • Liberal Arts Enthusiast and the hunt for Global terrorist ; thrive Long !

    As, as named"You Tube". Hoever Dear Patric Henry always thought the growth of endevering the frump of this generations minds; Sir Thomas Lynch Jr. remitts in fiction." Toss yawn thou homely of the grey who speak of thee, for you mascaline would be of great honor to hone the grasp of your generation. Take heed to the parts counter and fly my Crest." Who am I:

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    rtirman37@...
  • Are You Saying Free will not work?

    Are you saying that free will not work? I mean after all one of the long tail pioneers said everything will be free.

    I agree with you these micro-markets will be killed off in the name of profits. But that is also why companies like Microsoft will continue to thrive. While Home Server was a bit of a flop I could see a second life once these micro-sites are killed off.
    serpentmage
    • Free is not the same as forever...

      Free is free for as long as free makes money. There is an implicit promise I get free hosting for grandma's photos for ever... And because it is free, it is like it is beta, my expectations should be held in check, no promise is made. But if I charge for a service there is more of a contract involved and more expectation.
      foremski
  • Your right

    Much of the time, when i link to anything, other sites, youtube also, will change url info, remove the links, remove the content, its an uphill battle, and will most likely never end.

    People complain about content, some content has copyright violations (this is usually ppl's favorite content)

    so for all of those excited about the semantic web... i just dont get it. who's going to ensure all my semantic links are not removed.. . just like every other link i post today goes down.

    storage is cheap... i dont know why even newspapers remove article after certain amount of days. its irresponsible and innefective.
    pcguy777
  • I think we're already seeing a steady state.

    Equilibrium has been reached - Google already weeds its records of sites and pages that have gone; and photo-sharing websites already delete content belonging to people who haven't logged in for a long time. In reality there is no permalink culture.
    peter_erskine@...
  • Anyone notice the looming depresson?

    Depression, ID theft and fraud will kill it cold faster than you imagine.
    The black dog of commerce is about to bite hard. There's no such thing as a free lunch even on the internet.
    topsecret@...
  • RE: Will the burden of the Long Tail kill Internet commerce?

    It's nice to hear the Malthusians in a digital context! Let's see how he would have put it: tail ends increase at an exponential rate, while computing power increases linearly. I think neither assumption is correct.
    subscr1be@...
  • RE: Will the burden of the Long Tail kill Internet commerce?

    The Long Tail will swallow itself and in doing so internet commerce will become a misnomer. The face of this thing is destined to become as a carcass in the desert. The Long Tail builds the vulture system.

    Decades later we will look back at the scattered generation wandering about in the dark abandoned alleys of the old web.
    Agile Cyborg
  • RE: Will the burden of the Long Tail kill Internet commerce?

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