Anderson's Long Tail

Chris Anderson launched in 2004 the Long Tail hypothesis in an article in Wired Magazine, which he reworked into the book The Long Tail: Why the future of business is selling less of more. It is based on the graphical representation of a Pareto distribution. Vilfredo Pareto was an Italian economist who saw that in 19th Century Italy 20% of the population controlled 80% of the country's wealth (this is why it is also known as the 80/20 rule). George Zipf saw the same phenomenon in the use of words. The most commonly used words (such as "the") account for the largest proportion of use. The frequency of words is inversly proportional to its rank in the frequency table. When you display this graphically you get what is known as a Powerlaw distribution. The high use of a limited amount of resources can be found in the "Head", while the low(er) use of a huge amount of resources can be found in the "Long Tail".

Anderson noted a similar distribution in online shops like iTunes (music) and Netflix (movie rentals). In bricks-and-mortar retail stores the amount of available items are limited because of real world limitations to shelf space and distribution issues. In the digital realm, the cost of an SKU is virtually zero. This means that the less mainstream items can also be placed in inventory. His research showed that in these cases selling a little of a lot can also contribute to profit. Simply put, business is ruled in most cases by a given level of scarcity. Thus the most viable business model is one that focuses on selling as much hits as possible, whilst avoiding losses. Anderson postulates that when confronted with more choice, people tend to buy more and with more variety. Niches become more important and generate revenue. In order not to be swamped by the multitude of niches good filters are absolutely mandatory. Filters are not the same as the traditional cultural gatekeepers.

Even though I'm not sure how pervasive the concept of the Long Tail is in the world-wide economy, I am convinced that (for now) in certain sectors and/or for certain ways of doing business it is a force to be reckoned with. Long Tail economics is an important new business model. The classic examples of Amazon, iTunes and Google have shown its viability. Anderson states his case in a convincing well written way. For anyone interested in how the internet is changing our way of living, this book is a must read (together with Weinberger's books). It is a perfect introduction to a new way of thinking about business. The natural follow-up read is Wikinomics, which provides a complementary insight. In short: heartily recommended.

Digital reading with Kindle

I recently heard about the Amazon Kindle e-book reader. The article I read about boosted the ease of use and, most importantly, the ease of reading thanks to a paperlike quality of the screen. I was really excited about all this and wanted to have one. I'm an old school book lover. I just love having a paper copy, flipping the pages, rummaging through the bins in bookstores. However, I also read quite a lot of papers on the internet, mostly in pdf format which I don't intend to buy. Printing all of these would become expensive and would not be very friendly to the environment. So, an e-reader would come in handy. I wanted to write a post about how nice it would be to own a Kindle for that particular purpose. And then I did a quick check up on the internet. Instead of going the open source route, Amazon has opted for DRM proprietary software (read: Big Brother). The only non locked-in formats the device will support is html and txt, which can only be converted by mail at 10 cents a pop. Too bad, it seemed like a good idea. Yes, it's easy to buy books from their store, but if I want to buy a book I'll buy the paper version. My studies in records management have taught me one thing: digital media cannot be trusted, pc's crash, get corrupted by viruses, formats get outdated. My books are paper, my music is vinyl. MP3's and e-books are the things you find as torrent files to back up the other formats. Which reminds me, I really need to make hard copies of my pictures.

I hope Amazon will see the light in the future, or that some other company will. Apparently, the screen is really all that. So the product in itself seems amazing. But it's best to wait a little bit longer until the 2.0 release (and for the price to go down). In the meantime, here are some reviews: Paul Thurrott's in depth review, the Kindle Swindle, Gizmodo's Real Life Review, Wired's (Sony) Reader vs. Kindle, Technology Evangelist's video about the design features.

Everything is miscellaneous

David Weinberger's Everything is miscellaneous, the power of the new digital disorder offers a refreshing view on the way we organize our world and order information, and on the importance of knowledge. Historically he divides these efforts into the first, second and third order of order. The first order of order comprises the physical world. It is the way we organize our personal things, our house, a store, factories, etc. The second order tries to make knowledge accessible: classifications, taxonomies, encyclopedia, card catalogs etc. In the third order (which has the same object as the second) miscellaneousness rules.

The second order of order has been guided by the limitations of the physical world. No two things can be in the same place at the same time. Conversely, no one thing can be at two places at the same time (although quantum physics has cast somewhat of a shadow over that idea). In the same way, the organization of world views had to be thought out on paper. A certain item, a concept, can only be placed in one spot on the page. In the third order, these limitations no longer exist. Within the digital realm every concept can be at different places at any given time and knowledge can take on the form we choose to see at any given time.

The opening chapters of the book give an historical overview of the way we have been classifying the world, starting with the Aristotelian idea that there is a natural order of things and that knowledge should be divided according to this "natural formation, where the joint is, not breaking any part as a bad carver might" (Plato). This has resulted in tree-structures, where everything has its place and is a part of a broader or narrower class of categories. The problem is that the world is more complex than that. Besides, the way unified trees are structured depends on the way the person who has conceived it sees the world. The classical example is Melvin Dewey's Decimal Classification system (DDC). The choices he has made, honorable as they were, were obviously historically, personally and culturally biased. Nevertheless, the traditional classification methods have their virtues. In his own style, Weinberger explains what they are about, how they work and how they came about, in chronological order (from Plato over faceted classification to taxonomies, over ontologies to the semantic web), together with their virtues and shortcomings.

The newest member of this family is the folksonomy. A folksonomy is derived from the words 'folk' and 'taxonomy' (not to be confused with folk taxonomy). It describes methods of collaborative tagging. The classic examples are the sites del.icio.us and Flickr, but there are many more who utilize the same principle (eg. CiteUlike, LibraryThing, Connotea, BibSonomy, Technorati, Digg, Reddit). On these sites you can tag (add keywords) to the content you're saving to your account. These tags, together with the content you saved, are visible to the rest of the community who can use them to find interesting information. Folksonomies are more flexible than classical categorization schemes since anyone can add any type of keyword they'd like. The disadvantage is that anyone can add any keyword they'd like. Folksonomies provide a bottom-up approach, which enables finding items more intuitively because they are stated in a language that everybody speaks. On the other hand they can hide objects for the same reason because of problems with homonymy, synonymy, typos and the use of idiosyncratic tags.

The major innovation of the digital age however, lies in the fact that concepts (and its related content) no longer need to be in one specific place. As Weinberger puts it, in tree-like structures every leaf hangs from a particular branch. Now, a leaf can hang from many branches at the same time. He states that messiness can be seen as a virtue, since you only 'clean up' when you need to according to your preference of the moment. As an example he cites the online shop Amazon. A shop which arranges itself in different ways every time you visit it, in a view suited to what you're looking for at the time.

David Weinberger has a very positive view on the way technology is changing the way we think. This latest information revolution is providing us with new possibilities. He feels that we are reverting to a more natural way of gathering and disseminating knowledge: through conversation. And he's right. The more connected we get, the faster our knowledge base will grow as a species. Taxonomies provide you with a view of how information is related and how knowledge should be divided, according to the author of the taxonomy in question. Now, everybody can create his view. We have to watch out though that we don't revert to what Jaron Lanier calls digital maoism. It is not the 'hive mind' that will set us free, but the collective work of individuals. Sharing information, heightens our general knowledge. Working towards a consensus where everybody is happy with the outcome is an illusion however.

Only a small percentage of people actually are concerned with all of the above, but if only 1% of the world's population plays an active part, the rest can still make use of what these 6.8 million people have done. Of course, not everything is digital. We have to live in the physical world. An online shop can rearrange itself every time you visit it, in the real world there are some different constraints. This is especially true for archives, where finding a piece of information is not the only issue. In order to understand what you have found, you need to be able to place it into context. The structure of the inventory (taxonomy) will, ideally, provide you with the structure of the archive(s) in its original and/or functional state. This structure depends on the choices the archivist has made, so it's subjective to a certain extent. When done well however, these choices can give you an insight about the relevance of the document to the research you are conducting.

Nevertheless, the fact remains that the digital realm is enabling us to get connected, make our work more efficient, erode certain traditional power structures. Weinberger depicts somewhat of a digital utopia which sounds very appealing. How it will evolve, only time will tell. I'm sure not everybody will agree with his stance, but the least you can say is that Everything is miscellaneous provides us with something to think about.

To keep the discussion going, Weinberger has set up a website.

Here's a summary by the man himself (in case the embedded video doesn't work, you can watch it here):

Cluetrain Manifesto

The Cluetrain Manifesto started out as the website http://www.cluetrain.com/. Four men (Rick Levine, Christopher Locke, Doc Searls, David Weinberger), who only knew each other in the third degree, ended up having a conversation one day in 1999 about why the media coverage was all wrong about the internet and why business in general didn't get what it is all about. At one point one of them quoted an acquaintance from a big company that was in trouble: "The cluetrain stopped here four times a day for ten years and no one ever took delivery." The website went live in March 1999 and started a discussion about the relation between business and its customers via the internet.

The manifesto consists of 95 theses put forward as a call to action for all businesses to become a part of the networked world. The similarity with Martin Luther's 95 Theses on the Power of Indulgences is obvious. In 1517 Luther nailed his manifesto to the door of the Church of Wittenberg in reaction against what he perceived to be wrong with the Catholic Church at the time, unwillingly starting the protestant revolt. In the same spirit, the authors wanted to express their thoughts on what was/is wrong with business-as-usual.

The essential idea behind the website, and later the book (online and in print), is that markets are conversations. Back in the day when the 'market' was actually a physical place where you went to, people were discussing wares and news. The items for sale were a product of someone's labor and/or craftsmanship. This all changed with the advent of the Industrial Revolution. Labor became compartmentalized and a new elite came to the forefront. Mass production gave rise to mass markets and eventually to mass marketing. Companies evolved into monolithic entities defending their secrets like a fort. The result of all of this, is that 'business' became psychologically separated from 'people'. Markets are divided into demographic targets on which common denominator advertising is unleashed. This has worked well in an environment where the media outlets can be controlled, i.e. newspapers, magazines, TV ads. And then came the internet. People are getting more and more connected over the boundaries of the physical world. If a marketing campaign tells you that the product in question is the best thing that has happened to mankind since the invention of speech, you will go on the internet to find out how much of the marketing BS is really true. The point that the authors are trying to make, is that businesses should talk to people again, admit that they make mistakes sometimes and then fix'em. If you let your employees get connected, amongst themselves and with the rest of the world, their overall knowledge will increase and thus that of the company itself. The internet is not TV with a pay button. Be honest. Break down the walls of Fort Business.

The message that Cluetrain brings, sounds very appealing. They have a valid point. A lot of companies still use websites that look very good, but hide what you're actually looking for. If the answer to a question cannot be found in a FAQ, try to find another way of contacting anyone (although admittedly, American websites are usually more filled up with flashy BS than European ones). When the company itself fails to deliver information you will go online and find it for yourself. The big divide here is a question of philosophy, which we can also find in the open source vs. proprietary software discussions. The first group basically believes in the power of people and propagates a positive view of humankind, while the latter sees customers as a necessary evil, made up mostly of thieves and freeriders. The record industry is losing money because of illegal downloads, but at the same time myspace is creating new celebrities. A company that has understood the power of a community is Ninja Tune Records. They have an active forum, filled with music lovers and avid followers of the label. People cry that downloading is killing music. It's not. It's killing record companies. Just like new energy sources have killed the coal industry in Belgium. Life changes. If you want to stay with the program, do what successful companies have done. Change your business model and use what the world offers you.

Since the publication of the manifesto a lot has changed, and other things have remained the same. Online advertising still looks very much like typical mass media advertising. It's a bit different with games, since it is good place for product placement. On the other hand, within some businesses, the problem of connecting people within a company has been alleviated somewhat through a proper ICT alignment and the use of knowledge management systems like really useful intranets and groupware. Still, a great deal of work needs to be done and, more importantly, mentalities have to change. No doubt this will happen over time. Today, technology changes very fast and the way we are living with it. This however is only physical. Mentally, people change a lot slower. The internet as we know it, only exists for about 15 years. Historically speaking it's still a baby. We are experiencing a revolution. Not of the kill-the-king-long-live-the-new-leader variety, but a revolution nonetheless: the fourth information revolution (not to be mistaken with the concept that states we're evolving from industrial to more service jobs). The first one was the invention of speech, the second writing and the third book printing. During the previous one, the European continent (with the invention of the mechanical press by Gutenberg during the 15th century; the Chinese were well before us) was characterized not only by a more rapid way of dispersing ideas, but also by better roads and safer means, thus quicker, of travel. The same thing has been happening since the fifties of the previous century: holidays for the working class, affordable cars, TV, telephones, computer science, the internet and cheap airplane tickets. And the end is not near for some time to come. Conversely, all of this is mainly true for the Western world. The poorer countries (as well as digital illiterates in general) will need to find a way to bridge the digital divide. Non-democratic countries have been able to censor and monitor the digital world. Utopia is not around the corner. But, then again, it never was.

Essentially, the manifesto has a positive view on the world and how it's changing. The object was to get people to think about our changing world. As I said, mentalities need to change and that takes time, but also awareness. Right now, most people who are working are 'digital immigrants'. We have learned how to work with computers at a later age, while 'digital natives' are growing up with it. There is no telling how they will affect the rules of business.