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I'll admit it: it bugs me that Rupert Murdoch hasn't yet followed through on his plan to make the Wall Street Journal's website entirely free. It's the last big holdout in the all-web-media-must-be-free trend, and as the guy writing the... Chris Anderson

Just in time for another controversy over powerlaw statistics (wheee!), I'm delighted to announce that the paperback version of The Long Tail will be published next week and is now available for preorder. What's new? Well, along with a new... Chris Anderson

Anita Elberse, a Harvard Business School associate professor, has a really interesting article in the new Harvard Business Review that analyzes some Long Tail data and challenges some of the theory's predictions. Based on Rhapsody music data and DVD rental... Chris Anderson

In the new issue of Wired, Kevin Kelly has written another one of his patented mind grenades: the observation that the Internet has now hit approximate computational equivalence to a single human brain: A hyperlink is much like a synapse... Chris Anderson

Just in time for another controversy over powerlaw statistics (wheee!), I'm delighted to announce that the paperback version of The Long Tail will be published next week and is now available for preorder.

What's new? Well, along with a new cover, lower price and the usual corrections and updates, it's longer: there's an epilogue on the response to the book (pro and con) and a whole new chapter on Long Tail Marketing.

It's slightly ironic that this new chapter wasn't in the book in the first place, since the marketing implications of the Long Tail are the #1 thing I've been asked to speak about since its publication. But no worries: that just means that I've had more time to think about it ;-)

The marketing chapter is based on one of the overlooked things about the LT: if you're selling things, you don't necessarily need to massively expand your product range to tap LT markets. You can instead just reach the "long tail of customers", which is to say all the potential pockets of demand that don't necessarily lie within your normal marketing channels. This is the smaller potential customers, the ones you don't know about, the ones you never considered and the ones who didn't even think they were potential customers until they heard about your products from someone they know.

The new chapter is subtitled "How to sell where 'selling' doesn’t work" and includes examples that range from how Dell clawed back from its "Dell Hell" customer backlash to the tactical decisions that led Microsoft to let thousand of their employees blog, essentially distributing the PR function to regular folks in the bowels of the company.

For a glimpse of how this form of bottoms-up vs top-down marketing works, here's an earlier post on what I called "Long Tail PR: how to do PR without a press release (or the press)"

Anita Elberse, a Harvard Business School associate professor, has a really interesting article in the new Harvard Business Review that analyzes some Long Tail data and challenges some of the theory's predictions. Based on Rhapsody music data and DVD rental data from an Australian Netflix clone called Quickflix, she concludes that the blockbusters are not losing share to the long tail of niche products in those markets; indeed, they're gaining it. She writes:

Although no one disputes the lengthening of the tail (clearly more obscure products are being made available for purchase every day), the tail is likely to be extremely flat and populated by titles that are mostly a diversion for consumers whose appetite for true blockbusters continues to grow.

That's surprising (not least to me), and now that I've had a chance to give the paper a quick read, let me jot down some quick thoughts on why Elberse (who I collaborated with on some of my research and respect highly) would come to such different conclusions than I do.

Let me start by saying that the paper looks rock solid and I'm sure her analysis is accurate. But there is a subtle difference in the way we define the Long Tail, especially in the definitions of "head" and "tail", that leads to very different results.

The best example of this is in what she describes as a growing "concentration" of sales around a relatively small number of blockbuster titles. In the Rhapsody data, she finds, the top 10% of titles (out of more than a million in that data sample) accounted for 78% of all plays, and the top 1% account for 32% of all plays. That sounds pretty concentrated around the head, until you reflect, as she notes, that "one percent of a million is still 10,000--[...]equal to the entire music inventory of a typical Wal-Mart store."

This is a good moment to remind everyone of the normal definition of "head" and "tail" in entertainment markets such as music. "Head" is the selection available in the largest bricks-and-mortar retailer in the market (that would be Wal-Mart in this case). "Tail" is everything else, most of which is only available online, where there is unlimited shelf space.

So in the data she cites, the head of the online music market represents 32% of the all plays, and the tail represents 68%.  That's certainly no challenge to the Long Tail theory; indeed, it's even more tail-heavy than the data I cited in my book (probably because I used a more generous estimate of 50,000 tracks for Wal-Mart's inventory).

She then looks at Quickflix data. Here the top 10% of DVDs accounts for 48% of all rentals, and the top 1% accounts for 18%. "The concentration [of sales around the blockbusters] is not as strong as Rhapsody, but it's still substantial," she writes.

But here, too, the use of percentages misleads. Quickflix had 18,000 titles at the time of the research, compared to the average Blockbuster's 3,000 titles--there's only a factor of six between their inventories, as opposed to a factor of 100 in the Wal-Mart/Rhapsody comparison. If you look at her chart, you'll see that the top 3,000 titles (ie, the amount equal to Blockbuster's inventory, or the "head") accounts for 70% of rentals and the "tail" accounts for just 30%, making it more concentrated on the head than Rhapsody, not less. (BTW, I calculated almost exactly the same split for Netflix in the book.)

My point is not to suggest that Elberse is wrong and that I'm right, it's only to point out that different definitions of what the Long Tail is, from "head" to "tail", will generate wildly different results.

Anyway, it's getting late and I just wanted to highlight a few other interesting data points and conclusions from her article:

• Much of the paper is about consumer satisfaction in the head vs tail. In the Quickflix data, she says, "customers give lower ratings to obscure titles...it is a myth that obscure books, films and songs are treasured. What consumers buy in Internet channels is much the same as what they have always bought." That may be true for the specific example of the Australian DVD data, but it is not clear from the paper why she feels able to extrapolate that to all Internet commerce.
• The heaviest DVD renters were the most likely to venture into the tail; light consumers largely concentrated on the hits.
• In music, of the 2.4 million digital tracks sold in 2007 in the US (most of them through iTunes) 24% sold only one copy and 91% sold fewer than 100 copies.

And there are pages and pages of other nuggets like this. It's an excellent article, and although I don't agree with all the conclusions, I'm delighted to see research of this rigor on the topic. Recommended.

In the new issue of Wired, Kevin Kelly has written another one of his patented mind grenades: the observation that the Internet has now hit approximate computational equivalence to a single human brain:

A hyperlink is much like a synapse in the brain. Both work by making associations between nodes. Each unit of thinking in the brain — an idea, for example — grows by gaining links to other thoughts. The greater the number of synapses connecting to an idea, the stronger it becomes. Similarly, the more heavily linked a Web node is, the greater its value to the Machine. Moreover, the number of hyperlinks in the World Wide Web is approaching that of synapses in the human brain. But the Machine contains a million times more transistors than you have neurons in your head. And, unlike your brain, it's growing at a rate that outpaces Moore's law. By 2040, the planetary computer will attain as much processing power as all 7 billion human brains on Earth.

The full piece is here, along with a nifty animated version of the fold-out graphic that's running in the print magazine. But it's just a hint of where Kevin's going as he contemplates the increasing ability to treat the world's computational resources as one, what's often called ubiquitous cloud computing. Among the most radical implications of this is how we consider the new landscape of globalization in an age where anything digital can theoretically be done anywhere. How do we decide where?

In a post today, he describes three strategies:

Follow the Sun:  As one time zone wakes up for another day of commerce and entertainment, the peak activities will migrate around the planet in a wave that follows the sun. While California crunches, India sleeps. And vice versa. Here the maximum computation and energy needs will be found nearest to the time zone in the sun. 

Follow the Moon:  If the costs and latencies of communication are smaller than computation, then the many huge data centers can be placed where energy costs are least. And no matter where they are, their loads will ordinarily be less at night. So India crunches to keep California awake. And vice versa. Therefore the least expensive computation will be a wave flowing around the globe at night, or following the moon. 

Follow the Law:  Perhaps neither energy nor communication costs will be the gating factor in the One Machine; rather it may be law. Differences in privacy laws, censorship, and national security fears may restrict places where data can flow freely. In that case computation will have to hopscotch around the world following the law. 

Most likely different industries adopt a different scenario. Maybe financial follows the moon, while commerce follows the sun, and entertainment follows the law.  A single computing environment (One Machine) should not suggest homogeneity. A meadow is not homogeneous, but its does act as a coherent ecological system.

To that legal point, I was recently chatting in Seattle with a guy who runs the largest collection of server farms in North America outside of Google--he actually owns many of the facilities that Amazon's EC2 service and Microsoft's cloud computing initiatives are running on. Like everyone in that business these days, he's all about finding cheaper electricity. But although his facilities are all in the Pacific Northwest, using clean and relatively cheap hydro power, he hasn't crossed the border into Canada, where the hydro power is even more plentiful.

Why not? Because of political instability. Canada's governments shift from right to left too often, he said, and the threat of regional secession was too real to risk putting multi-hundred-million-dollar data facilities there--between changes in the laws to even the slight risk of nationalization should the wrong person be elected, he thought Canada's political liabilities outweighed its energy assets. Surprised? I was. But right or wrong, that's the sort of calculus that's required in the new era of global data. Anything can be anywhere. Where do you want to go today? 

While all is not well in the newspaper business, the global picture is far better than the US one, according to stats released today by the World Association of Newspapers. Overall circulation is up nearly 3% globally, mostly thanks to... Chris Anderson

Following up on my post about how niche social networks can command higher ad CPMs than the big generic sites such Facebook and MySpace, here's some new data from PubMatic that makes a similar point about web publishing: Not only... Chris Anderson

Econ geeks like me know George Mason University economist Russ Roberts as one of the best commentators on the dismal science, not only for his Chicago-school clarity but also his ability to communicate economics to a broad audience through everything... Chris Anderson

I've argued before that social networking should be a feature, not a destination, and that the one-size-fits-all model of Facebook and MySpace will eventually give way to a multitude of narrowly focused sites with social networking built in, such as... Chris Anderson

Two of my side projects--DIYDrones and GeekDad-- are going to be at Maker Faire this weekend in San Mateo. We're going to be in booth 166 in the Expo Hall (click on the map for detail), all day Sat and... Chris Anderson

My friend Seth Godin, CEO of human-powered search engine Squidoo, has been reading the press on the search debate between huge range and high quality and wonders if the Long Tail has something to say about it. Along with Squidoo,... Chris Anderson

While all is not well in the newspaper business,  the global picture is far better than the US one, according to stats released today by the World Association of Newspapers. Overall circulation is up nearly 3% globally, mostly thanks to Asia. Even in the US 62% of adults read a paper every day. Although that's declining, it's still a pretty big business. 

But the one unambiguous growth area in the industry? Free newspapers:

Free dailies are surging ahead, growing circulation 20% last year, mostly in Asia and their native Europe. Free dailies now make up 7% of worldwide print circulation (EU 23%, US 8%).

That's from a PaidContent report, ironically enough. Hey, Rafat--when are you going to change your great site's name?  ;-)

[UPDATE: Piet Bakker notes that the WAN's data collection methods appear to be pretty sloppy. Take these numbers with a grain of salt--probably directionally accurate, but no more than that.]

Following up on my post about how niche social networks can command higher  ad CPMs than the big generic sites such Facebook and MySpace, here's some new data from PubMatic that makes a similar point about web publishing:

Not only do small (Long Tail) publishers montetize their content at 3-5 times the rate of the larger publishers in PubMatic's survey, but they're improving in the current environment while the big publisher decline.

Segment Definitions

• Small Web site segment: Less than 1 million page views per month.
• Medium Web site segment: Between 1 million and 100 million page views per month.
• Large Web site segment: Over 100 million page views per month.

Econ geeks like me know George Mason University economist Russ Roberts as one of the best commentators on the dismal science, not only for his Chicago-school clarity but also his ability to communicate economics to a broad audience through everything from novels to a popular podcast. So I was delighted when he asked me to be the guest for today's audio installment, which you can find here.

The highlight for me was his explanation of what "There's ain't no such thing as a free lunch" (TANSTAAFL) means, and how it squares with my own suggestion that, at least from a consumer's perspective, lunch really can be free.

From Robert's summary of this part of the podcast:

What do economists really mean by this phrase? Common interpretation: If you think it's free it's only because you are not counting the externalities and repercussions. Suppose you go up to a sort of friend and say "I'm going to take you to lunch, a fancy restaurant." Friend demurs. Maybe feels he might feel pressured to reciprocate. Or that he might be asked for something down the road. Is if free to you if you never intend to reciprocate or do anything even if asked? It may be free to you, but it costs someone else or costs you in opportunity cost.

Everything has an opportunity cost--something else could be done with those resources. Walking down the street, someone presses into your hand that you recognize as a coupon for a meal at a great restaurant. No out of pocket costs, don't even have to deal with Russ's conversation, better than even daydreaming through Russ's conversation. It's free in the out of pocket sense, free in the sense of everyday language; but in fact it still costs you your time--the time you spend eating at the restaurant is time you're not doing something else. That's what economists mean by Tanstaafl ("There ain't no such thing as a free lunch"). Reading Wikipedia takes your time as a reader. Tiny cost, eyeball cost, zero compared to the alternative of looking up the information somewhere else--which would also have the eyeball cost. Milton Friedman meant the opportunity cost.

So there you have it. In the purely monetary economy, there are plenty of free lunches. But include such non-monetary factors as time, attention and the value of the other things that you might have done with your time and attention, and eventually you'll pay, one way or another. Fair enough--free in the monetary economy is close enough for me.

We had a lot of fun on the podcast and Russ is always a treat to learn from. Check out the rest of his summary of the wide-ranging conversation here, along with reading sources and furious comments from Russ' listeners  (or better yet, download it to your iPod and listen to it as God intended in the car)

I've argued before that social networking should be a feature, not a destination, and that the one-size-fits-all model of Facebook and MySpace will eventually give way to a multitude of narrowly focused sites with social networking built in, such as the 220,000 niche networks hosted on the Ning platform.

It turns out that it's not just the experience that's better on the smaller, more focused sites: the economics work better there, too. Yesterday MySpace's parent company, News Corp, released quarterly financial results and although traffic was up on MySpace, they're having trouble making money. COO Peter Chernin said:   

We remain incredibly optimistic about social media. But there are specific challenges 1) Tons of inventory. Lack of scarcity creates a liquidity challenge. Working on bringing big brands aboard. 2) People who are visiting social networks there for different reasons, different uses. Figuring out how to target. 3) What's the value of a "friend"? Trying to figure out new metrics to communicate with marketers.

Indeed, last I checked, display ads on MySpace were going for a rock bottom $0.13 CPM (price per thousand views). Meanwhile, although Ning isn't disclosing its revenue across its entire network, I can give you a sense of it from my own robotics site hosted there, DIYDrones. The AdSense ads we run there (mostly accelerometer and other sensor parts, as per the example above) generate an average "effective CPM" (CPM after Google's cut, which can be as much as 50%) of $3.60. Before Google's cut, that's as high as $7.00.

So that's $0.13 on a general-purpose social network like MySpace and $7.00 on Long Tail social network like DIYDrones. Even with a more generous scenario--$0.50 on MySpace and $5.00 on a focused Ning site--the difference is still a factor of ten.

Sure, the traffic today is still mostly going to Facebook and MySpace. But as they struggle to target ads based on the faint signals of consumer behavior in a generic social network, the smart money is going to the niche sites, where laser-focused content and community makes targeting easy. The Long Tail of social networks isn't just more satisfying if your community is actually about something, it's richer, too.

[UPDATE: See this excellent post by a marketing strategist who reports on the disastrous results from his Facebook advertising experiments. Bottom line: it was only a $0.30 CPM and not worth even that. Tell me again why Facebook is valued at $15 billion?]

Two of my side projects--DIYDrones and GeekDad-- are going to be at Maker Faire this weekend in San Mateo. We're going to be in booth 166 in the Expo Hall (click on the map for detail), all day Sat and Sun. We'll be showing:

• The BlimpDuino
• The Mindstorms UAV
• The Basic Stamp UAV
• The Lego Mindstorms FIRST Tech Challenge competition kit (first time seen on the West Coast!) .

Also, our rocket friends will be there in our booth with a 22-foot Delta Rocket that has to been seen to be believed. If you think the amateur UAV guys are nuts, you should see the amateur rocketry guys. They also seem to have unlimited budgets (it helps that some of them are VCs).

I'll be giving a live demo of the Lego UAV at the Maker Main Stage on Sunday at 1:30. (No flying alas, but if the air currents are calm I might let a blimbbot loose to do its patterns))

Oh, BTW, I''ve got five free tickets left. If you want one, email me.

My friend Seth Godin, CEO of human-powered search engine Squidoo, has been reading the press on the search debate between huge range and high quality and wonders if the Long Tail has something to say about it. Along with Squidoo, human-powered search companies include Jason Calacanis' Mahalo, Barnes & Noble's Quamut, the New York Times' About.com, as well as HubPages and many others who are aiming to use a "less is more" approach to competing with Google.

In a sense, they're all proudly leaving the long tail to algorithmic search and seeking success by relentlessly editing down to a human-edited short head. They argue that the search engines reward them for such relentlessly paring down and filtering (they're all at least partly search engine arbitrage plays).  And better search results ought to attract better page creators as well...

Seth's question: does this make sense?

My answer:

I'll answer, as I always do, with slogans half-remembered from Econ 101 ;-)

"Every abundance creates a new scarcity"

For instance:

• An abundance of information can create a scarcity of context
• An abundance of choice can create a scarcity of advice
• An abundance of content can create a scarcity of time
• An abundance of people competing for your attention can create a scarcity of reputational ways to choose among them.

In the old model, distribution bottlenecks made most of those choices for us--we could only watch what was on and buy what was on the shelf. Now, in a Long Tail world, everything gets out there--choice is abundant. This creates an opportunity for new and better filters to navigate that choice (Chapter 7 of my book!), which I would argue describes the examples below. 

How do you compete with the Long Tail? One way is by making the short head more attractive. So when Borders goes from 100,000 books to 80,000 books but turns twice as many of them cover-out on the shelf, they're competing with the Long Tail by making it easier to browse and search and discover new books in a physical setting--doing what a physical store and do best. 

So in short, there's a market for both. As I've said many times, the Long Tail doesn't kill the blockbuster, it just kills the monopoly of the blockbuster. And the same is true in reverse: Google's Long Tail success creates demand for more curated search. One size doesn't fit all.

But if you edit the range of entries down too much, are you really a search company anymore? Or are you just a collection of semi-random pages of human-created content, hoping to be noticed (and rewarded with traffic) by real search companies? If it's the latter, you risk getting it wrong on which pages to focus on, and thus losing out to Google's whole-web agnosticm. If so, you're just like every other web media company, trying to anticipate demand and otherwise stand out in a crowded marketplace. Which is fine. Just don't call it "search".

Late last month, Random House's Crown imprint launched its first free book experiment, which quickly became more controversial than the publisher expected. Crown released Scott Sigler's new book, Infected, online as a free (no DRM) pdf on March 27th, five... Chris Anderson