Why is mainstream media still confused by the 80/20 rule?

A recent study by Purewire revealed that only around 20% of Twitter users are contributing to the service, with 80% having fewer than 10 followers, and 37.1% having no tweets – leading Techcrunch to suppose most people on Twitter are sheep.

Meanwhile the New York Times reports the shocking discovery that bloggers who assume it’s an easy way to get a book deal or give up their day job often get disillusioned and give up. The article quotes the 2008 Technorati State of the Blogosphere, with 7.4 million (5%)  of the 133 million blogs tracked by Technorati having been updated once in the last 120 days.

The most active 2% of Wikipedia users made 73.4% of edits in 2006 (including maintenance and administrative edits).

The iPhone OS had 8% of the smartphone market, but generated 43% of mobile web requests and 65% of html usage.

Are we noticing a pattern here?

I suspect around 20% of the people reading this post will be knowingly thinking of Vilfredo Pareto, who noticed that 20% of the people of Italy owneed 80% of the land back in 1909, which was then generalised by Joseph M Juran in 1941 into the Pareto Principle, as the common rule of thumb that 80% of the effects come from 20% of the causes, i.e. a Power Law with a The Long Tail.

Internet access gives everyone the ability to self-publish – it doesn’t mean everyone will. Or entitle everyone to be able to make a good living out of it.

And more importantly…

Even if just 1% of bloggers, people uploading video to Youtube, or podcasters achieve sustainable fame and income – how does that compare to the number of aspiring writers, film directors or radio DJs who never even got published or broadcasted under the old model?

The Long Tail never said everyone would get rich – you can either try to rise up to the hit end by being one of the small percentage working harder, being smarter, and getting luckier – or you can aggregate the long tail by working harder, being smarter, and getting luckier, just as Google did with Adsense.

As usability godfather Jakob Nielsen broke it down in 2006: “In most online communities, 90% of users are lurkers who never contribute, 9% of users contribute a little, and 1% of users account for almost all the action.”

The internet doesn’t radically change that dynamic (although it’s definitely possible to move the figures slightly within a specific online community). What it does is hugely increases the numbers included in that 1%, and in that 9%, which has a bloody big impact on the 90%.

That’s the big lesson – a small number of people can get Wikipedia over 55 million U.S. visitors in a year, or create the fact that 20 hours of video are uploaded every minute (equivalent to Hollywood releasing 86,000 films every weekend!). It’s what got facebook to over 200 million users, and Twitter to over 32 million.

It doesn’t mean it’s all popular, or high quality.

It just means that most of mainstream media is likely to end up covered in content as if it went out in a desert sandstorm – and successful businesses need to figure out how to engage and build on that 1% or 20% which creates the value for everyone else.

New stuff in Beta from Absolute Radio

I’m two weeks into my new role as Digital Marketing Manager at Absolute Radio – I’m really enjoying it, I’m getting used to the commute, and hopefully I’ll be back up to speed with my blogging shortly (besides the normal disruption of starting somewhere new, there’s also a truckload of cool things already happening that I’m getting up to speed with).

Sadly I’ve had nothing to do with the cool new functionality that’s been developed for the site, as I only arrived just before it did. But I can definitely recommend taking a look at the newmedia player, videos and other sections of the site, and there’s a handy guided tour to each bit. Any comments and feedback are much appreciated.

So go and take a look at the Absolute Radio Beta Section.

Of utmost importance for businesses to remember

There’s a great article by Umair Haque on ‘Why the war against file-sharing is unwinnable‘, which was collected in a post on Music Industry Manifesto.

And one quote particularly stood out for me as being an essential element of business:

‘No business has a right to profit, sell, or even to produce. All are privileges that society grants businesses.’

That’s why I feel discussions about newspapers, music, advertising etc sometimes miss the point. It doesn’t matter how strongly a publisher might feel newspapers are entitled to survive, or whether a prominent musician feels file sharing and digital music is hurting his future income.

It’s down to whether society, in a viable number, feel a business model has the right to profit.

In closing, Umair notes:

’21st century economics are radically decentralized. Wars against networks are unwinnable — when orthodox organizations are the ones fighting them. Only networks (or markets and communities, if you’re a long-time reader) can fight other networks.

Want a better music/media/etc. “business model”? The understanding that hierarchies are dominated by networks is the key — and the failure to understand it is exactly why the media industry is so deeply in decay.’

Internet discovery still amazes me…

Having been active online for over a decade, I’m happy to say that I’m still pleasantly amazed by some of the things I’m able to find online.

For instance, due to the seemingly endless repeats of Scrubs on the E4 TV channel, and the fact it’s the only bearable TV show at 7pm as my son is finally going to bed, I’ve had a song from one episode stuck in my head.

I’m old enough to remember a time when that snapshot of a song would have played in  my head for days, weeks or years – unless one of my real life friends happened to know what it was, or a magazine tc happened to mention it.

Image by graciepoo on Flickr (CC Licence)

Image by graciepoo on Flickr (CC Licence)

Instead, a google search for ‘Scrubs, Brendan Fraser, Song’ led to to the exact tune: ‘Hold on Hope’ by Guided by Voices.

Then, thanks to Last.fm’s ‘similar artists’, I was able to listen to solo work by members of the band, and within a couple of degrees of seperation, end up at the interesting (and brilliantly-named) Psycho and the Birds side project.

Then a bit of background reading on Guided by Voices on Wikipedia (slightly more detail than Last.fm entries tend to have).

I love the internet for the things it allows me to do, not what it is.

And in a funny coincidence, my random library on Last.fm just threw up an old Lemonheads track –

After an interview in a magazine, I discovered The Lemonheads were on Taang Records, and would buy anything I found on that label without ever hearing it – leading to good stuff like The Mighty Mighty Bosstones, and some absolutely terrible purchases.

Having always preferred the writing/singing of Ben Deily, who left before The Lemonheads hit mainstream success, I was idly googling his name and trying to find out about what happened after he left.

I ended up finding Ben Deily‘s website, discovering his new band, Varsity Drag, realising they were on tour in Europe, asking if if was possible to interview Ben for the online magazine I was doing at the time (see a PDF of the gig review/interview here), buying a copy of the album on CD, and a CD of a previous project I’d missed, and a T-shirt from the gig.

And it’s safe to say I’m guaranteed to be at any future European gigs/buying future CDs – particularly as my other half confessed to being rather smitten with Ben after her first pop-punk gig. And all from an imported CD from 1988 (now signed), that I bought on the strength of hearing songs by an entirely different band lineup.

To close the rambling love letter to music with some sort of point:

Somewhere in there, there’s a business model for musicians/the music industry. The internet allowed me to find a musician who wouldn’t be stocked in local music stores, read his website and blog, find out tour dates, arrange an interview, publicise his music to more people, buy physical copies as much as mementoes as to play, buy a T-shirt, and sign myself up to buy future releases, T-shirts, and see gigs whenever I can.

New musical solutions to social humans

I’ve been reading a bit about the discussions happening at the MIDEM event taking place in Cannes at the moment, which is a big business 2 business event for the music industry.

Highlights include the fact that the bags for the event have been sponsored by Napster (as captured by Mr Herdmeister, Mark Earls).

The other highlight I’ve enjoyed is the presentation by Gerd Leonard, who is moderating the panel at which the Herdmeister is speaking.

And in the meantime, I’ve also been having my stab at the future of music, thanks to the People’s Music Store (Found via Springwise).

I’ve always been a closet librarian when it comes to collecting music in physical form, and always had a soft spot for the idea of owning my own record shop (Even before I read High Fidelity!)

It’s not completely revolutionary – basically you can set up your store, share recommendations and reviews, and anything sold through your store earns you 10% as reward points to spend on new music via the store.

Interestingly, I’ve just spotted Amazon has released an MP3 widget for affiliates, which helps you to earn a 10% fee for anyone buying someone from the store.

But the next step is also to include user-generated audio for sale.

It will be interesting to see if the People’s Music Store can emulate the feel of ‘your favourite local independent record store’ enough to differentiate itself and offer more than an affiliate mechanism.  In the meantime, I spent five minutes on the site and came up with the start of my own music store.

And there are plenty of other interesting music services out there for buying or even investing in music:

I’m not sure I can conclude with more than starting to wonder about the filter and recommendation mechanisms, and how mainstream media might better fit the future. But the evolution of media and entertainment seems to becoming more like Moore’s Law every week, and not just in terms of technology.

Passion is why Nine Inch Nails and vinyl are succeeding

There’s already a lot of commentary on the fact that Nine Inch Nails topped Amazon MP3 Album sales for 2008, despite the fact the first nine tracks of the  album had already been released by the band for free under a Creative Commons licence.

And the fact that vinyl album sales doubled in 2008, hitting a 17 year record of 1.88 million in 2008.

As Matt Mason points out, both examples show that ‘the physical souvenir of a digital idea still has value‘, and legitimate purchasing is becoming easier and more cost effective – for instance, Apple dropping DRM from iTunes and introducing variable pricing (although you’ll have to pay to remove DRM from tracks you already own). Om Malik nicely outlines the reasons why even the bonus from that DRM removal isn’t necessarily a good thing for the music industry – mainly because the three-tiered pricing structure being introduced could lead to more people expecting music for less.

And analysts are backing the idea that mobile music has to be free, for example.

Are there answers?

Going slightly further than Matt, I’d say buying an album already available for free, or investing in vinyl, shows something more than the benefits of better legitimate music stores or physical souvenirs.

I’d say it’s a direct result of passion.

The people most likely to download and spread NiN’s Ghosts I-IV are the passionate fans of the band. The people downloading from Amazon were aware of the album but either didn’t want to make do with the nine free tracks, didn’t want to download directly, or, possibly wanted to spread the word by purchasing via Amazon and propelling NiN up the charts.

Meanwhile to be a vinyl consumer you have to find a record player (hard to do offline outside of specialist hifi shops),  invest in needles and fluff removers, and actively seek out releases.

But what paying for NiN or vinyl does, is it elevates you from those people enjoying music as a diversion or convenient entertainment – it makes you someone who displays there passion for the band or format.

You don’t just like NiN enough to listen or download for free – You love them enough to pay $300 for the limited edition ultra-deluxe box set, and then buy the songs again via Amazon to promote them.

You don’t just have a convenient CD of new dance music or classic soul – you have the original vinyl with the ritual of selecting it from your shelf, sliding out the album carefully, putting it onto your record deck, and gently lowering the needle with the precision of a surgeon.

And anyone who witnesses either act is left within no doubt of your passion – and those who share it instantly mark you as one of their own. You’re not just a fan, you’re an Otaku.

It’s what sells a lot of products. For instance, the Halo Xbox game spawned two sequels, limited editions box sets, and a forthcoming strategy game.

  • Plus a table-top miniatures game.
  • The soundtrack CD for each game, plus a collection of the trilogy
  • 5 printed books
  • A graphic novel
  • A four-part comic book series
  • Calendars
  • Canvas Art
  • Posters
  • Vinyl Figures
  • T-Shirts
  • Controllers and headsets
  • Graphics to customise your console
  • Plus downloadable content to add to the original physical version, and customise your console dashboard

Then add in the derivatives:

  • Tournaments
  • Machima, such as Red vs Blue, which has it’s own DVDs, clothing and collectibles.
  • Halo costumes for Halloween or conventions.
  • And all sorts of other stickers and clothing from other retailers.

Now, how could you be a ‘real’ Halo fan if you just had a standard copy of the game? That won’t help you connect with other real fans, given 20 million copies of the series have been sold.

To show to other people you’re a ‘real’ Halo fan, you’ve got to have queued for the midnight release of the game, and have a sealed Limited Edition version. You’ve got to have the sountracks. At least one figurine of the Master Chief. A few of the books. Maybe a T-shirt.

After all, none of this is new!

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Essential viewing for content providers

It’s not often I would say a video is essential, but not only is this keynote by USC Annenberg Professor Jeffrey Cole full of brilliant comments and quotes, but after eight years of research in 20 countries, he’s got the stats to back them all up.

Found via the also brilliant Gerd Leonhard.

Will this be the Christmas of the MP3? Or could convergence save record shops?

With some time to kill before a meeting, I took the chance to browse round the Oxford Street branch of HMV, looking for inspiration for what to buy with a gift voucher I’ve had kicking around, and also to get ideas for Christmas presents.

Aside from reminding me how difficult it can be to find unusual items in even the largest stores (in fact it’s usually easier in the small secondhand record shops I spent much of my music budget in), I also felt something a bit different about the experience. I’m not sure whether it’s the credit crunch, the success of online retailers or the rise of the MP3 but the shop felt slightly emptier than I’d have expected – and the average age seemed slightly older than usual.

The only major exception was the ever-expanding videogames section. Could this be the fact full console games are still viable as a physical product? (Not many options to download a full game, and the filesize would be bigger than the monthly data allowance for a lot of people!) Certainly I got the anecdotal impression that without the videogame section, the average age of the shoppers would be 10 years higher than I’ve ever seen – or maybe I’m just noticing more…

Coincidentally, via PaidContent and Media Guardian comes the news that 32.1 million MP3 players were sold in the UK last year. Jemima Kiss points out, quite rightly, that the title is a bit misleading – 75% of the sales included were MP3 capable mobile phones – but the important point is that 90% of mobiles sold last year were MP3 capable. Whether or not they’re actually being used for MP3 consumption is almost secondary – the point is that a huge mass of people now have the opportunity to be converted at any moment.

I’m not sure that CD player sales dropping to 8 million last year is necessarily related – after all, CD players have been around long enough to have reached saturation point – but if the money drops out of manufacturing CD players, and sales are growing in those little devices that make phonecalls, take pictures and video, surf the web and play MP3s, it’s another challenge to providers and retailers of physical content.

Why would I pust through a packed Oxford Street to experience agoraphobia in a massive store populated by those 10+ years older than me, and then fail to find my ideal purchase without ordering it – particularly when its so closely linked to lifestyle?

Funnily enough, I have seen a packed record shop recently – in Malmo in Sweden. And I wish I’d grabbed a picture, because it wasn’t just records – it was the 50’s style in store cafe.

I realise this has been a bit of a meandering post, but perhaps the takeaway conclusion is this:

Mobile phones are a triumph of convergence to provide value. Convergence is also increasingly happening with living room technology and online applications. Perhaps in a time-starved culture, more retailers need to look at how they could use convergence to build engagement and loyalty in the real world, as much as online? After all, it’s a reason why supermarkets and department stores have continued to have cafes instore. So why can’t record stores look at food and drink, live events, introducing art, photography, specific genre nights, or other ways to hook into the tribes who don’t have a reason to support them anymore?

Are we still debating whether music can be free?

I just read the piece by Mark Mulligan (of Jupiter Research), reposted on PaidContent, on Why Music Can’t ‘Just Be Free’, and I have to say I disagree almost entirely (As you can see in my comment on the bottom of the PaidContent article).

As I realised in writing that comment, ‘Copyright is a byproduct of the business model put on content creation – not the reason that content was created’. Mark points to the introduction of copyright for music at 150 years ago, but music, and music-derived revenues, existed for far longer pre-copyright than after it.

And this is in no way suggesting that content creators of any kind should not be able to be rewarded for their work. I’ve spent almost a decade writing for a living, so I’m very appreciative of the money it created – but I’m also aware that it’s a priviledge, rather than a creative right, and that it’s necessary to find the most appropriate ways to derive value from content creation within the current environment.

The issue of revenue is probably the hardest, but there are more and more examples of revenue from freemium options, live gigs, merchandise etc coming all the time.

The easier point to remove is the idea that if content is free, we’ll be inundated with rubbish and won’t be able to filter out the good stuff. If that were true, there would be no head to The Long Tail, no A-list of bloggers, and I’d be making as much money as Techcrunch.

And that content creation is not driven by revenue – Wikipedia is just the biggest example.

On the plus side, paidcontent also had some interesting quotes from a Billboard interview with EMI which shows a lot of more promising developments.

  1. EMI was the first major to try dropping DRM.
  2. Focus not on sales
  3. Regaining innovation

Entropy 2.0

Steve Rubel posted a risky bet on his personal blog, Micro Persuasion, yesterday, that ‘By January 2014 I will wager that in the US almost all forms of tangible media will either be in sharp decline or completely extinct. I am not just talking about print, but all tangible forms of media – newspapers, magazines, books, DVDs, boxed software and video games.’

While I don’t doubt he’s right that all forms of tangible media will have experienced a sharp decline, I’d differ slightly in my belief that most will continue as niche products – in the same way that vinyl exists for some DJs and collectors. And I’m not sure about the timescale.

Although he makes a compelling point with many great examples of how digital content is becoming increasingly mainstream, I think there’s a tendency to almost imagine one day when suddenly all the printing presses stop, and we all ‘go digital’.

This is the way the world ends
Not with a bang but a whimper. The Hollow Men, T.S Eliot.

Physical products won’t go out like that, despite the predictions I’ve heard since I started in online publishing almost a decade ago. Think of the concept of Entropy, the natural decay of all things – or the erosion of land by the force of the sea. Both are gradual, and yet completely unstoppable physical forces like the changing habits of consumers and the constant innovations in technology.

Yes, many companies, products and industries are in sharp decline, which is likely to be accentuated by the current global economy collapse, and there’s a desperate need for most to innovate new revenue streams. But there are still isolated cases of success in traditional media, and there are still sizeable profits being made, even by declining titles. Will these have been eradicated to the point on non-existence in 6 years? I think that depends on the age of the consumers of those titles, and the likelihood of them continuing to buy physical products from habit or affection.

The End is Nigh - pic by Jason Cartwright on Flickr (CC Licence)

The End is Nigh - pic by Jason Cartwright on Flickr (CC Licence)

The era of physical content distribution domination for print, audio, film and videogames is coming to an end, but there are still barriers to overcome. Rather than the UK increasing broadband speeds and bandwith caps, for example, the U.S. is instead seeing them introduced. That’s a major barrier to film and videogame downloads, which can be a hefty size to acquire.

But the item for me which is most likely to drive this transformation is missing from Steve’s otherwise comprehensive list. And that’s the smart phone (the iPhone for the sake of argument). For the first time there’s a consumer device which combines digital music, photography, telephony, communication, blogging, applications and almost everything else, and which is easily able to feed Flickr, download from iTunes etc, etc, etc. It provides an attractive and increasingly familiar conduit for digital content which isn’t as imposing as a PC for the non-geeky, and reaches those who don’t spend their working days on a keyboard. On my recent holiday, I cursed my lack of a smart phone when I had to constantly remove the memory card from an old digital camera to upload to Flickr. And when we lacked a GPS, or mobile internet access to look for a location. And the fact I couldn’t access Twitter or my blogs without using a PC old enough to have a floppy disc drive!

Personally I think the physical content carthorse will continue to plod along for a fair while longer – if I had to pick a date out of the air, I’d probably pick 2020 as the cut off point for physical products reaching the very margin of content delivery – but don’t make the mistake of thinking I wouldn’t advise any company to be investigating every alternative opportunity as if they’re life depended on it, because it certainly does.