Category: Long Tail

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Netflix and Amazon customers are zooming past an inflection point

An inflection point is a term from calculus. It’s a place where a charted curve changes direction. Inflection points make interesting charts. They can also be harrowing for passengers zooming along the curve, hanging on for dear life. Just ask today’s struggling newspapers, publishing houses and record labels. Many would tell you that passing an inflection point is as fun as passing a kidney stone, only it takes longer. But the worst of a harrowing ride may be close to over.

At least for two industries, we may finally be rounding the midway point between mostly analog and mostly digital.

Let’s start with Netflix. I was struck earlier this year to learn that a majority of all Netflix subscribers have streamed at least some content online within the month. This is huge.

True, the delivery of DVDs to customers’ mailboxes is already partly digital. The first “D” in DVD is “Digital.” But reliance on the U.S. Postal Service to deliver those digital packages is fraught with expense and inefficiency; Expensive, because —  to quote Jeff Jarvis — atoms are a drag. And inefficient, because you need a physical warehouse of disks. Only a finite number  of people can watch the same film on the same day.

Then, earlier this week, I read that Amazon is now selling more e-books than hardcovers. The speed of this shift to reading on Kindles, iPads and other e-readers is a surprise even to those who should know better. Amazon says they now sell 180 e-books for every 100 hardcover books. A few months ago it was only 143 for every 100!

This is even more astonishing when you take into account that, according this New York Times article, “Amazon has 630,000 Kindle books, a small fraction of the millions of books sold on the site.”

Change is painful. But the worst pain is cyclical.

Sometimes it feels like the world is racing to a terrible future — similar to the ancient world maps where waters on the outer fringes had sober warnings of sea monsters. But at least from a cultural / technological perspective, call me an optimist. (I don’t speak here of the world’s geopolitical or ecological fate, and don’t get me started!)

I believe the voyage around this and similar inflection points is taking us to a pretty cool place. We just need to hold on tight and be prepared when we hit land. The other side of this curve will be as brimming with opportunity as it is different from the world we know now.

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Thriving in a hashtag economy

Kudos to photographer Matt Mason for providing these photos. Click to see the gallery

A question about using social media arose this morning — one that I only had time to half-answer. I was on a panel at a Milwaukee Social Media Breakfast (#SMBmke). The question (to paraphrase): “I don’t sell a sexy product. I’m a business that sells to other businesses something that they need. But they don’t necessarily blog about it or tweet about it. Can social media support my goal of lead generation?” I said yes. Below is the second half of my answer.

I did mention The Long Tail. Click through that link to learn what that is. And if you do, think about that link. Jeff Jarvis coined the phrase link economy. Chris Anderson coined the phrase the long tail. I propose a new coinage: the hashtag economy.

The long tail is the book, and the concept, about how niche markets find what they need in a world this isn’t hindered by the economics of brick-and-mortar. There are no carrying costs associated with iTunes offering one more song that just happens to be obscure. Their inventory is limited only by digital storage costs and the bandwidth necessary to deliver the song when someone buys it.

The link economy uses this free, or nearly free, paradigm. It cost me nothing to create the link that pointed readers to an explanation of The Long Tail. The link led to Wikipedia. There again, the power of almost-free. This crowd-sourced encyclopedia saw the most minuscule of incremental costs to provide you with that definition.

The upshot is this. Since we are rewarded nearly every time we click on a link, we do it more often. That generates something that very often can be monetized: Significant volumes of traffic.

Smart businesses — such as the publishers of Wired Magazine and Anderson’s book — leverage this link economy to sell more books. And they leverage The Long Tail Phenomenon in the very sale of a book about the long tail; Anderson’s book might never have become a best-seller if it hadn’t been offered in a virtual bookstore like Amazon first. His readers might have simply been just too darned “niche” to persuade bricks-and-mortar book stores to stock it in their shelves.

Scott Baitinger, co-owner of Streetza Pizza, and I were talking about niche marketing earlier this week. I complimented him on his use of Twitter Hashtags to find a narrow group and to market to them. That narrow group is @FitMKE. Scott has been peddling his pizzas to this group by tweeting to them with the #FitMKE hashtag.

Analog broadcast channels (those based on radio / television wave frequencies) are valuable enough that they are regulated by the government. There are rules about what businesses must do to earn their right to be there (e.g., public service announcements and public-oriented programming). Things that are scarce have value, and these channels are no exception. A recent auction of analog broadcast channels garnered bids in the many millions of dollars.

Twitter handles are not limited by the spectrum of a radio or television broadcast frequency. If I auctioned off my Twitter handle, I would get zero bids. Why? Everyone who knows anything about Twitter knows you can create accounts limited only by the nearly infinite combinations of letters and numbers.

This makes Twitter a spectrum of a nearly infinite number of nearly-free channels. It draws lots of people because it is so cheap and teeming with variety. It uses both the long tail and the link economy.

Increasingly, Twitter is also spawning communities of likeminded people around hashtags. One example of #SMBmke. Another, ironically, is #MKElikemind (another breakfast group — here’s the info on my blog). Scott, and @StreetzPizza, found #fitMKE to be a channel to narrow-cast his offer of healthy pizzas (and also indulgent pizzas, since — hey — you have to be getting fit to enjoy life, don’t you?).

The Hashtag Economy is one way smart marketers are finding their niche audience within the cacauphony of other channels. They’re tuning in, conversing, and doing business there.

Here’s a challenge, especially for my friends (old and new) who attended this morning’s breakfast: What hashtag conversations have you been a part of? And how have they improved your life and work? More important: What business relationships have formed from them?

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Also mentioned:

Photo credit: Matt Mason, photographer

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Tonight only, at a theater near you: the podcast innovators of Rifftrax

Anyone who has followed this blog long enough knows that I am fascinated by how entrepreneurs have attempted to make money with podcasts. For a moment, forget about news publishers, or those focused on b-to-b lead generation or working on a non-profit model like NPR. I’m talking about pay for product — and your product is a podcast. I’d even eliminate Audible.com — the spoken word bookseller — from my list, because they sell their content by subscription instead of purchase by the podcast.

I found one business a few years ago that fits my rigid, purely retail requirements. They sell what has to be one of the most novel applications of a podcast. Rifftrax started their business by selling podcasts that only have value when listened to while watching a movie.

The company has since morphed and grown. I now see that Rifftrax is testing live events “rebroadcast” in movie theaters. Below is an ad for a screening that’s taking place all over the country, tonight, of what I’m sure is a very funny version of the world’s worst film: Ed Wood’s Plan 9 From Outer Space.

Rifftrax at a theater near you!

I will be intrigued to see how this national screening takes hold. When I went into the site of NCM Fathom, their apparent partner in this event, I saw that a good dozen theaters within the Metro Milwaukee area are showing the film. If any of my readers attend the event, contact me or leave a comment. I’ll be intrigued to learn how it went, and if this may be the first instance where a podcast business has spawned a theatrical film series.

Full disclosure: When I wrote my first blog about Rifftrax, they sent me a $10 eCoupon to encourage me to select a podcast or two for a Rifftrax party I was throwing. I paid for the download instead and gave away the gift as a prize in a subsequent reader contest.

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Watching Twitter sell things like pizza and beer

Most online marketers recognize Twitter’s power to connect people. This virtual network is great for many B2B marketing types. In some ways Twitter — and microblogging in general — is the new Power To Get In. But what about driving consumer business? And here I’m not talking about ephemeral branding. I’m talking about getting people to your business with money in hand.

Last night I got a few answers.

Among other marketing innovators, I had the pleasure of meeting Joe Woelfle, owner of Blatz Liquor. He was co-hosting a Tweetup in collaboration with JSOnline.com. He contends microblogging has produced tangible results.

Last month Journal Sentinel business writer Tannette Elie (@Telie) cited Woelfle as saying that Facebook is responsible for 10% of his sales. This, he explained, was primarily through the soft-sell of publicizing wine- and beer-tasting events.

One tenth of a “bricks-and-mortar” retailer’s business attributed to Facebook? It seemed a lofty claim, but when I asked Joe earlier today if he would revise that estimate, he said only to throw his newest tactic — Twitter — into that mix.

The wall-to-wall turnout at the event last night certainly suggested that Twitter was powerful at something. But what? Skeptics would say you could use plenty of other methods to spread the word about a free event at a beer, wine and liquor store — one that included plenty of liberally-poured product samples!

Time will tell how effective @BlatzLiquor‘s Twitter efforts are at growing real sales and loyalty. But in the meantime, someone else at the Tweetup has a Twitter-fueled business already road-tested by other entrepreneurs.

Korean BBQ Tacos and Pizza By The Slice

Scott Baitinger is co-owner of Streetza Pizza (@StreetzaPizza). I was excited about connecting with him for two reasons:

  1. His business just had its official launch this Memorial Day weekend and I was eager to find out how it went
  2. Scott’s business is a glimpse at a promising future for retail — for everyone from food vendors to dry cleaners to banks

Streetza’s business model uses Twitter to tell hungry customers where its truck will be parked next. It even polls followers on questions such as future locations and product offerings. I wrote about this business model — this promising taste of the Web 3.0 world — last week. It was in a SOHOBizTube article. In that piece, I cited the wildly successful Zogi BBQ, a Los Angeles purveyor of “Korean tacos” that informs its tens of thousands of Twitter followers (@KogiBBQ) where it will be next.

As odd as it sounds, these customer-centric Tweets are truly a taste of things to come.

That’s because the next meaningful digital innovations won’t provide consumers with cooler web sites and more content. They will be mobile applications that provide exactly the content we crave, talking to us when we are physically in a place to scratch the itch.

The future of the web is about place. And like Kogi, Streetza Pizza, in sleepy little Milwaukee, will be leading us there one slice at a time.


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Social Media 101: Get your feet wet with Facebook

This morning I was part of a panel discussion, talking to the Greater Milwaukee Committee’s Insider Breakfast, held at The University Club. The topic was social media. One of the questions from the audience was (to paraphrase), “I know of MySpace, Facebook, LinkedIn, Twitter, etc., but the only one I am a member of is LinkedIn — and I barely know how to use that. How do I prioritize as I get my feet wet in them?” Panelists had varying opinions, but I opted for a one-word answer: Facebook.

Facebook announce this week it's becoming more like Twitter. Click to via a larger graphic

Start with Facebook, I advised.

Others, notably GMC president Julia Taylor (whose Twitter presence is @JHTaylor) and Cd Vann (@ThatWoman_SOHO), “participating visionary” of SOHO|biztube.com, disagreed. They leaned more toward Twitter as a place to start. As much as I enjoy Twitter, and find it invaluable in my consulting business, I rarely suggest a client start there as a way to understand the experience. Here are my reasons:

4 Reasons Why Facebook Is A Better Set of Training Wheels

  1. Twitter is too scary — Three weeks ago NY Times tech columnist David Pogue finally dipped his own toe into the waters of Twitter. Pogue began the column by saying, “I’m supposed to be on top of what’s new in tech, but there’s just too much, too fast; it’s like drinking from a fire hose. I can only imagine how hopeless a task it must be for everyone else.” This was his apology for being a “geek” and not being willing to face the ugly, 140-character beast that is Twitter. I feel for him. But more importantly, I feel for the clients who have to learn the arcane nomenclature of “re-tweets,” hash-tags and Twitter agents. When the panel discussion was over, I confided to Mary McCormick of the Rotary Club of Milwaukee that mere mention of Twitter causes most of my clients to go into spasms. I wouldn’t knowlingly wish that on anyone!
  2. Twitter is too amorphous — The same quality that makes Twitter so popular also makes it a little too much like a multi-faceted, super-charged desktop application (think Excel) that is daunting specifically because it is so versatile. I find myself using Twitter for a lot of things, and this versatility can lead to early abandonment and disappointment (read the book The Paradox of Choice: Why More Is Less for how this veritable banquet we face can be psychologically overwhelming).
  3. Facebook lowers the chance of a “crappy first experience” — Robert Scoble wrote that there is a barrier we’re facing today. It’s a “new digital divide.” The divide is between the folks who can swim easily in the social network pool and the “normal” people who refuse to or are afraid to dive in. Scoble writes that when these normal people get into a social network, “they enter a pretty lame environment since there are no friends … The first experience is a real crappy experience, since there’s no input. And it’s all about input from other users.” Facebook is more helpful than Twitter, and it’s easier to find a group of folks you can immediately “friend.” They can help you, and reduce the crap risk significantly.
  4. Facebook is becoming more like Twitter by the week — Just this week Facebook announced new changes to their interface. They make this social networking site, which already has a version of “tweets” in their mini-feed feature, even more like its competitor for user attention and participation.

I think all of us on the panel would agree that if you are a business leader, you need to start personally leaping the chasm — the digital divide — to get a feel for the new communication medium. You need to give social media a try. If you choose Facebook, I’m here. If it’s Twitter, I’ll see you there too, at @TheLarch!