Crowd-milking

The basic premise of the long tail is that there is an equal or perhaps larger market of those willing to buy unpopular items (or services) than all the people who buy the popular items. It goes against traditional wisdom of focusing on items that can be sold many times, as you may be missing an even larger opportunity in the long tail. Instead, the long tail theory is to sell a few things to a few people at a time, but repeat this many times over. Of course the kicker is that it only works in certain circumstances, such as online music sales. The important criteria include being able to store objects cheaply (works for digital content), and most importantly, owning the sales platform, like Amazon or iTunes.

In 2005, Seth Godin advised on how a budding entrepreneur could take advantage of the long tail.

So, what I would say to the struggling entrepreneur or pundit or expert or consultant or musician or person spreading that important idea is this:
  1. it’s okay if it doesn’t happen fast
  2. don’t worry so much about getting the approval of those who came before and are farther along the curve
  3. keep costs as low as possible so you can do this without panicking when it doesn’t work so fast
  4. surround yourself with friends and colleagues who “get it” and root for you, even when it’s not going so fast (variant: fire the friends and mothers-in-law who aren’t supporting you so much!)
  5. realize that it’s not about you or the way you look or what you wear. It’s about the tail.

—Seth Godin: Where is the rainbow?

His advice was to be patient, persistent and keep your costs low — fairly good advice.

profitpockets583_2

Image by Seth Godin

In 2008, Seth Godin built upon his long tail hypothesis, by calling the part next to the head, “Pocket #2”, which is a niche of the mass market.

“The long tail doesn’t offer a consolation prize. Instead, the wide selection (in every market, not just digital ones) is a collection of smaller long tails, each with its own dip, each with its own winners (and losers). Pick the biggest market you can successfully dominate, the biggest slice where you can get through the Dip and be seen as the best in that world.” —Seth Godin: The Long Tail and Dip

The economy is changing and we will see increasing market fragmentation. The only ones who will win in mass markets will be the big platform owners. Facebook dominates social networking, Amazon dominates book publishing, Google dominates online advertising, and Apple dominates online music sales. They are reaping the benefits of network effects with little trickle-down potential for any small players. Consider this:

“The people who are perhaps the most screwed by open culture are the middle classes of intellectual and cultural creation.  The freelance studio musician, the stringer selling reports to newspapers from warzones are both crucial contributors to culture. Each pays dues and devotes years to honing a craft. They used to live off the trickle down effects of the old system, and like the middle class at large, they are precious. They get nothing from the new system.” —Jaron Lanier: You Are Not a Gadget

It seems that to be successful in the network era you have to find a niche market and work to be the best at it. Ross Dawson makes a strong point by stating that “in a connected world, unless your skills are world-class, you are a commodity“. Expertise, relationships, and innovation will mark the successful people in the emerging network era economy according to Ross.

So if you are not one of the recognized leaders in your field, can you make a living online or will you be part of someone else’s long tail, increasing their advertising revenues? As a content creator, will you be providing the fodder that lets Google, Facebook, and YouTube earn huge revenues?

Here’s an example of how aggregators can benefit from those who used to be referred to as the middle class. There is an organization that aggregates smart ideas, connecting solution ‘Seekers’ with problem ‘Solvers’. It is supposed to increase the adoption of innovative ideas.

“We crowdsource innovation solutions from the world’s smartest people, who compete to provide ideas and solutions to important business, social, policy, scientific, and technical challenges.
Our global network of millions of problem solvers, proven challenge methodology, and cloud-based innovation management platform combine to help our clients transform their economics of innovation through rapid solution delivery and the development of sustainable open innovation programs.” —Innocentive

I came across one of their challenges, which I thought might be pertinent to PKM — The Economist — Lumina Foundation Challenge: Bridge the Gap Between the Workforce & Higher Education. However, a quick search turned up a couple of negative comments that confirmed in my mind that crowd-sourcing may just be another name for crowd-milking [Thanks to Jon Husband for that term].

“My opinion of ANYONE WHO SUBMITS anything whatsoever to most of the Seekers problems is that they ARE FOOLHARDY IN THE EXTREME and/or have little self-regard. Such offers are typical of parasitic exploitation and should be denied any of the indecent profit they so greedily seek for trivial sums or nothing at all to the many entrants whose intellectual property rights may be compromised simply by their entry.” —Customer Review: Better Business Bureau Boston

crowd-milking

It’s not easy finding new market niches but that seems to be the only option for most of us who are not in Silicon Valley building the next social media platform. The only way to make our talent profitable in the network era is to turn it into a highly specialized capital asset. Feeding crowd-milking platforms is not a sane small-business operating model. It’s better to find your own cow than be milked by someone else.

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