I'm seeing a lot of debate over power law distributions in the wake of Chris Anderson's Long Tail book, most recently debated by Lee Gomes in the WSJ. Chris's rebuttal is on point, but there are more subtleties here; Chris is primarily addressing retailers in his book, so even the longer tails of books and music he discusses are choked off by the original publishers. If you include the lovingly created media from amateur creators, such as we see in the weblog world, the tails extend still further. (The chart dates back to February 2004.)
At dinner after AlwaysOn tonight, I was chatting to Nik Cubrilovic of Omnidrive and Peter Pham of PhotoBucket. They both have businesses hosting data online, for individuals. These are pure Long Tail businesses - as I said in my Symmetry argument, we are moving to a world where we upload as much as we download. As JP discussed, and Peter confirmed, having lots of photos and videos viewed once or zero times makes caching near the client useless.
However, that doesn't mean there aren't still some big hits, and if you have a power law relationship that extends over a few orders of magnitude you do need to cope with both ends of it, often with very different mechanisms. Desiging for an average case fials in a long tail world. Satellite broadcast is the ultimate big head method, blanketing whole continents with identical signals, with broadcast TV a close second. Building out networks with only emulating this model in mind will fail.
As I said before:
The net extends the range of the power law distribution.
If you look at relative popularity on the web, using something like Technorati, you get a power law curve that goes all the way down smoothly, to the bottom where you see pages that got just a single link.
If you look at popularity in the publishing world - movies, chart music or books - the curve starts out with a power law, but soon drops like a stone. That's because in order to get a movie made, a recording contract or a book published, you have to convince somebody that you're going to sell a million tickets, a hundred thousand CDs or tens of thousands of books.
You end up in a zero-sum game, where people pour enormous resources into being number one, because number two is only half as good. The promise of the net is that the power of all those little links can outweigh the power of the top ten.
So what are the long tail businesses? You can be a commodity business catering to the tail (commodities are good - they mean people will pay you a known price). You can be fashion business, joining the zero-sum game for top place. Or you can create with love, and see if you can get paid for it over time.
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