Money is made on the long tail and not being in the long tail [Online Content Business]

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Today I had a long discussion with an old friend on economics of content in the Long Tail. Sharing some of the interesting points.

What is long tail?

online-content-long-tail-business

According to Wikipedia – The Long Tail or long tail is a retailing concept describing the niche strategy of selling a large number of unique items in relatively small quantities – usually in addition to selling fewer popular items in large quantities.
The concept was popularized by Chris Anderson in an October 2004 Wired magazine article. The distribution and inventory costs of businesses successfully applying this strategy allow them to realize significant profit out of selling small volumes of hard-to-find items to many customers instead of only selling large volumes of a reduced number of popular items. The total sales of this large number of “non-hit items” is called the Long Tail.

Why is long tail important to content business?

Thanks to technology and social adaption; search is getting smarter and social media is getting stronger every day. This is making the long tail of content yet more longer, and the trend will surely continue to grow. Search and social are good in helping people find content in long tail, but not in providing content to the long tail.

Why you are not making money from the long tail?

Almost 99% (if not more) of all the blogs and sites are residing in the long tail. So where is the money in the long tail? This long tail content is being provided by the independent writers, bloggers and hobbyists writing in their own fields of expertise and niche on their independent sites and blogs. But almost none of them are making any significant money. The problem here is all of them own very small portions of long tail. The volume is so low – that it hardly translates into anything whether it’s traffic, traction or money.

What is the real secret in making money in the long tail?

The truth is you make money on the long tail and not being in the long tail.

Long tail is the game of volume; you need to own a substantial volume of the long tail if you are serious about making money. Though there are challenges in how to effectively and efficiently own big chunks of long tail content volume, but we will come to that later in this article. First let’s take up Amazon long tail model. Most of the sales of Amazon’s inventory come from obscure and less famous books and products. These books and product might be selling one or two items in a year but the sum of sales of all these products outrank the sales of Amazon’s bestsellers. This phenomenon is captured nicely in a quote from an Amazon employee: “We sold more books today that didn’t sell at all yesterday than we sold today of all the books that did sell yesterday.”

The trick here is not the long tail itself but the efficiency in which Amazon was able to build that long tail for them. Amazon was able to build such an amazing inventory not by itself, but with the help of its millions of partners who were looking for a platform.

Now let’s apply the long tail principle to the content model. Long tail is divided into two different groups. Commercially viable long tail and non-commercial long tail. Let me explain, somebody uploading pictures of his birthday bash is a great user-generated content, but only to him and his close set of friends. This lies in the non-commercial part of long tail. Don’t expect to make money onto it. It is not just adding content, it’s to first understand what users are looking for and then adding content.

Another example – when you do a story on iPad, iPhone, Twitter or any other news; you are not part of the long tail. You are part of the head section in the long tail curve as the shelf life of news is couple of days or hours in few cases. To remain in the long tail –you have to enrich your news in such a way that it remains useful for someone even visiting after few months of publishing.

How to play for the long tail?

  1. Create more evergreen content. Enrich your content with more research, comparisons, fact boxes, media, info-graphics; hence increasing its shelf life.
  2. Produce content which has an advertiser, reader and virality. The means if you are writing on your spiritual beliefs, your pay checks will always be small – because you don’t have an advertiser in that niche. And if you are writing content by stuffing keywords researched from Google Adwords, you will never have a reader for it. Thirdly if you are only pushing content for the sake of pushing more and more content but don’t have an expertise or interest in that subject you will never be able to promote it across social media or search.
  3. Produce content at a large scale in a very efficient manner keeping focus on high quality.

Who is making money in long tail?

Volume required is so high that it is not possible for fragmented bloggers or writers to take advantage of long tail. Now the question arises if not writers and freelancers – they maybe mainstream media houses can do this? After all they have been creating expensive and useful content in volumes for decades now. But the truth is news has a short life; it loses most of its value just after couple of days. Essentially big mainstream organizations are sitting on a huge worthless archive of articles that have become irrelevant, at least until someone finds a new business model for them.

To make money of this long tail, we need a new kind of social media organizations who can understand the importance of efficiency in content creation and are equipped with strong technology platforms which do following things in a highly efficient and scalable way.

  1. Divide the content creation into assembly line mode of operation. Provide a collaborative environment in which the content creation starts from market research; picking topics from commercial long tail and then bringing writers, copy-editors, researchers, multimedia experts together. Just what AOL Seed, and Demand Studios are doing.
  2. Produce as much content as you can. Typical an article will take anything from 3 months to 6 months to recover its cost and will make you profit after that for its life. Average life of an article can vary from 24 to 36 months. But a right piece of content can even last for a decade as well.
  3. Keep eye on all metrics at all time; cost of article creation, time to create, traffic, social links and amplification, revenue and most importantly margin. Margins can range on long tail content from anything between 40-80% (avg. 3 years). Any small fluctuation in a single metric can entirely change the complete game.

We have seen a lot of creative business models coming out in recent months pushing for the long tail pie. Though the market is huge and has ample of room for many more players as well. But still the one with best efficiency and ability to fully integrate technical professionals into their content production process will have the bigger laugh if not the last.

  1. krishna says

    excellent article… Just to add some more titbits….Long tail creates exceptional income generating opportunity for companies which aggregate this inventory since Long tail products/publishers have a very less bargaining power compared to the large established products. Amazon able to do it with physical inventory is a great achievement in itself. And at the same time it is much more easier for companies to aggregate Long tail content in the online world.

  2. Madhav Shivpuri says

    Hi Ankit,

    Nice post and good analysis. It would be interesting to hear any ‘long tail’ kind of light you can throw on the blog network you run and you monetize that.

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