Tuesday, February 10, 2009

Can the Long Tail Survive Or Will It Just Fall Off?

Web content faces an interesting dilemma...itself. As consumers seek more choice among more distribution paths, new viewing options are cutting into and perhaps killing traditional models. Where syndication once enabled broadcasters to recoup costs and achieve profitability, the traditional placeholders, local TV broadcasters, have been replaced, first by national cable networks like USA and TBS, and now by online sites like Hulu and Joost. And in these latest models, the demand is growing, but the revenue models don't offset the losses from traditional models. And so if revenues can't grow, costs must be cut. The big companies can ride out this storm, the small guys can not.

As more content flows from the broadcasters and deep-pocketed producers, armed with more money to promote their awareness and value, what is left for the niche on-line content creators to do. Add to this scenario that advertising dollars have dried up, can this fragmentation of content survive for long?

The answer is no. Some of these long tail content creators will be bought by the big fish. Others will lose their VC dollars and withdraw. Fragmentation only inevitably leads back to segmentation. Let history be your guide to predicting this future. In too many instances, the many turn into the few. Just look at the cable operator as one example. Less than 15 years ago, there were many cable operators across the country; but size does matter and cost efficiencies mean that you must get larger and let economies of scale improve your cost efficiencies. Today, the cable industry is perceived more as an oligopoly, a few powerful cable operators cover the entire country. The same holds true with programming. Where there were once many independent networks existed, acquisition and merger have led to most cable networks represented by few companies.

And so the long tail cannot remain viable; it must either combine with other content providers to gain bigger share or it will simply become too costly to maintain. VC money can only go so far and at some point they will demand a return on their investment. How soon will this happen? It seems that the pace has quicken and it wouldn't surprise me to see major changes within 5 years. Regardless of the time frame, it is going to happen.

1 comment:

  1. I tend to agree that the internet is not going to be the quick path to success for (most) long tail content. People still consume (mostly) the short tail. But the internet can, has, and will continue to generate some hits from the long tail. With powerful enough discovery tools, the internet is a viable way to find quality content "beyond the multiplex."