Business in Virtual Worlds, Second Life

Virtual Worlds, and Why the Long Tail is (partly) Wrong

There was an interesting discussion brewing about intellectual property, “copybot II” and content protection until the conversation suddenly veered off into protecting the blessed hand of Second Life® and I lost the trail of thought. I suppose it’s a lot more important to worry about the value of the inSL logo, whether Linden Labs is Linden Lab or Linden’s Labs or the Linden is a dollar or not.

It all made me feel a little like Rumpole, worrying about “The World Who Must Be Obeyed” and blundering about while my raincoat trails through the mud as I try to crack the code of open source. So it was in this sort of grumpy frumpy mood that I was reading The Long Tail by Chris Anderson which is perhaps why I started to feel annoyed, or was it that my Spidey senses were tingling (oh, sorry, Spidey Senses®, and that was probably Rumpole® while we’re at it).

Bear with me, maybe we’re on to something, otherwise we’ll head back shortly and storm the barricades (and continue to hit the refresh button awaiting clarification on the branding guidelines as promised Friday, or maybe Monday, but it’s coming, really).

The Long Tail: A Primer
Like all good Web 2.0 concepts take a little trip over to Wikipedia for a definition. There, you’ll find the deep science behind the Long Tail:

In “long-tailed” distributions a high-frequency or high-amplitude population is followed by a low-frequency or low-amplitude population which gradually “tails off” asymptotically. The events at the far end of the tail have a very low probability of occurrence.

Power law distributions or functions characterize an important number of behaviors from nature and human endeavor. This fact has given rise to a keen scientific and social interest in such distributions, and the relationships that create them. The observation of such a distribution often points to specific kinds of mechanisms, and can often indicate a deep connection with other, seemingly unrelated systems. Examples of behaviors that exhibit long-tailed distribution are the occurrence of certain words in a given language, the income distribution of a business or the intensity of earthquakes (see: Gutenberg-Richter law).

But here’s the Reader’s Digest version (a true original Long Tail provider, it’s just that it was working with single paragraphs rather than whole units and happened to be doing it in print): if a 1,000,000 songs have been made and record stores tend to promote and stock hits (that top little sliver) then technology suddenly changes things because it makes all the non-hits accessible. Digital rules, shelves and real estate are sad anachronisms of a bygone age, and businesses need to wake up to the massive opportunity in all those things that only sell a little – one copy of a song, a book, a bag of flour (yeah, he even throws flour down The Long Tail).

Anderson speaks about The Long Tail with a kind of breathless enthusiasm. For the producer or band, it’s a chance to bypass all that meatspace stuff and speak to your markets directly. You might have written a book that was pulped but thanks to Amazon, even it can find a home with that handful of readers who have a yen for pulp.

There are a few little glitches along the way. Anderson talks about the “gnarly question of rights” (p. 96) but argues that the ecomomics of the Long Tail will eventually persuade even the most die-hard publisher, “…also improving the economics of the head…and will (thus) only accelerate the adoption of the technology”.

Lawrence Lessig blurbs on the back of my copy of The Long Tail: “Wipe the shelf clear of new economy books. This is all you’ll need.”

And I suppose I did pick up some new language to explain how buying and selling have changed as more stuff is available to more people in more ways all the time. But there’s some sort of odd sensation I was getting reading the book, and it has a connection to virtual worlds, or maybe just Second Life, or maybe it just reminds me that there’s as much hype as promise out there and to keep my guard up.

Marx Couldn’t Be Wrong, Could He?
Anderson rightly reminds us that the concept of The Long Tail works partly because it merges the production of things by professionals and amateurs. It works because no longer do you need to be a professional to enter their realm. I’m a professional in some areas but an amateur when it comes to virtual worlds. Sometimes I mistake the two, thinking that what I’ve learned as a professional can be transposed to a world I know nothing about. And I suppose amateurs sometimes make mistakes in the opposite direction, but there’s nothing wrong with that, and the costs of failure are low. So, you can be a professional song writer and think you “get the Web” and flop on your face. But you can be an amateur also, and flop, but you’ve also got the upside that the barrier to entry was low and maybe you get a hit instead and after all you didn’t stake your reputation on trying something new.

The Long Tail offers amateurs the chance to get in the game. You can be propelled from garage band to global youTube star over night. Or you can mob together a thousand people at home on their computers and throw together an operating system that rivals Microsoft. All of which is a bit disturbing to the old pros, like those flashy music exec types with their silk shirts or Bill Gates who was ranting about communism from his place on the lake (oh, more about communism shortly). Or even other meat space pioneers who Anderson pities a little for all the work they put in to figuring out the “old way of doing business”.

Anderson spends a few pages chuckling over the poor saps who work, say, in retail, giving them the vague assurance that “like it or not, hits are here to stay” (p. 147) and then devotes a few paragraphs defending retail racks, asking that “before we bury the shelf, let us first praise it” and marveling how many anthropologists, hidden cameras, radio-frequency ID tags and other assessment instruments have gone into knowing “the precise gradient of the vertical dimension” of the physical shelf and how “the best minds in supermarketology have learned how to make the most of each square inch of retail space.”

“It’s the very embodiment of capitalism evolved,” he says….and then BAM! (next paragraph) “Yet the shelf is so wasteful in many ways.” (Thus implying that if it’s wasteful, it’s almost anti-capitalist).

And here’s where I start to feel a little strange. On the one hand, Anderson is making a passionate argument for the business promise of The Long Tail, ending his book with a handy to do list for companies and reminding us that “On the infinite aisle, everything is possible” while on the other hand arguing that the production of goods to populate that aisle start to look like they could come from anywhere, a real gift to all those amateurs out there with a passion, and some time, and a desire to create. This desire by people to get their hands on the levers of production, Anderson reminds us, wasn’t invented by eBay or youTube, in fact we can head back to our good friend Karl Marx for a picture of how all this turns out:

“Marx maintained that labor – forced, unspontaneous and waged work- would be superceded by self-activity.” Eventually, he hoped, there would be a time when “material production leaves every person surplus time for other activities.” Marx evoked a communist society in which “…nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes…to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind without ever becoming hunter, fisherman, shepherd or critic”. (p 62)

So what I start to wonder is whether you don’t end up with a couple of values systems competing here. At the one end of the spectrum are the companies (old school, I’m assuming) who have been given the insight of the Long Tail so they can get with the program and tap into a market which arrives when they focus not on hits but on niches. And at the other end the producers of content, the amateurs (sometimes working with professionals, sure, or sometimes thinking they’re professionals but acting very amateur-like) who are unforced, spontaneous and, I guess, unwaged.

I am NOT a Buzzword
I’m just barely old enough to remember the hype train when it first came around. And first time around it was all about aggregating eyeballs, and content portals, and oh, does anyone remember “push technology”?

In all fairness to The Long Tail (and oh how I wish people who don’t know the term didn’t snicker when I use it, my motives are far more pure, truly) there IS something to be said about its relentless focus on the niche. Because yes, there’s the pro/am stuff, but there’s also the benefit of a widening of taste, as he points out, shifting culture Pop Top 40 and network TV to sub-genres and narrow casting.

But there’s this rising tide of terminology, and maybe The Long Tail is a better guide than most for the man in the corner office who doesn’t know a Twitter from a Looney Tune, but it still adds to a few core themes, and those core themes seem to be gathering around venture capital money like moths to a bright light, and when the venture capital starts to gravitate to the same place a bubble can’t be far behind. And one of those pools seems to be this idea of the niche, and aggregation, and filters, and the recommendation engine, and the blogosphere (gasp!). As Chris heads it in one chapter “the ants have megaphones” (I guess I’m an ant, but this sure isn’t a megaphone).

So Amazon is a filter, an aggregator, a portal between you and the niche of your choice. And Netflix is an aggregator. And Google is, of course, the ultimate aggregator. And what they all have in common is that they use increasingly sophisticated technology, combined with the inputs of their users, to create a demand for products that may only sell one or two copies but that sure add up.

And while we’re at it, here’s another take: using increasingly sophisticated technology, combined with the enthusiasm and inputs of their users, companies can create products for which there will be a demand, and we’ll call this open source. Because failing to create stuff that’s open and free, all those enthusiastic amateurs might beat companies to the punch and do it anyways, so it’s probably better to get in on the game sooner rather than later.

And one more angle – because if we need to find a market, and we need to find enthusiastic users, then maybe we can also tap into these sophisticated technologies and use ‘social media’ to find all these people, and bring them together, and somehow try to KEEP them together.

And out of all this, try to make some money from it all, forgetting the contradiction between the fact that, sure, lots of people want to be the guy in his basement with an undiscovered hit on their hands and strike it rich, but that a lot of the premise of all this production and wealth-generating fun is based on the willing input of creative people with some time on their hands and some passion and maybe some talent.

So the venture money flocks around Web 2.0, crowd sourcing, cloud casting, long tails, social media and ‘be bop’ reality, and in the meantime all this technology also creates transparency and blogging and the major winners turn out to be – who? Well, the PR agencies for sure.

One Wave Replaces Another
The Long Tail says that markets were once driven by hits. That meat space put a limit on how long the tail could be, because at some point you run out of shelf space. But that with technology, you could extend the tail almost forever, and in all those single sales you could make a tidy profit. The “head” (GOD how I wish they used better terms! Either that or I’ve got a filthy mind) doesn’t disappear (we NEED hits, Chris says, in order to “inform culture”) but the hits are less, well, hitty.

But what if it’s not that the “tail” of a market has changed, but the market itself? Let’s take books. The theory here is that there are fewer hit books – you know, like the latest Stephen King when you were a kid and everyone was carrying a copy (well, at least all your “out crowd” peers). Because we can now all buy books that suit our particular interests, and we have Amazon to thank for its recommendation engine, and it’s search, and its lovely little e-mail pings like a gentle nudge from the librarian. So with Amazon, there are fewer super hits and a lot of little hits, and a lot of REALLY tiny hits. The good news is, you don’t have to be Stephen King to make the sellers list. Or to even make the shelf for that matter.

But does it strike you that while the Long Tail theory is true when we dissect those old markets of “things” like movies or music – fewer mega hits, lots of little ones….that in fact we’ve simply replaced the same graph for a different market? Except we’re not graphing the market for books, we’re graphing the market of the aggregators themselves. A few mega hits (Amazon, ex Libris (its slightly worn cousin), and a couple of bricks and clicks operations for good measure) and then the same graph we used to see in the old days – a trailing off as the “shelf space” fills up, except this time the shelf space is where you’re placed on Google, how deep your banner advertising budget goes, and whether you can afford to upgrade your filter engine (a lesson maybe that Yahoo learned too late).

The old market model hasn’t died. It’s alive and well. And because we keep dissecting the old markets in search of new opportunities, maybe we’ve overlooked that the fundamentals are pretty much still there, they’ve just disguised themselves with a bunch of buzz words and venture capital, but blessed be – power is still in a few places, the long tail is alive and well in the “old markets” (and it’s running for free!), and while everyone is scurrying to develop a Facebook application or leverage the tail, someone, somewhere, is making money off all this scurrying and they’re worrying more about the next wave than the current one.

Climbing the Food Chain
As old markets flatten, and the hits get less hitty, and then new ‘distribution curves’ get applied to new models and we end up with a few mega hits of a different sort (Napster today, iTunes tomorrow) there’s still lots of room to climb the food chain. It’s not a bad view along the lowering side of the curve. I don’t need to wonder what it’s like out in the tail – I sell houses in Second Life, remember, I know what small niche markets are all about. (Makes note to update note cards for various language niche markets).

Virtual worlds are these really amazing test beds for all this stuff. They have very real economies. And they often give their users both the tools for production and the ability to own property. Second Life is perhaps the first true Long Tail virtual economy. Or maybe the first built-from-scratch Long Tail…because there were no mega hits to start with…it was all niche, all the time, and the niches kept growing, and before you knew it there were terrabytes of mostly amateur content, and there were a thousand “one sale” retail outlets, and there was a lot of stuff being swapped for free – a massive gift economy, on top of which a massive niche economy, on top of which a few aggregators started to come into play, on top of which…..what?

Because that’s the question. Because maybe virtual worlds, being the first made-from-scratch Long Tail, also hold the clues for how the hidden truth of the Long Tail will play out. The Long Tail didn’t suddenly just stretch out markets into an endless tail of niches. It replaced it with a higher order concept, one that leveraged insight into technology and its interaction with social networks and personal choice and built a business model around it.

So down amongst the copybots, you start to see the struggle of sustaining a long tail if you don’t elevate to a higher conceptual order. First, you try to protect. And then, in the absence of protection you climb the food chain to other things – branding, awareness campaigns, experience development, aggregation of talent.

But what happens after that?

Maybe there’s something about information architecture itself in a 3D environment that holds the key to understanding how to deepen the accessibility of information, content and property? Maybe there’s something in avatar expression that will open up a new insight into not just matching needs with product, but how to match desires and hopes and fears with ideas and people and community. The pioneers of Second Life and other virtual worlds might be playing in a massive long tail test bed, but they also might be sitting on the next concept that replaces the tail itself – someone, somewhere out there is sitting on the cusp of the next buzz phrase like “aggregating content” and in the process inventing the next Amazon.

And maybe there’s some other lessons in all of this, these test beds of “new economies” (I’m sweeping my shelves CLEAR of my old economics book Lawrence! – and yeah, that was singular).

Because this is a world with a tension between platforms and creators, where the niches get pretty small, and where the gift and Long Tail economy tends to up-end our notions of the “old economies” (thank goodness for land, something we can still hold on to). And that sounds a lot like where all this Long Tail stuff is bound to take us.

So I wonder what it says that we start to see the emergence of a tribal morality? I wonder whether griefers are like uncontrolled external events in an old economy, or are essential parts of this new economy that need to be understood? I wonder what it means that the niches become so small that simple notions of governance seem to splinter off or disappear?

I suppose for myself, I’m stuck down in the Long Tail and mostly having fun being there. But tensions with the folks up on the upper end of the curve can be discouraging, and I hold on to both the hope that the aggregation of the conceptual marketplace will give way to another enabling wave, or that at the very least we’ll learn the lessons of what it means to be in a tribe, or how to deal with IP issues and griefers, or come to some conclusions about governance – because if not, there’s a whole brave new world out there of Long Tailers that’s going to go through the same thing.


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