Posted by: Rob Hof on July 21, 2006
John Hagel has a well-thought-out post on the upshot of the Long Tail for media. The Long Tail, of course, is Wired Editor in Chief Chris Anderson’s name for growing importance of niche products—and the name of his new book (reviewed here). John also likes Chris’s book, but rightly notes that it didn’t really pursue what happens to existing media businesses as a result of the Long Tail phenomenon. John fills in some gaps:
Today, we have an interesting phenomenon – highly specialized aggregators focusing on one media type: Netflix for DVDs,YouTube for videos, Rhapsody and iTunes for music, Flickr for photos, etc. In many respects, this is a perverse replication of traditional media boundaries in what was once conceived to be a multimedia business. Amazon stands out as the major exception, although its real depth is in the book category. MySpace is another interesting exception, even though it retains a deep spike in music, perhaps because it, more than most aggregators, represents a deeper blend of community and content.
… My own view is that the current generation of aggregator businesses represents an unstable transitional form that will unbundle into two very different kinds of businesses: infrastructure management businesses and customer relationship businesses.
… So, what are the large media conglomerates to do? As I have suggested here and here, they can either unbundle or rapidly evolve into something else. Because of their broad reach to high quality audiences, they have an opportunity to make the transition to customer relationship businesses, potentially even preempting today’s generation of online aggregators if they move smart enough and fast enough. The problem is that this is a huge transition for most media companies today – the product mindset dies hard.
John even questions whether advertising can remain the main business model. Yikes. It’s worth reading the whole post to get more hints at the full impact of the Long Tail on media. But it’s clear I and my colleagues are in for a rough (but interesting) ride.