Here is a portion of a lecture I gave about the short head in Tel Aviv university.

 

 

 

special

So why are we so not unique?

Why don’t we fulfill our rebellious charming unique personalities and run to discover the wonderful gigantic fields of the long tail?

Why do we buy the same T-shirts, tablets or Apps? Why do we go to the same movies and concerts? Why can’t we be more fucking special?

The short answer is that we are all basically conformists. We match our attitudes, believes and behavior to our group norms. It helps us feel belong, a part of the group and it lowers our risk.

Solomon Eliot Asch, a Jewish psychologist who was born in Poland 100 years ago, and lived most of his life in New York, conducted a series of experiments during the 1950′s to explore conformism.

In his most famous experiment he gathered a group of college student to participate in a task – they were shown a card with one line and another card with 3 lines in different lengths and then had to choose which line of the 3 had the same length as the one in the first card. The thing is that except for one student, the rest of the group members were actually actors and they were given specific instructions on how to respond to each trial, in some cases they all gave the same wrong answer and in some they all gave the correct one. The results were clear – The one student who was tested and didn’t know about the play he was part of, was highly influenced by the other members and used to make the same mistakes they did. Even when he knew the answer and thought that the others were wrong he would choose their wrong answer as well.

Solomon Eliot Asch conformism experiment

Solomon Eliot Asch conformism experiment

“If everyone has one, I want one too”

The social influence that makes us pick the same picks like everybody else is also known as Social proof – We assume that the people that surround us know better and have more knowledge about stuff and therefore by imitating what they are doing we believe that we behave correctly.

This may also be referred as “the bandwagon effect” – the probability of any individual to adopt (a new trend, product, ideas) increases with the proportion of those who have already adopted. As more people adopt or believe in something, the others “hop on the bandwagon” regardless of their own beliefs, which they may ignore or override.

 

Don’t hesitate, Manipulate!

Our conformism can be used and manipulated. For example, the 16th century French poet, Jean Daurat, used to buy tickets to his own plays and give them for free to people, who in return agreed to applause.

When they started clapping their hands, the rest of the audience followed, thinking that their clapping was a signal of the performance’s quality.

Same goes to fake laughter in TV shows. The studios found that even though viewers find it annoying, they perceive sitcoms that use canned laughter as funnier than shows that don’t. Fake laugh tracks are less common today but can still be heard for example in “How I Met Your Mother” and other series. A recent study was done in 2011 by Psychologist Bill Kelley who checked the human brain’s response to humor. His findings were that “We’re much more likely to laugh at something funny in the presence of other people. Hearing others laugh — even if it’s prerecorded — can encourage us to chuckle and enjoy ourselves more”.

We will talk further about manipulating in order to become a short head winner later on…

 

“Feel what I feel, do what I do, like what I like”

Our conformism also applies when it comes to Likes.

It turns out that if you Like this post on Facebook it would help me get more likes from other people.

On august 2013, the science magazine published the research of Lev Muchnik, Sinan Aral and Sean J. Taylor, who checked how prior ratings such as Likes affect our rating. Their findings were that “positive social influence increased the likelihood of positive ratings by 32% and created accumulating positive herding that increased final ratings by 25% on average”.

As one of the researchers said: “Hype can work and feed on itself as well”. These findings are very interesting as they also shake the foundations of the “wisdom of the crowd” theory. If we are so influenced by other people thoughts and ratings, then the crowd is not really a crowd but a small group of people who spoke first and a big group of people that followed and accepted what the first group said.

 

This music sucks! I LOVE IT

A very interesting demonstration of this “Hype that can feed on itself” in music was given to us by Salganik, Dodds & Watts in 2006.

In their experiment they created an artificial online “music market”. 14,341 participates, most of them teenagers, were shown a list of 48 unknown songs from unknown bands. Half of them were able to see how many people already downloaded each of the songs (let’s call them “the touchables”), and the other half didn’t get any former information about the songs (“the untouchables”).

Each participant was asked to listen to whatever songs he chooses from the list and then rate it (1-5). They could also download the song to their computer after they had listened to them.

The result was very interesting – the popular songs of the touchables were much more popular than the popular songs of the untouchables and the un-popular songs of the touchables was less popular than the un-popular songs of the untouchables. In other words the early success led to much bigger future success just like a prophecy that fulfills itself. The hits became mega-hits.

Probability of listen vs. market rank

Probability of listen vs. market rank

 

The social influence helped the popular songs to become much more popular. The reasons that this, and other similar studies, offered are that people use the popularity of products as a signal of quality and because they are conformists they think that they will benefit from coordinating their listening choices (and also reading and watching) with the choices of others.

But you haven’t heard the interesting stuff yet…

A few years later, in 2008, they released another study.

Once again they invited people to a false “music market” with 48 tracks. Only that this time after gathering rating and downloads data from the first 2,211 participants, they created a new version of the site in which they inverted the popularity order of the songs – the most popular song (based on the first 2,211 participants) which reached 128 downloads was swapped with the less popular song that had reached only 9 downloads. The second most popular song was swapped with the second less popular and so on.

After introducing the new fake version of the site to more participants and gathering their data the results were amazing.

The fake number one track (which was apparently not very good based on the real downloads of the first group of participants) gained many downloads while the fake number 48 (which was actually the most popular among the first group) did quite badly.

Downloads vs. subjects

Downloads vs. subjects

 

We are all special!


 

At least that is what we tell our kids.

Most of us are basically conformists, we don’t have our own opinions on most things and even when we do, we tend to put them aside and follow the herd.

Should it make us feel bad about ourselves?

Well, it’s up to you.

Oh, no it isn’t…

Ask somebody

 

 

bass diffusion model - will it catch on?

I tried to postpone it but I guess it is time to start talking mathematics and dive into the Bass diffusion model in order to understand why the short head economy is happening. Therefor this post requires you to be focused and concentrated.

As said before the Bass diffusion model is a mathematical model that describes the “Diffusion of innovations”.

This is the Bass model principal:

These are the variables of the equation:

  • f(t) – The portion of the potential market that adopts the new product at time t.
  • F(t) – The portion of the potential market that have adopted up to and including time t.
  • a(t) – Adopters (or adoptions) at t.
  • A(t) – Cumulative adopters (or adoptions) at t.

And these are the parameters (coefficients):

  • M – The potential market (the ultimate number of adopters).
  • p – Coefficient of innovation (external influence such as PR, advertising etc.).
  • q – Coefficient of imitation (internal influence – interactions between adopters and potential adopters in the social system).

Another way to look at it is this:

The graph of a(t) looks like this:

The number of adoptors at time t - bass diffusion model

The number of adopters at time t

From the graph we can see the importance of the word of mouth influence (q). The flat blue line presents a case where there is no internal influence (meaning that the word of mouth doesn’t work at all)…

Let’s take a look at the Cumulative adopters graph (A):

The number of Cumulative adopters at time t - bass diffusion model

The number of Cumulative adopters at time t

As you can see, p (the external influence like advertising and PR) mostly affects the starting time of the adoption. q, the internal influence meaning the word of mouth) is the important parameter that influences the adoption and sales.

Here are another 2 examples:

  a4

a5  a6

are you still with us? that great! Get some coffee and let’s carry on…

 

How do we predict the future of the new product?

Well, it’s easy. After we have the real data of several time periods we can calculate the coefficients (p, q and m).

After we know the coefficients we can put them in the equation and predict the future adoption of the product.

Here is an example of how the model worked in the past:

Eight Generations of DRAM Chips Actual and Fitted 1974-2000 / same p's and q's - Data from Gartner Dataquest

Eight Generations of DRAM Chips Actual and Fitted 1974-2000 / same p’s and q’s – Data from Gartner Dataquest

 

Now let’s go back to the original equation:

On the left side of the equation is the portion of the potential market that adopts at time t (f(t)) given that they have not yet adopted (1-F(t)). It is known as a hazard rate. It also presents the probability that someone will adopt the innovation in this time period, given that he has not yet adopted it.

For example – let’s say that 10% of the potential market have bought the new product at time X, and till now (altogether including time X) 30% of the potential market have purchased the product, the result would be: 10%/70% = 1/7 = 0.14. That is also the probability that someone who has not yet purchased the product would do so in this time period.

If another 10% of the potential market bought the new product at time Y, and till now (altogether including time Y) 80% have already purchased the product, the result would be: 10%/20% = 0.5. Again, that is also the probability that someone who has not yet bought the product would do so in this time period – 50%. He can be one of the 10% that will buy the product (out of the 20% that still haven’t) or one of the 10% who would still not buy (out of the 20%). The chances are even in this case.

The right side of the equation is linear with respect to the number of previous adopters and the variables.

So the chances that someone would buy the product are influenced by the variables and the number of previous adopters.

The chances for adoption are higher when q, p and the number of previous adopters are higher.

all we have to do now is check if anything happened to these coefficients in the last several years.

to be continued…

 

For further reading - http://www.bassbasement.org/BassModel/BassMath.aspx

 

In 2011 28 baby girls were named Cataleya. In 2012 there were 636!

In 2011 28 baby girls were named Cataleya. In 2012 there were 636!

“The Cataleya orchid. It comes from one place on Earth. Our place.  My mother, your grandmother, used to grow them. Every morning I would wake up to the sight of them. The smell of them. That’s why I named you after them. It reminds us of who we are.”

From the movie “COLOMBIANA”. Written by Robert Mark Kamen & Luc Besson.

 

In 2011 28 baby girls were named Cataleya.

In 2012 there were 636!

An increase of more than 2000%.

The movie Colombiana, whose main character was Cataleya, might have had something to do with it.

Names and trends in names have always been affected by famous actors and characters. Cataleya is just a recent example.

The U.S. Social Security Administration provides a list of new born baby’s names every year since 1885. They offer the data for researchers who look for trends in names or for people who are just bored in general.

We took the opportunity to check if girl name trends endorse the short head theory.

This is what we have found…

the short head of names 2012 - source: The Official Website of the U.S. Social Security Administration

the short head of names 2012 – source: The Official Website of the U.S. Social Security Administration

  • The 10 most popular girl names (out of at least 19,380 different names that were given that year) in 2012 were given to almost 10% of the new born girls.
  • The 100 most popular names (0.5% of all the names on the list) were given to almost 35% of the girls.
  • The 250 most popular names (1.275% of all the different names) were given to 50% of the girls.
  • The 1,000 most popular names (5.16% of all the different names) were given to almost 75% of the girls.
  • The 2,000 most popular names (10.3% of all the names) were given to 82.6% of the girls.
  • The 4,000 most popular names (~20% of all the names) were given to ~90% of the girls.

That is a nice short head!

But what we also see is the tail is getting longer throughout the years and that the head is getting … shorter. In other words, “The Short Head” theory does apply here but it used to apply even more in the past.

For example – the most popular girl name in 2012 was Sophia. It was given to 22,156 baby girls (1.3% of the girls that were born in 2012). In 1982 the popular name was Jennifer. It was given to 57,102 girls! Almost 3.4% of the girls that were born that year were named Jennifer. In 1885 the most popular girls name was Mary, and it was given to almost 7% of the girls that year.

There were only 1197 different names on the list of the year 1885 (of girl names that were given to at least 5 different girls). Not much compared to the 12,300 names in 1985 and almost 20,000 names in 2012.

So we still see in 2012 a short head behavior but we also see that the tail grew longer and that the “hits” got shorter.

Why is that?

Well, it is about time you started contributing to this blog as well :) Lets hear what you think.

 

 

 

“This year marks the 100th birthday of the T-shirt. Maybe” – Here is a site that doesn’t take itself too seriously. That’s cool with me; it is T-shirt we are talking about, not rocket science.

However, they do say in the article that 100 years ago, in 1913, the U.S. Navy ordered a light undershirt for sailors to wear under their uniforms. That brought tees into public consciousness.

But we don’t really need the allegedly 100 year’s celebration to check on the short head of T-shirts, do we? I just couldn’t keep that unimportant piece of information to myself.

Let’s talk about online t-shirt stores.

Apparently it should be a Long tail classic: No need to keep stocks on the shelves; the retailer can just print the desired design on the desired t-shirt the minute an online order gets in; the buyers can express themselves and chose niche designs that fit them… classic long tail logic.

But does it really work that way?

My first guess was that it doesn’t but I had to check. After all, the short head theory is no rocket science but I do take it seriously.

So I asked 2 people who know something about Tees.

Spacebar - my favorite popular threadless T-shirt

Spacebar – my favorite popular threadless T-shirt

The first guy I asked was Jake Nickell, the founder and CEO of Threadless, my favorite T-shirt website. Threadless was founded back in 2000 after he won a t-shirt design contest. The site invites anyone in the world to submit their own T-shirt design. Then the Threadless community votes on the design and if it is chosen, it is offered for sale as t-shirts and other products on the site.

Jake told me that over the years Threadless received half a million designs for T-shirts!

Only 500 of them were actually printed.

99% of the designs that are submitted don’t feel the fabric of a T-shirt. They just get covered with dust in a back hard drive somewhere.

In other words, Threadless doesn’t even offer the long tail for sale!

That is not all – within the 5,000 designs they do print the distribution is  like this:

1.33% of the Tees generate 20% of the sales.

8% of the Tees generate 50% of the sales.

30% of the Tees generate 80% of the sales.

The last 70% of the Tees generate only 20% of the sales.

Classic short head!

The share of revenues as function of the number of Tees

The share of revenues as a function of the number of Tees

This is what the graph would probably look like if they had printed all 500,000 different designs that were ever submitted.

The share of revenues as function of the number of potential Tees

The share of revenues as function of the number of potential Tees

The situation is quite similar at bustedtees.com, another online t-shirt store I like.

This is what Josh Abramson, the CEO of Bustedtees told me: “For t-shirts I think we’re probably still close to that 20% of the shirt produces 80% of the revenue…. I’ve been doing this stuff for 14 years since starting CollegeHumor in 1999 — both of our businesses are certainly driven by hits… That being said, we still have a nice benefit from having a big catalog to take advantage of the long tail as well… “.

So why doesn’t the long tail work here?

There are several reasons.

First of all, most of us, consumers, love popular stuff (as we can learn from the chart). We are not really that unique and special. We want Hits! This is one of the basic short head basics. We do however appreciate a site that offers us a nice variety and an option to browse.

Even if we are unique and feel like browsing for that something special, there is a limit to our ability to deal with too much information and variety. How much time do we want to spend on a T-shirt catalog searching for a…T-shirt? Or as Josh from Bustedtees suggested: “Hits have become more and more important in a world with so much noise online”.

As for the online store, dealing with thousands of designers requires a lot of resources. True, it doesn’t take much Database space, but it does requires resources and attention. You need to manage the monthly billing and payment to all of them, offer support, customer relations etc. it can be done but why bother if almost nobody wants to buy it?

The long tail is not economical as we once thought – the revenues that we can generate out of it don’t really worth it and it is much more efficient to focus on the hits!

 

DAFT DROID - My favorite bustedtees T-shirt

DAFT DROID – My favorite popular bustedtees T-shirt

So we have seen that the movie industry has set some incredible records in the last several years (read more here), and that the word of mouth, which is a fundamental reason for the short head, works overtime when it come to movies (read more here).

Now let’s fly a little higher and check some more macro aspects of the movie industry.  For that purpose we shall take a look into the Theatrical Market Statistics 2012 that were published by the MPAA (motion picture association of America).

First of all it is good to know, especially for those in the movie industry, that the revenues are going up and that so is the number of digital screens and the price of an average movie ticket – the growth is bigger out side of the US but also domestic we see that the numbers go up.

Global Box Office – All Films (US$ Billions) / source: Theatrical Market Statistics 2012,  MPAA

Global Box Office – All Films (US$ Billions) / source: Theatrical Market Statistics 2012, MPAA

 

But this is not what we are here for. We are here to check on the short head of the movies and see if and how the film makers react to it. The best way to learn about it is by checking the number of movies that were produced and released each year.

Oops.

In 2012, 677 movies were released in domestic theaters. This is a boost of 11% from 2011 and 49% from 2003.

Is this the sound of a tail getting longer?

Let’s go deeper.

549 of The 677 movies that were released in 2012 are non-members movies. Only 128 movies were released by MPAA members. MPAA members are the big 6 studios (Walt Disney Studios Motion Pictures, Paramount Pictures Corporation, Sony Pictures Entertainment, Inc. Twentieth Century Fox Film Corporation, Universal City Studios LLC, and Warner Bros. Entertainment Inc.) and their subsidiaries.

If we look at the number of movies that the MPAA members released over the years the picture is different – their 128 movies that were released in 2012 are a huge decrease from 141 in 2011 (9%) and from 180 in 2003 (29%).

source: Theatrical Market Statistics 2012, MPAA

The big studios are making fewer movies year after year and in the meantime the small studios have doubled their releases in the last 10 years.

It seems like the big 6 studios fully understand and follow the rules of the short head scene while the small studios are still reading the book about the long tail.

But who says that the big studios are right? Maybe there is a long tail in the movies and they don’t know it?

Mmmm. Don’t think so.

 

The pareto of Hollywood

So I looked into box office mojo again and checked all the revenues of all the studios and all the movies that were playing in 2012.

According to BOM (box office mojo) the top 7 studios (the 6 MPAA members and Lionsgate which is the biggest independent studio) had 205 movies in 2012 (156 new and 49 that were released in 2011 and still running).

These 205 movies made all together almost 10 billion dollars in 2012. Bear in mind that not all of their movies were hits. They had some major flops but they still managed to get almost 10 billion dollars (domestic).

All 802 movies that were playing in 2012, according to BOM, made less than 11 billion dollars. That means that the big 7 studios were responsible for more than 90% of the revenues!

 7.69% of the studios, who had movies that were playing in 2012, took almost 100% of the revenues.

 The other 92.3% of the studios hardly made any revenues…

 

 The market share (in revenues) of the different studios / source – box office mojo

The market share (in revenues) of the different studios / source – box office mojo

 

The top grossing 10 movies in 2012 were responsible for 30% of the revenues. That means that 1.5% of the movies that were playing in 2012 made 30% of the revenues.

3.6% of the movies played in 2012 made more than 50% of the revenues.

Less than 15% of the movies made more than 90% of the revenues!

 

The market share (in revenues) of the different movies / source – box office mojo

The market share (in revenues) of the different movies / source – box office mojo

 

This is a nice short head but maybe it has always been this way?

So I turned back to BOM and checked the numbers of 2002.

Did the revenue split differently back then?

Apparently there was already a short head back then – here is a chart of the revenue share of the top grossing 100 movies in 2012 and in 2002:

 

The market share (in revenues) of the top grossing 100 movies / source – box office mojo

The market share (in revenues) of the top grossing 100 movies / source – box office mojo

 

The short head of 2012 seems only a bit bigger than the one in 2002.

But when we examine the market share (in revenues) as a function of the movies share (not the absolute 100 movies but the 15% of the movies that were published in the year) the picture is far more dramatic.

While in 2012 3.6% of the movies made 50% of the revenues, in 2002 it took almost 6% of the movies to reach 50% of the revenues.

 While in 2012 14.3% of the movies made more than 90% of the revenues, in 2002 14.3% of the movies made less than 80%.

The market share (in revenues) of the top grossing 15% of the movies / source – box office mojo

The market share (in revenues) of the top grossing 15% of the movies / source – box office mojo

 

It appears that the movie industry has shifted towards the short head, leaving the long tail to the small and medium studios. These small studios are still making more and more movies, trying and sometime succeeding to make a hit, but their revenues as whole are almost meaningless (sounds like what is happening to the long tail musicians… they tour much more than the popular artists but make less revenues – read more here).

The big studios are making fewer films, investing more and more money in each of them; they know that at this era all they need is a small amount of huge hits.

“Taking notice of changing industry economics and shifting consumer tastes has been modifying that blueprint. His strategy involves making fewer but more ambitious movies”. that is The New York Times wrote in 2010 about Jeff Robinov, the former president of the Warner Brothers Pictures Group.

Steven Spielberg

Steven Spielberg recently explained that in a panel at the University of Southern California that: “We can’t expand the week. We can’t expand the 24-hour cycle. So we’re stuck with so many choices. You’re at the point right now where a studio would rather invest $250 million in one film for a real shot at the brass ring, than make a whole bunch of really interesting, deeply personal — and even maybe historical — projects that may get lost in the shuffle because there’s only 24 hours”.

Spielberg, by the way, doesn’t think that this strategy will prevail: “There’s going to be an implosion where three or four or maybe even half a dozen of these mega-budgeted movies are going to go crashing into the ground and that’s going to change the paradigm again”.

But the short head isn’t a paradigm. It is a profound change in our economy – in the demand and supply. The consumers, or at least most of them, in this case the moviegoers, don’t really want a long tail. They want hits. On the other side we have the suppliers, in this case the studios, who are doing what is right for them – focus on a small amount of potential hits and meeting the demand.

If one or more studios would fall in the process it probably won’t really change a thing.

 

A parade of turkeys from the 1922 Cuero Turkey Trot - the bass diffusion model - part 1

A parade of turkeys from the 1922 Cuero Turkey Trot / source: www.turkeyfest.org

The death of Vilfredo Federico Damaso Pareto in August 1923 didn’t have much impact on the people of Cuero, a small town in Texas, USA.

They were busy getting ready for their annual “Turkeyfest“, a parade in which more than 30,000 people come to see 20,000 turkeys march together down the Main Street of their town, dancing and enjoying with big band music.

Another reason for not grieving over the death of Paretto was that they didn’t really know the guy who died more than 5,000 miles away in Switzerland.

What they also didn’t know was that a few blocks away from the Turkey parade route that was covered with feathers and crumbs of corn, and 3 years later, Frank Bass would be born.

Frank Bass grew up in Cuero, and after graduation he had to decide if he wants to be a cowboy or a professor.  The decision was hard. “Cowboys dominate on the honesty dimension, but they are, perhaps, slightly more intelligent than professors. Alas, however, professors make a lot more money than cowboys” He said.

Luckily to the marketing profession he chose to be a professor.

Today he is known as the creator of the Bass diffusion model, which was first introduced in 1963.

Bass diffusion model is one of the solid bases and explanations of the short head theory.
Bass diffusion Model

 

The origins of the Bass diffusion model

 

Diffusion of Innovations

In 1962, Professor Everett M. Rogers gave a lecture at Purdue University, where Professor Bass was teaching at that time.

It was a few months after Rogers, who was a professor of rural sociology, published his book “Diffusion of innovations“.

“Diffusion of innovations” tried to explain how innovations (new ideas, objects etc.) are being spread through the communication channels over time and among the members of a social system.

The “spreading” is done by word of mouth and the reason why it is so important is that “new” things are perceived as risky and uncertain.  People try to lower the risk by seeking out others like themselves who have already adopted the innovation.

Therefore the diffusion process starts with the innovators, then the early adaptors, who adopt innovation and then spread the word further until the innovation gets to a critical mass.

 

The diffusion of innovations according to Rogers

The diffusion of innovations according to Rogers / source: Wikipedia

 

The book was one of the first attempts to understand how we adopt innovation, a subject that engaged Frank Bass as well.

After Professor Roger gave his speech at Purdue University, one of Frank’s students came to him and asked if there was a way to express the idea of imitators and innovators that Rogers talked about, mathematically.

Frank took a pen and started scratching an answer, a mathematical model that would describe the “Diffusion of innovations” – it didn’t take him long to come up with one.

It did, however, take him another 5 years to write a complete paper that provided empirical support for his model.

Two years later, in 1969, this paper was published as the Bass diffusion model.

Until today the Bass diffusion model is one of the most widely cited and tested models in marketing science.

It also explains why the short head is so huge and getting bigger and bigger!

 

An introduction to the short head

How long did it take the radio to reach 50 million listeners? 38 years.

How long did it take TV to reach 50 million viewers? 13 years.

How long did it take the internet to reach 50 million users? 4 years.

How long did it take Facebook to reach 50 million users? 3.5 years.

How long did it take I-pad to sell 50 million pieces? 3 years.

How long did it take Google+ to reach 50 million users? 3 months.

How long did it take angry bird space to reach 50 downloads? 35 days.

How long did it take Suzan Boil to reach 50 million views on YouTube? 7 days.

How long did it take Justin Bieber’s “Baby” to reach 50 million views on YouTube?

Less than a day…

 

the short head - how long did it take it to get 50 million users

How long did it take them to reach 50 million

 

Everything seems to happen much faster these days.

Everyday records are being broken, in sales, popularity, downloads etc.

In August 2012 Fifty Shades of Grey has become the best-selling book in Britain since records began, surpassing Harry Potter and the Deathly Hallows with sales of 5.3 million copies.

Few days later Taylor Swift beats Lady Gaga’s record for fastest-selling iTunes number one with her “We Are Never Ever Getting Back Together” song that got to the top in less than an hour.

Few weeks later, on October 2012, One Direction top US singles chart with fastest-selling British release ever.

Few weeks later, in November 2012, PSY’s “Gangnam Style” passed Justin Bieber’s “Baby” to become YouTube’s most watched video at 805M views.

Few months later, on March 2013, Samsung Galaxy S4 Shattered Pre-Order Record Set by Galaxy S3, Most Popular Android Phone Ever.

Few days later, Justin Timberlake breaks US sales records with new album “The 20/20 Experience”.

A month later Moshi Monsters toys broke Easter sales records…

 

So, can it get any higher?

It sure can!

Welcome to the era of the Short Head – where few sell more than a lot!

 

david bowie

 

“Industry has a lot to do with things… The industry is tough, especially for a band like us, a rock band right now. We’re not bitter about it or anything like, “Fuck the music industry”, that’s the last thing we’re thinking. We’re all continuing to do music”

After 10 years together as a band, Dave Strauchman of “Every Avenue”, explains their break up in Oct 2012 in an interview to The Gunz Show.

Every Avenue / long-tail artists tour more

Every Avenue is a pop punk band from Marysville, Michigan. They have 228,000 likes on Facebook, millions of views on YouTube but most probably you haven’t heard of them and they are still referred to as the “long tail” of the music industry.

Before their break up in 2012, Every Avenue was also one of the fastest growing artists in touring. From 11 tour dates they had in 2007, to 140 in 2010.

According to a songkick.com report, long-tail artists tour more than the most popular artists, and Every Avenue is just an example.

Their report divided artists into quartiles based on their site internal popularity ranking, which is the number of users who are tracking that artist and want to see them live.

 

long tail artists tour more

source: songkick.com / Long tail artists touring more

 

The result shown in the graph above is clear – not only that the long tail artists tour more than the popular ones, they also present a very big growth in their touring.

In their blog songkick also mention a research that was conducted by Julie Holland Mortimer, Chris Nosko and Alan Sorensen in 2010: “Supply Responses to Digital Distribution: Recorded Music and Live Performance”

While file-sharing may have substantially displaced album sales, it also facilitated a broader distribution of music, which appears to have expanded awareness of smaller artists and increased demand for their live concert performances. Concert revenues for large artists, however, appear to have been largely unaffected by file-sharing. Music for large artists was likely widely available prior to file-sharing, and as a result it is not surprising that demand for those artists’ concerts would have been largely unaffected by file-sharing. Similarly, the decline in album sales is much more pronounced for large artists than for small artists. Again, for small artists, file-sharing may have increased awareness of their music and encouraged some additional album sales from a larger fan base even as it displaced album sales to others.”

David bowie - Music itself is going to become like running water or electricity

By the way, one famous artist who had it all figured it out already in 2002 said back then: “Music itself is going to become like running water or electricity… You’d better be prepared for doing a lot of touring because that’s really the only unique situation that’s going to be left. It’s terribly exciting. But on the other hand it doesn’t matter if you think it’s exciting or not; it’s what’s going to happen.”

The artist is David Bowie and we will be getting more meaningful and wise quotes from him in later posts.

These 2 reports teach us that the less popular long-tail artists tour a lot and that there is more demand for their concerts. That is supposed to be encouraging for the long tail musicians, right?

mmm…

If that was the case, why would Every Avenue, who toured all over the place, break up after 10 years and complained about the “industry”?

If you have read my previous posts you probably already know the answer.

 

the short head of live music

Again, it is all because of the short head.

It seems that although the indie and less popular artists travel a lot and perform more than before, the short head rules in the live music arena in terms of money.

“The music industry is a microcosm of what is happening in the U.S. economy at large. We are increasingly becoming a “winner-take-all economy,” a phenomenon that the music industry has long experienced. Over recent decades, technological change, globalization and an erosion of the institutions and practices that support shared prosperity in the U.S. have put the middle class under increasing stress. The lucky and the talented – and it is often hard to tell the difference – have been doing better and better, while the vast majority has struggled to keep up.

These same forces are affecting the music industry. Indeed, the music industry is an extreme example of a “super star economy,” in which a small number of artists take home the lion’s share of income.”

These words were said by the Chairman of White House Council of Economic Advisers, Prof. Alan Krueger, at the Rock and Roll Hall of Fame on June 2013, The theme of his talk was: “Land of Hope and Dreams: Rock and Roll, Economics, and Rebuilding the Middle Class”.

Prof. Krueger, who also teaches Economics and Public Affairs at Princeton University, likes to explain economics using examples of the rock ‘n roll industry.

In 2004 he published “The Economics of Real Superstars: The Market for Rock Concerts in the Material World“.

He found out that 1% of the performing artists in 2003 took 56% of all concert tickets revenues in that year! The top 5% of all artists took almost 90% of the revenues! The remaining 95% took only 10%.

The short head of live music concerts is significant.

His research also showed the change throughout the years since 1982. In that year the short head of the artists, meaning the 1%, took only 26% of the revenues of all concert tickets. The top 5% took 60% and the remaining 95% took 40%.

 

the short head of live music - The bigger got bigger and the smaller got smaller.

source: The Economics of Real Superstars: The Market for Rock Concerts in the Material World

The bigger got bigger and the smaller got smaller.

 

The superstar economy beats the long tail economy

So what has happened since 2003?

According to Prof. Krueger it hasn’t changed much. The “long tail” economy didn’t affect the the live concert industry, or as the wired magazine article well said: “We Listen to Indie Bands Online, But Pay to See Madonna”.

Krueger told Ryan Tate of Wired that based on his latest research update, from February through June of 2013, the top 1% of artists garnered 56.3% of total concert revenue and that “These numbers bounce around from year to year, but I see no evidence that it has become less of a superstar economy since I last published on it”.

We will discuss the reason why in future posts.

 

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“Amazon had over the last few years either lowered discounts on scholarly books or, in the case of older or slow-selling titles, completely eliminated them” said Bruce Joshua Miller, president of Miller Trade Book Marketing, a Chicago firm representing university and independent presses, to DAVID STREITFELD of the new York times (July 4th 2013).

The article claims that As Competition Wanes, Amazon Cuts Back Discounts –  They still offer a lot of discounts on bestsellers, where they have competition, but reduce the discounts on niche titles that can’t really be found in other stores.

Some small publishers are disappointed at Amazon that once was their savior and stood after its slogan about ‘leveling the playing field for small publishers’ but now turned on them.the story reminds me of this cartoon from 2005.

THE SHORT TAIL by Hugh Macleod, 2005

THE SHORT TAIL by Hugh Macleod, 2005

STREITFELD suggests a reason for Amazon’s new discount policy: “In its 16 years as a public company, Amazon has received unique permission from Wall Street to concentrate on expanding its infrastructure, increasing revenue at the expense of profit. Stockholders have pushed Amazon shares up to a record level, even though the company makes only pocket change. Profits were always promised tomorrow. Small publishers wonder if tomorrow is finally here, and they are the ones who will pay for it.”

Amazon is the model of the “long tail theory” – If the things said in the article are true, then this might be a proof that the long tail is not really profitable. Not even for retailers.

Read the full article here.