Chris Armstrong (again - the man does write about some interesting topics) has an interesting set of discussions regarding:
- Community and the Long Tail (pt 1)
- Community and the Long Tail (pt 2)
- Filters and the Long Tail: Part 1, Part 2, Part 3,
- Remixing and the Long Tail
At some level, all this stuff is about the same stuff - that people can self-select into small groups of high affinity, and that content, goods and services can do the same.
Chris' point about Filters is critical - this is the value of the community and the long tail - finding what is relvant to the community. Without "tastemakers" / "agents" who either set the trends or fill needs based on demand, the community will disappate. In my experience, the value people receive in exchange fore participating in a community comes from:
- Sharing: Connecting with like-minded people
- Learning: Becoming more educated about their interest / affinity
- Acquiring: Finding goods and/or services that are related to the affinity
Filters are critical for all three endeavors. Filters, to rehash Gladwell, serve as teachers (Mavens), promoters (Salesmen) and, well, Connectors.
As Chris points out, however, these rols no longer need to be performed by individuals, or evey by any human. Instead, software can now step in and create new forms of filtering. Software can connect you to people (e.g., eHarmony), goods and services (Amazon's "people who bought this also bought"), and information (Related Stories on the NY Times). What's important about this? Well, it allows for a couple of things:
1. Communities to form with less friction.
With software easing the movement of information, I no longer have to rely on knowing "the right people" to find what I need / what's important. Thus, I can stay current with the community with less effort.
2. Clearing prices to normalize, decreasing arbitrage margins
With poor information / information asymmetry, generally there are some enterprising types who can find one person's junk and turn around and sell it to someone else for whom it is a treasure. This means that the arbitrageur makes a tremendous margin on a single transaction, but it also means that very few transactions actually clear. As people get a clearer sense of what is demanded and what is available, the prices should move toward equilibrium, meaning that even though the arbitrage margin will dwindle, the volume should increase. This is classic long tail economics, but always worth remembering because often people ignore investing in the long tail because they feel "there is no money there". What they mean, of course, is that there is little visible demand at the time they are making the investment decision. However, if they could identify the latent demand, they might see a significantly different financial picture.
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