Content Aggregators Are King of The Hill
Thanks to the advent of feed readers and technologies of the like, web content has become more accessible than ever before. Suddenly, you can spend the entire day having fresh content to look at and keep your brain on a content high all day long. What a great world we live in right? Yes, but eventually you are going to have access to more content that you are interested in than you are capable of consuming (if you aren’t already facing that problem). The volume of niche content is increasing rapidly. This phenomenon can be illustrated by the “long-tail theory”.
In his article, “The Long Tail”, Chris Anderson successfully illustrates what the long tail effect is. In an interview with Robbie Vann-Adib, the CEO of Ecast, Chris is asked “What percentage of the top 10,000 titles in any online media store (Netflix, iTunes, Amazon, or any other) will rent or sell at least once a month?”. Vann-Adib proceeds to share the shocking results:
Most people guess 20 percent, and for good reason: We’ve been trained to think that way. The 80-20 rule, also known as Pareto’s principle (after Vilfredo Pareto, an Italian economist who devised the concept in 1906), is all around us. Only 20 percent of major studio films will be hits. Same for TV shows, games, and mass-market books - 20 percent all. The odds are even worse for major-label CDs, where fewer than 10 percent are profitable, according to the Recording Industry Association of America.
But the right answer is 99 percent. There is demand for nearly every one of those top 10,000 tracks. He sees it in his own jukebox statistics; each month, thousands of people put in their dollars for songs that no traditional jukebox anywhere has ever carried.
In short, each individual has their own personal tastes. Before the advent of the internet, local stores had to cater to genric demands, but now stores, product providers, and content distributors can provide niche products to a broad marketplace. Ok, so this long-tail concept isn’t a recent revelation, but what is current is the rapid increase in niche content in recent years. As the volume of niche content on the web booms, consumers are going to become overwhelmed. The solution? Content aggregators.
In his article “The Content Aggregators and the Fat Belly”, Om Malik argues that aggregators are part of an increasing trend that is going to continue; an argument that I support. Additionally, Malik references Robert Young’s article about the “fat belly” which is the area between the hit-driven end and the long-tail end of the power law distribution curve. In his recent report Spencer Wang at Bear Sterns supports the fat belly concept and suggests that this is where entertainment and media companies should be focused.
Ultimately, over the next year you are going to see a rapid growth in content aggregators. If you decide as a business to go after the “fat belly”, you will be up against stiff competition from larger media companies. Alternatively, you can focus on the long-tail (niche markets) and enjoy steady growth and a more diverse competitive landscape.