The Long Tail, fashion design and collectables

I don't make a point of cross-referring my own posts, but there's very little overlap between the readerships of IP Finance and Fashionista-at-law, and my piece there this morning ("Does my Long Tail look big in this outfit?", here) is arguably as relevant, if not more so, to readers of this blog than that one. The piece draws attention to the imbalance between the windows of opportunity for deriving revenue as between fashion designers on the one hand, whose markets are often ephemeral creatures of a single season, and sellers of collectable dolls on the other. Enjoy!

Micro-Payments for On-Line Contents: Is the The Long Tail No More ?

I almost let pass the recent announcement that the Wall Street Journal (read News Corp) plans to introduce micro-payments for individual articles. What I read is that the micro-payments will apply for readers who choose not to pay a $100 annual subscription fee. Reports have noted that Financial Times is also considering a form of micro-payments for its contents.

These announcements are the latest salvo in the Armageddon drama in which the print media seeks to find a business model that can offer some type of economic viability in an age of promiscuously available free on-line content. The old mainstays for supporting contents in the print era--subscriptions, want-ads and other forms of advertising--appear to be inadequate by themselves in the on-line environment (e.g., Craig's List makes the want ads service a virtual online non-starter for such news organizations).

I recognize full-well that the drama that is unfolding for a business model for online news contents still has a number of scenes, if not full acts, to go. In particular, I recognize that cultural mores are such that there is an aversion to paying for heretofore free contents. Don't get me wrong, I am as an avid a user of free online contents as anyone. Still, there is a deep-rooted residue of the Old Media within me that rationalizes that subscription support for online content is part and parcel of a vibrant press. But when I tell this to my kids, I tend to get a bit of a glazed reaction. Acculturated to wholesale access of free contents, the learning curve towards an alternative conception of content availability is a daunting, uphill, battle.

Against this backdrop, I still hold out a lingering hope that a business model for online news contents will take root based on something other than nostalgia for the print media. I see this hope as based on a marriage of copyright and trademarks, where the latter is the driver to monetize value in the former.

By this I mean that a smallish number of strong news brands will succeed in being able to charge for their contents primarily due to the fact that such contents are made available under the brand. In a rough analogy to brands in the bricks and mortar world, just as a strong brand succeeds in extracting monetary benefit for goods that would otherwise not enjoy this pricing advantage, so to will the strong news brands succeed in monetizing contents that would otherwise be sought for free. Stated otherwise, a strong brand will always be able to monetize value, even in the exaggerated case where the value of the non-brand (content) product will approach zero.

If that be correct, then one wonders how Chris Anderson's "long tail" will fit in. As readers will recall, Anderson posits that the on-line world frees up both supply and demand at the speciality tails of a product category in comparison with the limited offerings that are inherent in a bricks and mortar world of distribution. Instead of a small number of mega-winners, the "long tail" promises a potentially large number of niche winners.

That view may be correct for the sale of widgets in an online environment, but it would seem to have less currency in the micro-payment world for online contents, as I have suggested. The reason is clear: If the model succeeds, there will be a few winners, able to monetize their contents, and a large number of other content providers that will struggle or simply be unable to monetize their products. How such a bi-bifurcated world, bereft of the long tail and with only a few winners will impact on the nature and quality of the contents themselves, is worthy of a separate posting.

App Store: The Long Tail or Trojan Horse?

The oldest "chicken and egg issue" in IP law must be the copyright question: what takes precedence: the author and his work, or its commercializer/distributor? I admit that the question is not precisely fair, because the existence of a work is obviously the prerequisite for its distribution and sale. That said, prior to the means of mass reproduction (I am going all the way back to the advent of the printing press), works were few and commercially irrelevant. True, people have and will always create works, but it is only the ability to commercialize the work that warrants copyright law and the legal and business apparatus that underpins the system. Creations are typically not made for their own creative sake, but with an eye how that work can successfully be distributed and sold.

I thought of this most basic of copyright truisms when I recently read an item published on April 24 on CNBC.com entitled "Big Game Makers Staying Off the iPhone". The gist of the article is the reluctance of some big video game producers to proceed warily with making at least some of their games available for download onto a iPhone via the Apple App Store.

On the one hand, the thought of a games application intentionally shunning the App Store seems difficult to fathom. After all, various media reports have notedthat App Store expects to reach the one billion download level virtually any day. That kind of potential market would seem to make the App Store the dream platform for a game developer seeking to monetize his product in the smartphone environment. And indeed, some game developers appear to have enthusiastically embraced the App Store. The CNBC report indicates that Electronic Arts has five games available, including the high-profile game "Spore". As well, an iPhone version of "Star Wars: The Force Unleashed" was released simultaneously with its release for the xBox 360 and Playstation 3.

However, as noted by CNBC, "[o]f the Top 25 paid applications (most of which are games) in Apple's App Store, only two are from established third-party publishers: EA's Tetris" [I assume the same "Tetris" I played a decade or two ago--njw] and Namco's "Galaga Remix." In particular, the article noted the reluctance of game maker Activision to publish a title via App Store. Notably, Activision is reported to have cut a deal to distribute five "blockbuster" titles to a number of platforms--none of which is the iPhone. The reason for Activision's reluctance seems to be rooted in the current economics of the App Store download market. True, we are reaching the one billion download level, but that activity has not yet translated into the kind of financial flows that make the App Store a preferred distribution platform for the larger players in the electronic games industry.

The business environment created by the App Store was described by John Taylor, an analyst with Arcadia Investment Corporation, as follows:

"It used to be that competitive advantage was defined by time to market and establishing a presence on new platforms before the competition. The genius of the iPhone is that all it takes is a small file and a consumer touching a screen to d0wnload it. It is the most elegant way to deliver interactive entertainment I've ever seen.... It's a huge opportunity, but it is going to be amazingly fragmented."

Well and good--so here's the question: Is the iPhone/App Store combination the Nirvana platform for the "long tail" model of distribution of contents and products? Or is the iPhone/App Store merely a Trojan Horse for ultimate domination by the larger game players when they ultimately decide to mark to App Store as a preferred means of distribution for their products? You will remember that the "long tail" model, as developed Chris Anderson, the editor of Wired magazine, posits that on-line distribution enables niche players to reach a customer audience to which it was unable to have access in the bricks-and-mortar days.

Translated into the App Store environment, "[t]o a small (or single-person) development house, $500,00 or $1 million are significant, but to a video game publisher, they're basically pocket change." That view would seem to support the "long tail" notion, where the potentially huge distribution numbers allow developers at the far end of the tail to reap commercial reward. Stated otherwise, fragmentation of the AppStore market provides exactly the kind of benefit envisioned by the "long tail".

However, the CBNC report suggests that farther out in time, the situation may change. The article suggests that, at some point, there will be more distinct winners and losers on the AppStore. With a reported 8500 games already available and presumably more coming on-line every day, there may be a day where more traditional barriers of entry will come into play, and the ability of the game publisher to support its product at the engineering and marketing level will provide a material competitive advantage and determine the ultimate success of the game.

All of this is a long way from the author-centric notion of copyright. And while "chicken and egg" it might not be, distribution and sales is certainly front and center in connection with the ultimate fate of creations in the computer game world. Let's check back again six months or so and see how things have developed.

The Long Tail on the Prowl

Will the Long Tail do away with IP Rights?

I may be a bit late getting to the party, but I have just finished reading Chris Anderson's best seller of 2006, The Long Tail (late to the party, but still allowed in, since the 2008 version has one completely new chapter.) Anderson, editor in chief of Wired magazine, is a leading spokesperson for the view that the world of marketing, sale and distribution has been completely changed by the Internet. Anderson terms this tectonic shift (if a term of geological provenance can be used regarding the Internet) "the Long Tail".

In short, in a world where physical limitations on storage, display and performance are largely eliminated, the focus of business on generating a limited number of "hits" (i.e., "the Short Tail") gives way to the vast terrain inhabited by so-called commercial misses, such as the movie or album that does not quite make it in the bricks-and-mortar world, or the speciality retailer who cannot generate enough in-store custom to successfully purvey her fare of Far Eastern buttons.

In the Internet world, such products are not "misses, but "the endlessly long tail of niche products in the demand curve". Some will succeed, others will ultimately fail, but the sheer variety expanding options to the consuming public by virtue of the Long Tail will, in Anderson's words, fundamentally alter the nature of products, sales, and ultimately the fabric of culture itself.

The Long Tail, from top to bottom

From the IP perspective, what is notable in Anderson's book is the absence of any significant concern about IP rights. No wonder, perhaps: from the business vantage, IP protection can be seen as going hand-in-hand with the truncated world of hits at the head of the Short Tail. Once one leaves the head of the Short Tail, the vast number of misses that populate the endless path down the Long Tail carry with them the potential to clog the system because of rights clearance and the threat of IP hold-up. Where the aggregator is central (on the very last page of the book, Anderson identifies "the aggregator" as one of the three central participants in the Long Tail market), IP rights are largely hindrance and seldom an opportunity.

Be that as it may, Anderson represents an important intellectual force whose well-crafted rhetoric contains a tacit but potentially powerful challenge to the current IP regime. Perhaps he can be encouraged to add a chapter in the next edition of the book on the role of IP along the road of the Long Tail.

Will the Aggregator of the Long Tail become the IP Terminator?