Tuesday, December 28, 2004

Philanthropy's got a long tail, too Grand Gestures From Big Names. Join Bill Gates, Michael Dell, and J&J in improving the world. [The Motley Fool] Families that have household incomes of $100,000 or less contribute 59% of all philanthropic dollars, according to a study by the Center on Philanthropy at Indiana University. Worth keeping in mind, espeically if you're wondering whether your drop in the bucket can make a difference for the tsunami relief. (I think it was David Gershon who noted that buckets get filled by 'drops in the bucket.') UPDATE: Relief resources 8:38:43 PM    comment []  trackback []

The Long Tail and the Death of 80/20 I just stumbled across one of the more interesting pieces of business thinking I've seen in a long time. [VentureBlog]: Chris Anderson's observation in a recent Wired Magazine article is that the 80/20 rule exists in the physical world because you chop off the long tail. Because of the marginal costs of offering the items that don't sell big, traditional business focuses on the 20% of stuff/customers/etc that represents 80% of the revenue. But what if marginal costs disappear? What if the infrastructure enables economical delivery of low volume items? What do you get? You get iTunes, eBay, Amazon, and many more -- and things we've yet to see, or even imagine. The transformation of 'economy of scale' by the internet (and other enabling phenomena?) may have just begun. (I suspect this is also key to unlocking some of the 'bottom of the pyramid' challenges we've been discussing below, and in related comments.) Anderson's Long Tail blog is billed as a 'public diary on the way to a book' -- with a $500,000 advance to help it along, according to Halley (thanks!), who left the trail that led me to the tail. What's really amazing about the Long Tail is the sheer size of it. Combine enough nonhits on the Long Tail and you've got a market bigger than the hits. Take books: The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon's book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are (see 'Anatomy of the Long Tail'). In other words, the potential book market may be twice as big as it appears to be, if only we can get over the economics of scarcity. Venture capitalist and former music industry consultant Kevin Laws puts it this way: 'The biggest money is in the smallest sales.' 8:31:38 PM    comment []  trackback []