My idle thoughts on tech startups
Internet’s long tail…
Jeremy Liew, partner at Lightspeed Ventures and former AOL and IAC guy, had a good post about the simultaneous expansion and contraction of the long tail of web content sites. He took a look at some comparative data Compete released on their panel of 2M+ internet users, collected from browser toolbar users, ISPs, and other sources. The data provides some additional empirical proof that evermore content is out there on the web, yet the top publishers garner an even greater share of attention.
What the data shows (Jeremy has done some nifty charts) is that the number of unique domains the Compete panel visited jumped nearly 80% from 2001 to 2006. So broadly speaking, people on average are visiting nearly twice as many different websites as they used to. It’s not entirely surprising… think about how many more types of sites you visit today (blogs, special interest content, video, etc) than you did five years ago. The seemingly counterintuitive point is that as users touch ever more sites, they spend 30% more attention (at least measured in page views) on the top 10 domains on the web. The top 10 domains have obviously changed since 2001 when MySpace didn’t exist, Chad Steve & Jawed were still at PayPal with the rest of us, and Wikipedia had just launched. But the fact remains that while the long tail of web content gets longer, people are spending more of their time at the “head” end of the distribution.
What’s the implication of of this seeming contradiction? Jeremy draws the conclusion that verically focused, content specific ad networks can benefit as advertisers try to reach beyond the head end with their spending allocations. It’s also worth keeping mind that from 2001 to today, overall online population has increased dramatically and the amount of attention people allocate to internet usage has greatly expanded. So while the top domains have increased their share, the total number of page views has gone up significantly.
Personally, I am interested to see how the (still primarily text) web compares to other forms of media. For example, it seems that new TV (cable/satellite) channels continue to proliferate yet the big networks still seem to garner massive share. Think of the ratings for American Idol (despite recent drop), Sopranos, or Grey’s Anatomy. I know the music industry remains pretty highly concentrated… of the new albums released in 2006, just 90 accounted for 40% of total new album sales. And 1,000 out of ~75K new releases by major labels and independents account for 80% of volume. The web has already eviscerated the cost of distributing text (go ask a newspaper company), it has made good headway in the distribution of music (though digital was still only 5% of all album sales in ’06), and is just beginning its paradigm shift in video (both TV and movies). What will happen to the breadth and concentration of consumption as these media continue their march to the digital domain?