Follow up: Making money in the long tail

Guy Kawasaki has posted a follow up to his post 'A review of my first year of blogging' which sparked a flurry of interest from bloggers because it revealed just how little Guy actually makes from advertising on his blog (and by implication, how little money there is in online advertising)

The new post - entitled 'The Short Tale: Much Ado about Not Much' goes further - explaining that he did not mean to cause any controversy and explained, if not for money, why exactly Guy blogs.

He says:

In case you’re interested, the reasons that I blog are:

1. To increase the likelihood that “two guys/gals in garage” with “the next Google” will come to Garage for funding.
   
2. To help companies and people that I (a) like, (b) have sometimes invested in, (c) am sometimes advising publicize their products and services. This is also known as “alignment of interest” as opposed to “conflict of interest.”
   
3. To be able to tell Web 2.0 entrepreneurs how full of shiitake they are if they think that advertising is a slam-dunk business model. Essentially, a Web 2.0 company would have to be 10,000 times better at selling advertising than me before it gets interesting.
   
4. To test ideas with “reality checks.” How many guys have 30,000-person focus groups?
   
5. To tap the “wisdom of the crowd.” For example, ideas for my next book. How many guys have 30,000 people providing new-product ideas?
   
6. To make meaning and fulfill my mantra of “empowering people.”

As I explained - I personally never imagined that individual bloggers would blog for the advertising revenue. Not successfully anyway.

In case you're interested - here's the reasons I personally blog here on the Touchstone blog.

1. To join the daily discussion about topics and issues I am passionate about.
   
2. To explain to our testers/users, partners, investors and anyone else who will listen why we should all be paying attention to Attention.
   
3. To keep everyone up-to-date about our challenges, goals and intentions with Touchstone (as guy says, how else can you get such a large focus group).
   
4. It helps me structure my thoughts and clearly express them for our team and the wider community to see.
   
5. To encourage people to connect with me if they have similar ideas or potential opportunities that could benefit us both.
   
6. To be heard...

Making money from the long tail...

There have been a number of posts lately about the profitability of the long tail.

First Guy Kawasaki posts his year in review where he mentions how little he makes from his very successful blog.

Then Chris Anderson posts called "Don't quite your day job" a reaction to Guy's blog revenue talking about the long tail and its profitability.

Then Chris makes a follow up post where he clearly explains who in the long-tail ecosystem can make money, and why those that can't, shouldn't worry anyway because direct revenue is not the main motivating force or reward.

This is how he explains it:

1. Consumers. Effect: Largely cultural. People have more choice, so individual taste increasingly satisfied even if the effect is an increasingly fragmented culture.
   
2. Aggregators. Effect: Largely economic. It's never been easier to assemble vast variety and create tools for organizing it, from search to recommendations. Increased variety plus increased demand for variety equals opportunity. Also note that just as one size doesn't fit all for products, nor does it for aggregators. I think the winner-take-all examples of eBay, Amazon, iTunes and Google are a first-inning phenomena. Specialized niche aggregators (think: vertical search, such as the real estate service Zillow) are on the rise.
   
3. Producers. Effect: Largely non-economic. I responded to a good Nick Carr post on this last year with the following: "For producers, Long Tail benefits are not primarily about direct revenues. Sure, Google Adsense on the average blog will generate risible returns, and the average band on MySpace probably won't sell enough CDs to pay back their recording costs, much less quit their day jobs. But the ability to unitize such microcelebrity can be significant elsewhere. A blog is a great personal branding vehicle, leading to anything from job offers to consulting gigs. And most band's MySpace pages are intended to bring fans to live shows, which are the market most bands care most about. When you look at the non-monetary economy of reputation, the Long Tail looks a lot more inviting for its inhabitants."
   
   

Nik Cubrilovic still holds onto the hope that producers can indeed make money from blogging and suggests some alternatives to AdSense which should be more profitable.

But of course, each of these commentators have day jobs.

There were some posts from bloggers who do basically make a business out of their blogs. First Yaro Stark who posts "Is Professional Blogging a Sustainable Business Model" and Darren Rowse with a post called "Does AdSense Suck for Bloggers?".

This is an interesting topic to me because I have had a number of conversations with friends, partners, investors etc about 'where the money is' in this emerging marketplace.

My feeling is more closely aligned with Chris Anderson's. Participants who create long-tail content are not doing it for money. We don't write open source code, contribute to wikipedia or blog about our lives for cash. We do it because we want to contribute - both to our egos and to the world. We want to be heard.

Professional producers, however, need to pay the bills. But unfortunately they are finding it hard to monetize their 'participants'. That's why I think aggregators should give something back. But that's a post for another time.