ecstaticist

Chris Anderson’s original 2004 article on the Long Tail phenomenon in marketing provides us with three rules:

1. Make everything available.
2. Cut the Price in Half. Now lower it.
3. Help me find it.

Anderson and thousands who have followed him focus on the ability of emerging media and networks to facillitate delivery of product long after its traditional shelf-life has expired. They point to businesses like Amazon and Netflix as examples of extensive inventories with small sales of older, less popular items. With huge inventories these small sales add up to significant revenue for retailers and rights-holders. Thus the three rules.

The Long Tail concept is one that has captured people’s imaginations. I see this as an opening for some new thinking on old topics. The concept of the Long Tail invites us to expand our scope of awareness. That invitation can be extended to thinking around more than just digital media and giant inventories of obscure widgets. We need more economists who think like ecologists, and understand the three rules apply to other aspects of our economy. It may be that the Long Tail is not always a positive thing. I’d like to invert it and propose the concept be applied to issues economists like to refer to as “externalities“.

An externality occurs in economics therefore when a decision causes costs or benefits to stakeholders other than the person making the decision, often, though not necessarily, from the use of common goods (for example, a decision which results in pollution of the atmosphere would involve an externality).

Succeeding using the Long Tail phenomenon as a strategy depends on a particular kind of Externality called a Network Externality or the “Network Effect.” Companies like Amazon and Netflix built out capacity in a gamble that they would win the race to provide the infrastructure people would choose. People chose them, and competitors fell by the wayside.

An example of a Network Effect play with long-term Long Tail potential is Sirius Satellite Radio. Here’s a company that is bleeding badly right now, but is nonetheless winning a race that will position them to deliver Long Tail content to huge N subscribers. Howard Stern was brought on to drive the Network Effect forward with his name recognition.

So, we have a concept - the Long Tail - that depends on an Externality - the Network Effect - for major commercial success. Such phenomena depend on the growth and expansion of markets, the freeing up of exchange and transactions, the free flow of goods, and the growing commonality of base culture. This is Globalization.

Gobalization drives the increasing thickness of the nascent Long Tail. The expansion and finer granularity of globalization and its networks means Long Tail phenomena can occur in more and more diverse sectors of the economy. The Network Effect externality speeds the thickening of Long Tail phenomena.

There are other Long Tail-ish phenomena that have not been properly or at all monetized. Globalization drives these phenomena through various Network Effect externalities, and their thickness is also increasing.

An example: ocean acidification. The ph balance of the oceans is shifting due to the uptake of anthropogenic carbon dioxide - the collective exhalation of our civilization. There is a huge positive externality in the short term, but a highly negative one in the long term. The oceans are presently functioning like an Iron Lung for the planet:

Although this oceanic absorption will help ameliorate the climatic effects of anthropogenic emissions of CO2, it is believed that it will have negative consequences for oceanic calcifying organisms. These use the calcite or aragonite polymorphs of calcium carbonate to construct cell coverings or skeletons. Calcifiers span the food chain from autotrophs to heterotrophs and include organisms such as coccolithophores, corals, foraminifera and pteropods.

Currently our civilization is building out capacity for increased CO2 release. Huge middle classes are emerging in India and China, and they want the same amenities Europe and North America have enjoyed. This takes power and Network Infrastructure. The uncosted, unpaid for externalities will be significant.

The short-term money to be made equipping these new middle classes is enticing. But that is only because the cost of a wildly swinging environmental Long Tail has not been negatively monetized. Or, more simply, things do not cost what they really cost.

So here’s the inversion I spoke of before: while there is a marketing opportunity brought about by the growing Network Effect externalities of globalization, and that opportunity can be monetized using Long Tail techniques, we need a concomitant political and social acknowledgement of the strengthening and thickening Long Tail externalities that nobody wants to monetize lest they be put quickly out of business at minimum and behind bars at maximum.

I’m all for it. Let’s broaden our focus. Let’s collectively think past the “head of the tail” as Bill Gates put it in a recent interview. But let’s do it across the piece. Let’s acknowledge that externalities eventually have to paid for - that externalites are paid for, often with lives and livelihoods and neighborhoods.

So what are our three rules then?

1. Make everything available.
2. Cut the Price in Half. Now lower it.
3. Help me find it.

I propose this change:

1. Make everything accountable.
2. Double the price. Now raise it.
3. Help me bind it.

Make everything accountable: this simply means we have the right to ask what the full cost of things is, in the here and now and out on the Long Tail.

Double the Price. Now Raise it: this is a very conservative estimation of what we’ll find when we start to do true costing.

Help me bind it: this means globalized industry must not have anywhere to hide from their own Long Tails. Polluters and other externality generators like arms manufacturers should be made to bear the true costs of their profiteering.

Man, he was looking pretty fresh, pretty intelligent, pretty attractive…pretty electable.

Damn. Stupid Democrats.

Obama’s first major gaffe…it is true, but it certainly doesn’t help him. Unless, of course, he’s looking for a way to explain his upcoming loss in Penn. in advance.

You go into these small towns in Pennsylvania and, like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing’s replaced them…And they fell through the Clinton administration, and the Bush administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not.

And it’s not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.

It is the second paragraph, spoken to an audience in San Francisco, that will get him into trouble. He just lost a lot of voters who might have been inching toward him in the poor, white underclass…

3 Trillion US dollars - an incalculable opportunity to do good lost forever. More than half a million Iraqis dead who would be alive today had the US not invaded. 4000 US soldiers dead and rising. An entire country’s infrastructure razed. Tens of thousands of US soldiers severely maimed. Hundreds of thousands of US soldiers put in harm’s way for a lie - a lie repeated bald-faced below. They were never there. Never there.