Sharecropping the long tail

A while back I wrote that Web 2.0, by putting the means of production into the hands of the masses but withholding from those same masses any ownership over the product of their work, provides an incredibly efficient mechanism to harvest the economic value of the free labor provided by the very many and concentrate it into the hands of the very few.

Richard MacManus’s new analysis of web traffic patterns helps illustrate the point. Despite the explosion of web content, spurred in large part by the reduction in the cost of producing and consuming that content, web traffic appears to be growing more concentrated in a few sites, not less. Using data from Compete, MacManus shows that the top ten sites accounted for 40% of total internet page views in November 2006, up from 31% in November 2001, a 29% increase. The greater concentration comes during a period when the number of domains on the web nearly doubled, from 2.9 million to 5.1 million.

Even if we grant that traffic numbers are unreliable and that page views are not the only way to measure traffic, the trend seems clear: A few big sites increasingly dominate the web.

On the surface of it, this might seem to contradict the long-tail, or power-law, theory. But it’s not so simple. As MacManus shows, the greater concentration of traffic can largely be explained by the popularity of two “social networking” sites, MySpace and Facebook, which together accounted for 17% of all page views in November 2006. Both MySpace and Facebook are made up of millions of “user profiles” created by their members. If we counted each profile as a separate site, which in a content sense it is, we would find no increase in the concentration of traffic, consistent with the long-tail theory.

What’s being concentrated, in other words, is not content but the economic value of content. MySpace, Facebook, and many other businesses have realized that they can give away the tools of production but maintain ownership over the resulting products. One of the fundamental economic characteristics of Web 2.0 is the distribution of production into the hands of the many and the concentration of the economic rewards into the hands of the few. It’s a sharecropping system, but the sharecroppers are generally happy because their interest lies in self-expression or socializing, not in making money, and, besides, the economic value of each of their individual contributions is trivial. It’s only by aggregating those contributions on a massive scale – on a web scale – that the business becomes lucrative. To put it a different way, the sharecroppers operate happily in an attention economy while their overseers operate happily in a cash economy. In this view, the attention economy does not operate separately from the cash economy; it’s simply a means of creating cheap inputs for the cash economy.

It strikes me that this dynamic, which I don’t think we’ve ever seen before, at least not on this scale, is the most interesting, and unsettling, economic phenomenon the Internet has produced.

More on this subject: The sharecroppers’ tools.

16 Comments

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16 Responses to Sharecropping the long tail

  1. 1. It costs nothing to slap some advertising on your social network page and reclaim ownership of your written word.

    2. My bet is that the economic question to answer is when will groups defect from social network A in large masses to the newest, widget enabled, social network B? Measuring, predicting and controlling this migration will become important.

    3. We have already seen something similar to this economic problem at the turn of the century with newspapers and letters to the editor.

  2. *We have already seen something similar to this economic problem at the turn of the century with newspapers and letters to the editor.*

    Hmm. What do you mean by that? Yes, newspapers don’t compensate letter-writers when the letters run in the paper, but people don’t buy the papers for the letters; they buy them for the original reporting. (Although I’d pay to read the Washington Post’s Saturday Free For All letters page of cranks and grammar freaks.)

    I’m pondering Nick’s suggestion that we haven’t seen this dynamic before, at least on this scale. So far I haven’t come up with a counter-example that truly reflects the tiers of attention economy and cash economy. Not sure why this is unsettling, though, as long as all parties understand their role. Methinks some of the attention economy participants might grow resentful if they were to truly understand their sharecropper status, however. (Look at pushback from Wikipedia and Digg volunteers.)

  3. What’s being concentrated, in other words, is not content but the economic value of content.

    Bingo! And, indeed, ka-ching!

    The blurring of the line between the two – between the ‘attention economy’ and the, er, economy – is also where the collective narcissism[1] of Web 2.0 shades off into outright collective fantasy, with that vague feeling that Yahoo! and Google are good guys, one of us, on our side. Maybe in 1999 something new and different really was going on, but right now all I can see is a different set of corporates – after Ford, IBM; after IBM, Coca-Cola; after Coca-Cola, Google. Most people seem happy with this state of affairs, though.

    [1] I run four blogs and contribute to a fifth; I’m not speaking as an outsider.

  4. Not sure why this is unsettling, though, as long as all parties understand their role.

    If you’re employed to produce something that the masses will do for free, it’s unsettling.

    If you’re concerned about the increasing concentration of wealth in a very small sliver of the population, it’s also unsettling.

  5. If you’re employed to produce something that the masses will do for free, it’s unsettling.

    Most of what the masses do for free is of extremely low quality, so it’s not clear that the market for high-quality content is in jeopardy. But even if some content producers are feeling the pinch, how is this different from capitalism-driven market transformations of the past? If abundance dries up some career opportunities, that doesn’t make abundance the bad guy.

  6. Aron

    I do wonder how Marx’s labor theories would fit into this.

    I’m not sure I agree with the usage of long-tail above. For me, the long-tail is the impact of reducing the cost of distribution and\or improve the ability for a person to discover a product\content. If the web is continuing to concentrate as a power law would describe, according to the long-tail theory, it would be because cost of distribution or discovery has INCREASED from time point X to Y.

    I suspect long-tail is not relevent therefore.

  7. Most of what the masses do for free is of extremely low quality, so it’s not clear that the market for high-quality content is in jeopardy.

    Somewhere, someone in that masses will produce something (for free) of very high quality and is probably even better than much of the content that people were paid to produce. The rest of the masses will then find and elevate that content to the same status as the content people are paid to produce. Political commentary, for the most obvious example. Paid columnists vs bloggers.

    On the main point, I’m not seeing the problem here. Individual MySpace pages are worth fractions of a penny, at best. And anyone who really becomes “attention” rich on MySpace is still able to turn that into “cash” rich, if they’re so inclined. Bands use MySpace for marketing. If my profile had a million friends I could easily start to include advertising on it myself, or siphon some of it into my own site with advertising, etc.

    This really isn’t any different than the previous way of doing business, except it’s now a long tail world. NBC (for example) would produce a dozen or more shows a season, and make money from all of them, more than any single show did on it’s own. MySpace has a tens of millions of “shows” – and the real money is still in being the network, rather than having even the most popular show on that network.

  8. Great post Nick,

    You know, I see similarities with the gold rush days. Miners could work on their own but eventually most worked collectively for a variety of economic, social, and political reasons. Ultimately, a miner was compensated but it was really the mine owner that made most (ok,all) of the real money. In this sense, the aggregation of labor with incentives (steady job, steady pay, a community) provided the economic trade off a miner was willing to make.

  9. Nick: In your post “Sharecropping the long tail” you note “One of the fundamental economic characteristics of Web 2.0 is the distribution of production into the hands of the many and the concentration of the economic rewards into the hands of the few.” There are some websites like the one I run http://www.muzility.com albeit we are few who are working at distributing the wealth and allowing the content providers full control and full ownership of their content. We are merely a service for their video content deep in the long-tail.

  10. Great Piece…Could not agree with the conclusions more…Its also an interesting contrast to the de-portalization debate from a few weeks back (http://karmaweb.wordpress.com/2006/12/11/de-portalization/)

    Thanks,

    Jitendra

  11. Jim C.

    Isn’t this “sharecropping” similar to what AOL used to be? IIRC Steve Case himself said that what AOL offered was other users.

    I started on AOL, but I dropped them when my (local) cable company first offered high-speed access with themselves as an ISP. If AOL had offered similar access at the time, I might still be with them.

  12. At least two similar phenom come to mind.

    “free” checking accounts – very large numbers of small deposits provide large sums for aggregators to loan out in a fractional banking system.

    religious volunteerism – for the approbation and support of a religious community large numbers of individuals may contribute dedicated time to secure shared ends.

  13. Bertil

    Aron,

    Marx’s theory would fit very well: the key asset is too be able to aggregate content — Why? Because their is more attention in the long tail. This is how Amazon became the main seller of blockbuster books, by selling any book. As people need to abide an aggregator (read ‘capital owner’), and that aggregating strengthens your ability to aggregate (read ‘capitalize’) this system might lead to a few number of unchallengeable service provider. I let you decide whether that (or capitalism) proved optimal.

  14. IreneG

    Sharecroppers probably match up as prosumers, in the terminology used by Alvin and Heidi Toffler in Revolutionary Wealth, 2006. Prosumers produce what they consume or give away. The Tofflers assert that the economic value of goods and services outside the money economy exceeds the value of the money economy.

    I enjoyed looking for citations for the science fiction project of the Oxford English Dictionary on jessesword.com/sf for two years. I felt the joy of the hunter and collector when one of my citations was used, especially when I had suggested a word in the first place.

  15. Nice analysis, thanks!

  16. spike0xff

    Isn’t the term ‘sharecroppers’ unnecessarily pejorative? Isn’t it equally accurate to say that the Internet, and Web 2.0 technology, allow millions of people to obtain sophisticated information services for no more cost than a few moments of their attention? 100 years ago, if you owned a media company with 1,000,000 subscribers, you were the wealthy head of a media empire, and more powerful than the mayor. Today if you have only 1 million subscribers, people will ask if you have enough funding to get to profitability! I’ve worked for high-tech consumer companies, and in many ways those companies (and their managers) are more like the slaves of their customers than their masters.