Today I had a long discussion with an old friend on economics of content in the Long Tail. Sharing some of the interesting points.

What is long tail?

According to Wikipedia - The Long Tail or long tail is a retailing concept describing the niche strategy of selling a large number of unique items in relatively small quantities – usually in addition to selling fewer popular items in large quantities. The concept was popularised by Chris Anderson in an October 2004 Wired magazine article. The distribution and inventory costs of businesses successfully applying this strategy allow them to realize significant profit out of selling small volumes of hard-to-find items to many customers instead of only selling large volumes of a reduced number of popular items. The total sales of this large number of “non-hit items” is called the Long Tail.

Every content network has walked this rope at least once – ad inventory optimization. Direct sales team can only sell 40-50% of your ad inventory at any given time. The rest is filled with different ad networks, big and small. The math is very simple; push those ad networks which pay you higher CPM all the time. However, the truth is, no single ad network pays highest CPM all the time. It varies a lot depending on geography, time, page/site context, readers, etc. And to top it all, with strict frequency capping and default ads deployed, ad networks leave you playing with pennies.

In my recent visit to Vienna, met a lot of interesting people from Norway. My initial impression of Norway’s online market was that of a small and passive market with few clones of popular global sites like Facebook, Digg, Craigslist catering to the local audience. But after interacting with my Norwegian friends, I realized not only Norway has a mature online marketplace but have aggressive online players pushing for audience share. Norway also has one of the highest ad spend per user of around US$207.

High-res image

Most of the start-ups as well as established companies in internet space primarily targets US audience. This is understandable as US Online Advertising market stands at a whopping USD 24 billion and is at least four times bigger than the second largest market that of UK.

In developing countries, it’s a rarity if an internet company gets funded, and most of the start-up visionaries here are not very bullish when it comes to internet space. Countries like China, Brazil or India might lead in number of internet users with around 33% of total online traffic, but their online advertising market is less than USD 2 billion. Though China has some exceptional online players but nothing close to US.

This list is entirely based on my personal experience, and can vary according to your spouse or girlfriend. So no guarantee that your geek wife would be as geeky as mine, but I can assure you that you will definitely have lots of fun having one.

Most of you know that we operate from Shimla. A small city by comparison with Silicon cities of India. Its very tough to find experienced or highly skilled people in these beautiful mountains. So we had no option but to build a powerful, aggressive and intense training system which can train freshers (with an aptitude) to be converted into marines.

These days we are training a new team. A team of freshers, from different educational backgrounds; commerce, science, MBA, mass-com etc. This team will be helping the content network move more aggressively. You might be surprised by our choice of team members, you might even argue on our decision of putting them in a single team. But we only hire on the basis of aptitude, not on experience or educational background. All of them might have different educational backgrounds; but they have lots of common things like hunger to learn, work under any pressure, no compromise for quality and a killer attitude.

During my college days, I took a small course in mountaineering. The lessons I took from there, have been the guiding force of my life.

Mr. Negi

We had a teacher Mr. Negi. I don`t know his full name, never asked, and never felt to do so.

Mr. Negi was a guy in mid forties with short height, thin moustaches and cold eyes. His rules were very simple – you can’t complain, and you can’t say no. He never told us about his rules, but we understood them in few interactions with him. If you asked him for rest, he will say – “Bahut acha kiya jo bata diya, ab yeh exercise aadhe ghante aur karo, jab tak fresh na ho jao”. (“Very good, I really appreciate your telling me, now please do this exercise for another half an hour, until you start feeling fresh.”) And if you told him about back pain, he will award you a dozen of back exercise. Similarly if you ask about lunch or dinner time, you are surely to skip that.

Once I was carrying a heavy rucksack, during one of the trekking trails. I was sweating profoundly, when he asked me if bag was heavy. Before realizing any consequence I told him, yes it was. He smiled very calmly and repeated the famous phrase. “Bahut acha kiya jo bata diya, ab yeh pathar utha lo, aur bag me daal do, halka ho jaayega”. (Very good, I really appreciate your telling me, now please pick these stones and rocks and put in your bag, your luggage will feel light.)

I tried very hard explaining that I spoke unintentionally and I never meant to complain. But it was too late; Mr. Negi has always treated all of us equal when awarding his famous remedies.

From that day, subconsciously I developed a feeling – that I can’t complain. Whatever happens, I can’t complain.

Forward a few years. Now I am running a startup.

Startups are also like Mr. Negi, they don’t accept complaints. You can’t negotiate. They don’t tell you the rules. You have to understand them. Whatever they give you, you have to take that. You can’t talk to them back. You just smile and appreciate whatever comes your way.

Pain is good.

Somebody once told me – running a startup is like testing your ability to bear the pain. But pain is good, as Mr. Negi would have put that. Pain tells you that your muscles are strengthening, and if you want to be a skilled mountaineer, this is what it takes. So when you feel that pain running your startup , smile. Because your startup is telling you that your venture is strengthening, and to be good entrepreneur, this is what it takes.

Mr. Negi, used to remind us that mountaineering is not something which you can buy in a market like your Nike shoes. You have to earn that. Running a startup is also a skill which no MBA school can teach you (yes, I am aware of all those new entrepreneurial courses), but you have to go through that cycle of pain, to earn it. I am still learning that art, but have started enjoying the pain.

Remember, pain is good. Pain tells you, that you are growing.

In India, our financial year ends 31st March. This might sound a bit odd to our Americans friends, but remember we are more British than you.

Last academic year has been a roller coaster ride. We got funded, launched some cool new features, expanded our team, then had a 10-15% salaries cut in Q4 2008, also let go off few of our consultants and took the recession monster head on. But overall, I believe we managed to put on a great show. This would have been impossible without the great team we have, highly supportive investors, very energetic advisors and great friends in the industry.

Like any other media company, pageviews are our bread earner. We saw a plunge in CPM rates from November, but we compensated the low CPM rates and unsold inventory losses by nearly tripling our pageviews.

Here’s our page views graph from Statcounter.

Today we have over 50,000 registered members, 600 Citizen Journalists, 75 bloggers, 15 country editors, full time staff of over 40 people in 15 different countries and readership of around 6 million pageviews per month.

(This post was born out of internal discussion that took place in MVP forums. Its jointly written by : Sameer, Ankit, Nandini and Indus)

Bharat Matrimony

Bharat Matrimony (BM) has launched its facial search feature that enables you to upload celebrity (you can also upload your ex-girlfriend’s pics) pictures and BM will find a look-alike.
Check it out here

Though the technology is imperfect the idea is so perfect on so many levels:

1. Viral nature
2. Engagement of users
3. Stickiness of the site
4. Differentiator from other sites
5. Users having fun, part of so many jokes

It totally rocks and its great to see an Indian company leading its way in innovation. On the other hand its disappointing to see so less buzz created by them in the Startup media.

AdaptiveAds

Glam Snaps Up AdaptiveAds. Mumbai based startup AdaptiveAds was acquired by Glam, a leading ad network based in US. This news was covered very well by Techcrunch and and other leading tech blogs of US about a month back, but again coverage in Indian Startup media left a lot wanted.

Adaptiveads, a mumbai based startup, clearly demonstrated that an Indian startup can target the global market very well and it makes a lot of sense for other Indian Companies to tap into borderless economy. When we can serve millions of western companies by being an outsourcing hub, by developing the core technology for them, why cant we guys put together our collectible brains to bring Indian products to whole world.

Startup Media

The current Startup Media in India consists of the leading startup blogs, some newspaper / magazine columns, couple of dedicated magazines and little bit of TV coverage. The main credit for creating the “Startup Media” goes out to the leading startup blogs, they have been at it for few years now and have done quite a good job of covering the news, sharing good practices, aggregating discussions around startups. They have built a strong and sticky community of readers / contributors around them.

Shout ‘em out louder

Though a lot has been done, there is a need to increase and provide regular coverage “towards celebrating / highlighting / sharing the Indian startup ecosystem triumphs”. This post is a request to Startup media to shout louder about the successes. Indian ecosystem is evolving and it definitely requires much needed boosts from media to encourage them. There are quite a few successful Indian startups, may not be to the tune of 10-100 million USD, but still doing pretty good. But, every mention will only encourage and boost the morale of the others to push the bar & succeed!

Some suggestions to the Indian Startup Media:

* Add regular weekly features that bring out startup success stories, backed by research. Bring out the reasons for the success and help others learn and get inspired. This can also be done with some guest writers contributing.

* Missed out on covering the news in time? - not a problem - write enough juice and they’ll quote you on their blog!

* Dig into the development of the startups you have already covered, ask them to keep you updated, monitor their blog feeds for news of successes - followup stories is always a welcome for a reader!

* A lot can happen over coffee - spend more time with startup founders (new & old), listen to their stories - can make for a good copy!

Communication channels are the most important for development of any eco-system (Even Hitler banked on it) - you have the power to influence and help startups imbibe good practices - make the most of it! This will go a long way to also help dispel India’s image “as only copycats, service-based companies and outsourcing hub”. It will encourage the ones who are on the edge and are evaluating doing a startup. Current and potential investors will see the successes and increase the financial participation towards Indian startups.

The day is not far when people will be bringing Garam chai and Samosas to your home (riff from people bringing donuts/coffee to Arrington to get covered) . While you make them the stars, they will make you the celebrity!

If you are an active user on social media scene, you must be having different accounts on various platforms; an account on Facebook or Orkut to connect with friends, an account on Flickr to share images, a Linkedin account to network with people in your profession, a Youtube account to share videos. In addition you must be having your blog running via wordpress, typepad, Instablogs or blogger, and would be using twitter for microblogging.

So you are essentially creating your different identities across so many networks, that it is increasingly becoming difficult and to some extent impossible to keep track of. It’s also very difficult to escape this fragmentation, since a part of your network (your friends, peers, colleagues etc) could be active on one social platform while the other part may be on another platform.

Some of the sites like Friendfeed are trying to solve this problem by centralizing all the activity stream of your friends on a single network. Other solutions like data portability can be looked as an attempt to allow users to access their friends and media across all the applications, and social networking into their own systems.

Some thoughts

1. A centralized network of activity stream has its benefits, but there are times when you would prefer decentralization according to your network. It won`t make much sense sharing your Halloween outfit with your business network, or your business presentation with your young cousins.

2. Today most of the sites are fast embracing decentralization. Any activity done on any site can be easily exported to your preferred social networks. For e.g. Instablogs is working on tools which will allow you to port articles or comments posted on Instablogs automatically to your Twitter or Facebook accounts if you desire. Similarly images uploaded can be ported to your Flickr account.

3. Conversations would be taking place across platforms. For e.g a content article you posted on Instablogs could be replied on your Facebook or Twitter networks by your friends, and you can reply them on Instablogs platform. This means conservations around content will become more fragmented in nature.

4. Different opinions, links, articles related to a certain news event can be collected together to increase the context of the news event. You can see how your network and your friends’ network is reacting to it in real time.

5. Many solutions have already been in work which would give users more control over the content they produce on different networks and interconnect them. For e.g Distributed Social Networking” (DiSO) is an idea to move, aggregate and integrate activities, data and social connections built up on sites like Facebook, LinkedIn, Flickr, Twitter and personal blogs.