A View From Under the Long Tail 123
An anonymous reader writes "Here's a funny article by James Boyle in the Financial Times on what it really feels like to be part of the long tail economy." From the article: "Where Amazon's normal customer service seems to be run by suspiciously cheerful MBAs from Stanford, who break off from counting their stock options to write apologies and deliver refunds, 'Amazon Advantage', the ironically named system for selling wares, is clearly based on the last days of the Soviet system. The problem with their representatives is not that their native language is not English, it is that their native planet is not Earth."
Life sucks, until there's real competition... (Score:3, Insightful)
Fund/find an alternative, and you will see Amazon fix itself. Until that happens, bend over and grab your ankles.
The network effect makes competition impossible (Score:5, Insightful)
Fund/find an alternative, and you will see Amazon fix itself.
A major point of the article is that this is not possible because of the network effect - people who want to buy a book online go to Amazon, because Amazon has all the books and "just works".
As the article puts it:
As an academic, I am very interested in network effects - the curious economic features of networks, which increase in value as they increase in size. Does this mean that customers will be "locked in" to the system that achieves ubiquity? (...) Does this threaten the efficiency that the networked economy was supposed to provide? As a vendor, I fume and rant, but am unable to convince myself that we can shift distributors: will the people who want our books trust an unfamiliar name?
Disintermediation? BAH! (Score:5, Insightful)
The network effect makes competition DIFFICULT (Score:2, Insightful)
Competitors to Yahoo exist: Google [google.com], etc.
Competitors to MySpace exist: Facebook [facebook.com], etc.
Competitors to YouTube exist: Revver [revver.com], Vobbo [vobbo.com].
The network makes it difficult, but nobody's ever given up because something was difficult. There are always options, and yes - there can be significant barriers to entry, but it's never "impossible".
Re:Life sucks, until there's real competition... (Score:3, Insightful)
Makes more sense for virtual than physical (Score:4, Insightful)
On the Internet, startup costs are negligible (I had capital investment of $60), and if you've got an aggregator which has a nation-state scale worth of eyeballs (*cough* Google *cough*) then you can pay them a weeee bit of money to send a sliver of those eyeballs over to you. Transactional costs amount to almost nothing: Paypal takes 4% of every sale. If you count the cost of AdWords, that comes out to 20%, but thats still a third of the traditional retail channel and AdWords scales *down* where retail only scales *up*. You might not think there is that much of a market for a one-screen application that makes reading bingo cards for teachers (www.bingocardcreator.com), but way-down-the-tail made $600 gross, $450 net. Not too terrible for an app which took a man-week to write and, literally, 20 minutes of work in September ("Lost your registration key? No problem, have a new one." "No, thank YOU, Ethel." multiplied by handful of emails).
The other beneficiaries besides me? Google (Adwords), Paypal, and Uncle Sam. They'll get $90, $30, and $lots respectively as a result of September, all for doing zero marginal work: they just let the computer systems/country they established continue to operate, and they get more money.
Re:Makes more sense for virtual than physical (Score:3, Insightful)
Uh... yeah. Not too terrible. You made $15 an hour.
Economics ... setting the record straight (Score:3, Insightful)
First off, an efficient high tech economy means that the "business cycle" is going to be more drastic and harsh not magically soft land and smooth out like every body preaches now days. "soft landing?", It is absolutely insane for people to say that.
Second off, during the late 1800s the US economy experienced a period where efficient factory production drove down costs for every year for nearly half a century. This also had the effect of driving down pay and driving down profit margins, but it drove down costs faster than both - so people still did well. Now fast forward to 2006, and the US is going into the information age full blast, and hard drive farms that would cost over a million dollars yesterday, now cost a few hundred and can be held in your hand. In addition, overseas labor is driving down costs even more. But today there is one huge 'bigger than life' problem
Third off, having these huge amounts of debt and all these stock market bubbles and all these housing bubbles (today) is not a normal part of a free market economy. They happen specifically because investment is financed thru the banks, which is financed thru the Federal reserve, which is financed by nothing. I mean, when they need money to loan out - they print it up and loan it out. That means that over time, more and more money goes into circulation driving up prices, driving up debt, and driving out private savings. Hey lookie! The US has record high debt, record high housing prices, and record low savings. Hmmmmm.
Fourth off, if we used money like gold that couldn't be printed up out of thin air. That would naturally limit the amount of debt in the economy and force finances to come from savings instead of print-ups. That would kill bubbles, but more importantly put investment power back into the hands of private savers instead of central bankers and government.
In sum, the US economy is about to make a radical shift as the housing bubble violently pops and when it does the US will be in deep shit. This will happen because everything you have been taught about central banking and paper money is BS. Loaning out "modern" paper money (instead of real money like gold) leads to irrational allocation of resources that causes inflation, bubbles, too much debt, and puts investment power into the hands of inefficient central planners (bankers) instead of private individuals. Seriously, name one institution who ever thought they had too much money. At this point it is beond repair, so people would be very wise to collect guns, food storage, and gold like no tomorrow because all freaking satanic hell is about to break loose.
Re:The network effect makes competition DIFFICULT (Score:5, Insightful)
The road transport system = the new ebay. People could club together to sell things and you could call them -- Oh I don't know -- Markets or Shops....
Re:Economics ... setting the record straight (Score:4, Insightful)
The value of Gold is no more real than that of a promissory note. The important thing is scarcity, and paper money, if managed properly, can be just as scarce as any valuable commodity.
Re:Economics ... setting the record straight (Score:3, Insightful)
This is like saying that a command economy [wikipedia.org] can work if "managed properly"...and we saw how well that worked.
Re:Makes more sense for virtual than physical (Score:3, Insightful)
I believe that the point is that the ability to sell this rather specialized program over the internet makes it feasible to market the program. The alternative would be to put classified ads in school teacher oriented magazines and have teachers mail him a check for $25. Ad Sense expands his market as it includes people other than school teachers who may be looking for a product like this.
Re:Makes more sense for virtual than physical (Score:3, Insightful)
Just *let them* continue to operate? Yeah, maintenance just happens on its own. When things wear out, they just get up and repair themselves.
Have you ever visited a "3rd world" country? Personally, I'm happy to pay my taxes. I think I getting a good deal, comparatively.
Re:Makes more sense for virtual than physical (Score:3, Insightful)
Those extra (non-primary) jobs people take for extra income don't need to pay a lot to be worthwhile.
Plus, as another reader pointed out, he probably had fun doing it, he was motiviated for some reason (wanted it for himself or a friend), so it's just extra money in his pocket. Nothing wrong with that, and it's a fine example of how a niche market can be worthwhile.
A two-tiered system is NOT the "long tail" (Score:3, Insightful)
Amazon seems to have a two-tiered system that brings out the worst in the long tail principle: Flawless, reliable service for fairly common items - I have returned several shipments or gotten them late and I have never had trouble working things out, and because I live on the west coast I usually get stuff in three days or less. Then, a low budget operation outsourced to who knows where for the "long tail" stuff.
FedEx did the same thing when they acquired RPS and changed it to FedEx Ground. A top-shelf service with premium prices that picks up anywhere and delivers on time anywhere, and a shambling low-priced service for those of us not living in Central Business Districts (that's still cheaper and better than UPS though.)
Re:Makes more sense for virtual than physical (Score:3, Insightful)
Google has to pay its bills and replace broken servers anyway. Uncle Sam has to maintain our first world glory anyway. Selling $600 worth of software over the uberweb didn't mean google had to install a new server farm, nor did a new canal have to be dug.