My First Year With the Kindle

I am not a music person. Don’t get me wrong, I enjoy listening to music. But my taste in music has never been an important part of my identity, and listening to music has never really been something I devoted a whole lot of time to. For that reason, the iTunes revolution didn’t impact my life quite as dramatically as it did for some people I know, for whom music is a very crucial part of their lives.

What do matter to me are books. I read a lot of books, and always have. However, the digital revolution in books lagged way behind the one in music. We can’t know the reason for this, but there’s one story that intuitively makes sense to me. By the time the web was born, CDs were already the primary way we were getting our music, and CDs were a digital format. It was trivially easy to rip songs from those CDs to our computers, which made piracy just as trivially easy once people started going online in large numbers. This created pressure to create legitimate, low-cost alternatives to Napster. In the publishing industry, however, we were still working with essentially the same “analog” product that humanity has known since Gutenberg; a physical, printed book. It takes a big time commitment to scan books page by page to turn them into something digital.

Amazon had built its empire on book sales, and despite the fact that they had started selling just about everything else under the sun, they weren’t about the rest on their laurels. Jeff Bezos knew the digital disruption would be coming to books eventually, and he wanted to own it rather than have Apple or someone else come in and dominate the future of a category that had been Amazon’s bread and butter. Learning the lesson of the iPod, he would offer a device with a tightly integrated content ecosystem. In 2007 he announced the Kindle, which was just such a device.

The Kindle basically created the market for ebooks, and has dominated that market as a result. Barnes and Noble’s Nook is in a distant second, and Apple’s iBook store has less than half of Barnes and Noble’s market share (source).

The Kindle and Me

Despite my love of reading, I waited for years before I took the plunge. In 2009, after Amazon deleted people’s copies of Orwell’s 1984, I thought I might never trust them enough to buy into their ecosystem. However, after the PR firestorm that rained down on them after that, I’m confident they wouldn’t pull it again–as the big fish in the ebook pond they are being scrutinized very closely, so they’re unlikely to be able to accomplish it by stealth, either.

2009 was the first year where I was really tempted, too, as I moved out of my parents’ place and into an apartment, which meant moving my books. I left behind the majority of my books, but the ones I took still amounted to a ton of boxes. Knowing that this was not going to be my last move, I started wondering whether physical books were worth the hassle.

I wasn’t really pushed over the edge until last year. I can pinpoint a single event that did it–the publication of Tyler Cowen’s The Great Stagnation. It wasn’t just that a brilliant economist at the school I got my MA from was publishing a purely digital book. It was also that just about everyone in the economics blogosphere was talking about it. It was a $4 digital book that kicked off a fascinating debate and, really, set many of the parameters of the discussion around our current economic predicament. After watching this unfold, I couldn’t help myself–I really, really wanted a Kindle.

I asked for it for my birthday, which was three months later. Now, almost a year later, I currently have 62 items on my Kindle. I have read a ton, to put it mildly.

To put it plainly, I love my Kindle, and I love the Amazon ecosystem. The device itself is much lighter to hold than a book is. You don’t have to worry about holding it open or turning pages, so you can hold it with one hand. The fact that it isn’t a fully-featured computing device is definitely a plus in terms of avoiding distractions. I can also read my books on just about any computer–from my iPhone to my laptop. If I forget my Kindle at home, I can still continue whatever book I was reading by logging into my Amazon account and reading it in the browser.

2011 turned out to be a year where a lot of Great Stagnation-style, straight to digital short, cheap books came out. The other one that drew a similar amount of attention was Erik Brynjolfsson and Andrew McAfee’s Race Against the Machine, but there were also Ryan Avent’s The Gated City and Alex Tabarrok’s Launching The Innovation Renaissance. I read blogs by all of these people, and when they announced their books, it was just too easy to follow the Amazon link and click “Buy now with 1-Click”. As my friend James Long eloquently put it, “any interesting Kindle book which costs less than $5 feels free to me because of a floating point error in my internal processor.”

Similarly, when bloggers or people on Facebook or Twitter that I trust recommend a book that is less than $2, it is hard to resist snapping it up. Authors and publishers are clearly learning to take advantage of this–I recently read Child of Fire, a fantasy novel that goes for $0.99. The price of the next book in the series jumps up to $5.99, and the third one goes up to $7.99.

To legacy publishers, ebooks may seem like a mixed bag as they threaten their margins. To authors who haven’t been able to make it big in the old system, however, there are new opportunities. Take Tim Pratt, whose Marla Mason series was cancelled before it was finished due to lack of sales. So he serialized the book on the open web and sold the complete version directly through the Kindle store. He was among the first to call my attention to the growth that indie authors with a strong fan following were seeing for the Kindle titles when he tweeted the following:

Wow. Kindle sales for me have grown from beer money to grocery money to preschool tuition, and is now approaching rent money amounts.
@timpratt
Tim Pratt

I’ve talked about how Scott Sigler has taken advantage of the ebook scene–I actually just finished reading Nocturnal on my Kindle before I started writing this post (though that one came out through his publisher). And Amanda Hocking captured everyone’s imaginations last year when it became clear that she was making some serious money off of her Kindle sales.

One thing I don’t like about Kindle books, compared to print books or just open, non-proprietary digital standards, is that my friends can’t borrow my books. With a print book, if I love it and have a friend I think would too, I can just hand it to them. While a subset of Kindle books have “lending” enabled, where you can let one other Kindle user read it through their account, most Kindle books do not.

However, Kindles keep getting cheaper and cheaper. The cheapest one right now is $79, and I will bet good money that we’ll eventually see a $20 one. In a world with $20 Kindles, having a secondary one that you lend to your friends seems a lot more plausible.

And one thing I love about Amazon as a company is how relentlessly they push down prices. One of the books on my Kindle right now is an item from their Lending Library. If you have Prime membership and a Kindle device, you can get one book a month for free from a subset of their catalog that are part of the program. I just read the entire Hunger Games series this way, without paying a penny.

In short, I have really enjoyed my first year in the Kindle ecosystem. It’s really a very exciting time for anyone who loves to read.

You Can’t Kill the Network

Back in June of 2010, a Japanese and American manga publishers formed a coalition for the express purpose of stamping out manga piracy. Shortly thereafter, they struck–One Manga, home to an enormous number of fan scanned and translated manga (scanlations), shut down its operations.

At the time that Alex Leavitt wrote this fantastic analysis of scanlation culture and online manga, One Manga was listed by Google’s ad planner as one of the top 1,000 most trafficked websites in the world. It received just over 4 million in estimated unique monthly visitors, but over 1 billion monthly pageviews. Which makes sense–as each individual page of a manga represented a pageview.

It slapped network ads all over the place, of the pay-per-click sort. Some back of the envelop calculations to give you a sense of the money involved: if all of their ads on a page had a very conservative clickthrough rate of 0.5%, and paid a very conservative $0.05 cost-per-click, that’s 5 million clicks a month which translates to $250 thousand a month in ad revenue. I don’t know how much bandwidth costs for a site serving images a billion times, but it would appear to be tens rather than hundreds of thousands, so it is very likely that the people running One Manga were making an extraordinary profit. This is true even if you go with more conservative estimates than mine, and in my experience, my numbers are pretty conservative.

It makes sense to me that the publishers would target a site like One Manga. What I find interesting is the fact that the big scanlation distributors are basically mirror sites to much smaller communities that do the scanning and translating.

The Network

This is something that the publishers are either completely ignorant of, or just really bad at acting on.

They keep going after the mirror sites, but the network lives on. In the Alex Leavitt post mentioned above, he say:

I predict that, just like the online telenovela audiences, scanlation teams and communities will — in the face of legal action — retreat away from prying eyes into further gated communities, allowing only internal (sometimes P2P-enabled) distribution.

This may happen, but it has not yet. Instead, they strike down One Manga, and occasionally swoop in and make its successors like Manga Fox or Manga Stream take down the big ticket titles like Naruto and Bleach. Which accomplishes nothing, because there are still plenty of places putting scanning and translating super popular titles like that. The very day that they came down, copies of each could be found at manga.animea.net and mangareader.net.

Out of curiosity, after a recent crackdown I googled “Naruto manga”. All ten of the first page search results were mirror sites like the ones mentioned above, not one result pointed to an official, publisher-associated website. And this in spite of the fact that Google has apparently blocked over 600 sites for copyright reasons!

You can kill the mirror sites, but you can’t kill the network. I think that publishers would probably be satisfied  if Leavitt’s prediction came true, and scanlation was relegated to small communities exchanging them in private. In an ideal world they don’t want any piracy at all, but without the mirror sites the scale of the audience for such pirated works would be dramatically smaller.

Unfortunately for the publishers, it is trivially easy to set up a website, and the fact that ad networks have automated advertising means that there’s a market for anyone who can marshal a big audience.

Which brings us to the Oatmeal point: the reason that these sites can so easily marshal a big audience is that there is no legitimate alternative.

Not Taking Digital Seriosly

As Leavitt points out:

That problem, though, is two-sided. The obvious first side is that scanlations are technically illegal. But the second — and more important — side is that legal alternatives to online manga distribution do not exist. Yes, you can say that there are experiments with online distribution (such as Viz’s online Signature Ikki magazine), but the fact remains that a universal and ubiquitous legal alternative for online distribution of every English-language manga published in the United States does not currently exist.

iTunes, the Kindle Store, and Netflix have all demonstrated that people will pay for digital content if you give them a chance. The road ahead for manga publishers, if they want to recover the opportunity cost they have incurred from piracy, is to offer Netflix-like bundles for a monthly subscription as well as iTunes-like à la carte services. They could even offer a service for getting new, translated chapters to people within a week of when they come out in Japan, and charge a premium for it. If a bunch of amateur fan translators can get a turnaround time of a few days, surely a professional staff can do it in a week.

The tremendous success of physical manga in the US demonstrates that there is a market. And that existing market could be promoted further if a free digital copy was provided with each sale of a physical volume, something that Marvel recently announced that they would be doing. Author Scott Sigler does this as well for his premium-priced hardcover novel.

In short, fans cannot buy what you are not selling. No amount of piracy-busting is going to change that.

Scott Sigler’s 1,000 True Fans

Four years ago, Kevin Kelly wrote a post describing how creators could achieve success in a small niche. He called it the 1,000 true fans strategy.

A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, videomaker, or author – in other words, anyone producing works of art – needs to acquire only 1,000 True Fans to make a living.

A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can’t wait till you issue your next work. They are true fans.

The point is not that you specifically need 1,000 of them, but that a small number of these true fans can be enough to let an artist make a living. Seeking to cultivate such fans is a far more reasonable goal than trying to ride a blockbuster to the head of the tail.

Some information recently released by writer Scott Sigler reminded me of Kelly’s post.

Few people have invested in building up their fan base the way that Sigler has. He pioneered the podcast novel years ago, giving away his book in weekly audio installments. He has a website which fans can register on in order to comment on specific posts and episodes, interact with one another on the forums, and even update a wiki about his science fiction universe. Whenever someone signs up on his site, he gives them a shout out in that week’s podcast. If you post a lot on his site, he will include you as a character in one of his books–usually a character that meets with a grizzly end, which his fans eat right up. He also has a very active presence on all the major social media, and responds to the fans who engage him there.

He has reaped the benefits of investing so thoroughly in his fans. First, he got a book deal with the small publisher Dragon Moon Press. That book managed to rocket up the Amazon rankings on the strength of his fans’ promotional efforts alone, which then secured him a book deal with major publisher Crown.

However, Sigler has continued to publish his Galactic Football League series independently, without any backing from Crown. He and his business partner, A Kovacs, started Dark Overlord Media for the sole purpose of publishing the first book in the series, The Rookie. They published a high-end book with a lot of extra goodies and charged a steep price–more than $30.

They pulled it off, and have continued to publish the successive books, iterating their approach each time. They’re now on their fourth book and have hit on a formula–determine the number of physical books to be printed based on pre-orders, and after the last physical book has been delivered, only offer digital versions. This minimizes the financial risk to them–they only print as many as there’s demand for–but you have to have pretty devoted fans to pull this off, since they have to pay the money well before the product even exists.

The post that made me think of Kelly’s 1,000 true fans was this one by A Kovacs:

It took us fifteen hours to sell 1,000 copies of THE MVP. Fifteen is not a lot of hours:

  • In 2009 it took us 13 days to sell 1,000 copies of THE ROOKIE.
  • In 2010 it took us 6 days to sell 1,000 copies of THE STARTER.
  • In 2011 it took us 3 days to sell 1,000 copies of THE ALL-PRO.

Do they ever say “the fourth time’s the charm?” If not, I might start saying that myself; try and make it a thing. Scott and I have been very happy with our year-over-year performance, but I won’t lie: it is some kind of wonderful to be able to move 1,000 copies of a premium-priced, plushed-out hardcover in less than one day.

The books cost $34.95, so Dark Overlord Media just basically made $35,000 in fifteen hours. Certainly, you will have to subtract the cost of printing from that, and certainly, since Sigler has a partner it won’t all go to him. But you can bet that they continued to sell more books after those first fifteen hours, and that this isn’t the only source of revenue they have going in.

2011 was clearly a turning point for Dark Øverlord media. We're running a genuine small biz, not just selling "a book" anymore.
@scottsigler
Scott Sigler

One of the crucial changes they made this time around was to include a free digital copy of the book for anyone who purchased the hardcover. In fact, 2011 saw a big shift in Sigler’s digital strategy in general; he started offering more small purchases in the Kindle store, like this short story collection which started off at a promotional price of $0.99 in order to get him more exposure on the Amazon rankings.

I was curious how much of a difference ebook sales have really made to his bottom line, so I asked.

@ Curious--how much would you say that eBook sales played a part in that?
@adamgurri
Adam Gurri

His answer surprised me.

@ About 65/35 in favor of eBooks. eBook make running a small-biz publishing house a real possibility.
@scottsigler
Scott Sigler

I expected that ebooks were a big part of his success in 2011, I did not expect that they were already the majority of his company’s revenue.

I think this is in large part because it helped what true fans he had to promote him to more marginal fans. As Kelly explains:

This small circle of diehard fans, which can provide you with a living, is surrounded by concentric circles of Lesser Fans. These folks will not purchase everything you do, and may not seek out direct contact, but they will buy much of what you produce. The processes you develop to feed your True Fans will also nurture Lesser Fans. As you acquire new True Fans, you can also add many more Lesser Fans.

Every so often, for instance, Sigler’s big publisher Crown would discount the digital version of one of his books they had published, often without even letting him know. When he noticed, he would announce it to all his fans across social networks and his own site. This was a call not just to pick up the cheaper copy for themselves but to let others know about the discount; people who might not otherwise have made the plunge to buy the book are much more likely to do so when it’s going for a dollar or two. This in turn helps him build up his fan base yet further.

All in all, Sigler should serve as inspiration for creators who are trying to find their place in the new digital landscape. You don’t even have to make it as big as he is in order to make a decent living. And then you’re living the dream of making a living off of your creations; what more could you ask for?

 

A Tale of Two Audiences

Disclaimer: the following is simply a hypothesis, a story if you will. I submit it to you with no pretension of either originality or authority.

When content companies look at their incoming traffic, they divide them into two general categories–referral traffic and direct traffic.

They’re both fairly self-explanatory. Referral traffic comes from people who found you from somewhere else. The biggest category of this in general is search traffic, but links from Facebook or Twitter, or someone’s blog are also typical sources.

Direct traffic, as the name implies, is made up of people who go directly to the site. Often this means that they are loyal followers of your content.

A loyal user is much more valuable than someone who finds an article of yours from Google, gives it a look, and then never comes back again. They’re more valuable in the quantifiable sense that they see your ads a lot more than that drive-by search user, but they’re more valuable in less obvious ways as well.

The vast majority of the traffic to the big content sites is referral traffic. While the individual user may be less valuable than the individual in direct traffic, the total amount of revenue from referral traffic is much larger. This is the reason that the internet is rife with SEO spam and headlines that are more likely to get clicked if tweeted. Search traffic alone is a gigantic pie, and empires have been built on it alone, with practically zero direct traffic.

However, having a loyal user base that comes to your site regularly is extra valuable precisely because it is likely to get you more referral traffic. Consider: loyal users are more likely to share a link to content on your site from Twitter, Facebook, Tumblr, Redditt, or a good old-fashioned blog. This is exactly the kind of behavior that generated referral traffic–both directly from people clicking those links, indirectly from those people possibly sharing the links themselves, and yet more indirectly if they link from their blogs and thus improve your Google ranking.

Of course, even within your loyal base there is variation in how valuable a particular user is. Guy who has read the Washington Post for forty years and has just moved online is less valuable to the Post than someone like Mark Frauenfelder, who might link to one of their articles on Boing Boing, improving their Google ranking further and sending some of his traffic their way. But it’s still useful to think broadly about direct traffic vs. referral traffic.

The Porous Wall

Back in March, the New York Times launched something like a paywall. There are numerous particulars and exceptions, but the long and short of it is that someone like me, who only ever visits the Times when someone I know links to it, faces no wall of any sort. Meanwhile, someone who has loyally visited the Times every day for years will have to pay if they want to see more than 20 articles a month.

At the time, Seamus McCauley of Virtual Economics pointed out the perverse incentives this created: the Times were literally punishing loyalty without doing anything to lure in anyone else. Basic economic intuition dictates that this should mostly result in reducing the amount of direct traffic that they receive.

The Times did spend a reported $40 million researching this plan, and while I’ll never be the first person to claim business acumen on the part of the Times, you have to think they did something with all that money. As usual, Eli had a theory.

@ Intentionally leaky. Price discrimination. I wouldn't be surprised if they spent $40 million figuring out optimal leakiness.
@elidourado
Eli Dourado

Imagine, for a moment, that all of the Times’ direct traffic was composed of individuals who were perfectly price inelastic in their consumption of articles on nytimes.com. That is, they would pay any price to be able to keep doing it. Assume, also, that all of the Times’ referral traffic was perfectly price elastic–if you raised the price by just one cent, they would abandon the site entirely. The most profitable path for the Times in this scenario would be, if possible, to charge direct traffic an infinite amount to view the site, while simultaneously charging the referral traffic nothing so they keep making the site money by viewing ads.

The reality is a less extreme dichotomy–though I wouldn’t be surprised if a significant fraction of the Times’ referral traffic did vanish if they tried to charge them a penny. Still, the direct traffic, while undoubtedly less elastic than the referral traffic, is unlikely to be perfectly inelastic.

Getting a good idea of just how inelastic would be a very valuable piece of information for the Times to have, and I think Eli is right that that is exactly what they spent the $40 million on–that, and devising the right strategy for effectively price discriminating between the two groups.

It’s too soon to tell if the strategy will work for the Times, or if it’s a viable strategy for any content company to pursue.

Come One, Come All

2011 also saw the birth of a new technology website, The Verge.

The Verge began after a group of editors from Engadget left, in the spirit of the traitorous eight, because they believed they could do it better than AOL would allow them to. During their time at Engadget, they had developed a following through the listeners of their podcasts and their presence on social media–Twitter in particular. They also were fairly active in the comment sections of their own posts.

In order to bridge the gap between the launch of the new site and the departure from the old one, they set up a makeshift, interim blog called This Is My Next, and continued their weekly podcast. This kept them connected with the community they had built around them and allowed them to keep building it while they were also working on launching The Verge.

There are a lot of things that I really like about The Verge. First, they bundled forums into the site and gave people posting in them practically the same tools that they use for the posts on the main site. The writers themselves participate in the forums, and any user’s post that they find particularly exceptional they will highlight on the main site and in The Verge’s various social network presences.

Second, they do a lot of long-form, image and video rich, niche pieces that may take time to get through but which just have a kind of polish which is rare among web-native publications.

When I told a friend of mine about how much I loved these pieces, he very astutely asked “but it costs like eleven times as much to make as a cookie-cutter blog post, and do you really think it generates eleven times more revenue?”

This question bothered me, because in a straightforward sense he seems to be right. Say that Paul Miller could have written eleven shorter posts instead of this enormous culture piece on StarCraft. There is no way that The Verge made eleven times as much in ad revenue from that post as they would from the eleven shorter posts he could have written.

But posts like that one attract a certain kind of audience. I may not read every long feature piece that The Verge does, but I like that they are there and I read many of them. The fact that they do those pieces is part of the reason that I made them my regular tech news read rather than Engadget or Gizmodo.

In short, the clear strategy being pursued by The Verge is to reward their most loyal audience, even if it doesn’t directly result in more revenue than trying to game search engines. There isn’t always tension between the two strategies–one of the sites features is called story streams, pages like this which make it easy to see how a particular story has unfolded so far. It also is one more page that could potentially show up in Google search results.

Still, having followed the group very closely at Engadget first, and now at the Verge, it seems clear to me that the core mission is to build up the loyal visitors. If a feature piece costs eleven times as much as a shorter one, but makes a loyal reader out of someone who indirectly brings 100 visitors to the site over time by sharing links on Twitter and Facebook, was the feature piece profitable?

The Verge is even younger than the Times’ paywall, so time has yet to tell if their approach is sustainable.

Farming Referral Traffic

At the onset of 2011, a big rumble was building in the tech community about Google’s search quality. Many claimed that it had become filled with spam. Google was not deaf to these criticisms, and argued that spam was actually at an all time low. The problem wasn’t spam, they argued, but “thin content”–and what have come to be called content farms.

The logic of the content farm is that with enough volume, enough of your pages will make it high enough in search results to get you enough referral traffic to make a pretty penny. In short, a content farm focuses its efforts on acquiring referral traffic and foregoes any real effort to build up direct traffic.

This in itself isn’t a problem, of course. If you have 500,000 of the greatest articles ever written by mankind, then you, Google, and search users are all better off if you rank highly in relevant search results. And many companies that took a beating when Google began targeting thin and low quality content for downranking have cried that they were unfairly lumped in with the rest just for having a lot of pages.

The content farm controversy aside, there is a clear and obvious place for a site that has an audience made up almost entirely of referral traffic–reference sites. Wikipedia, for instance, at one point received somewhere in the neighborhood of 90 percent of its visits from referral traffic. Though it is probably the biggest receiver of search traffic, it is not unusual in this regard–there is a whole industry of people whose livelihoods are made or broken by the various tweaks of Google’s algorithm.

The Path Forward

As I said, much remains uncertain. Five or ten years from now we’ll look back and be able to say which experiments proved to be the models for striking the balance between these audiences. For my part, I can only hope that it looks more like what The Verge is doing than what the New York Times is trying.

Innovation will Bubble Up from the Long Tail

I recently wrote that the long tail of digital content producers–that is, the vast majority–will make nearly nothing in revenue. This is especially true when compared to the head of the tail, the tiny fraction of content producers that will earn the vast majority of the revenue. By this I did not mean that the long tail was unimportant–in fact, I believe that the long tail is the most important segment, because that is where the future can be found.

Social Trial and Error

Societies progress through continual and parallel processes of trial and error. Small groups adopt products or activities or norms, a subset of which are picked up by larger groups, and even smaller subset of which goes on to yet a larger group. This process continues until only a tiny fraction of the original products, activities, or norms go mainstream.

An enormous number of trials end up discarded before a single one makes it to even a middle level of adoption, much less the favored few that go mainstream–or stay there long.

This phenomena, well documented in the diffusion of innovations literature, is most familiar to people in the fast moving world of consumer technology, where phrases like “early adopters” are used in casual conversation. It applies to anything that could proliferate across groups–for example, art, and content more generally.

A Hotbed of New Ideas and Failure

An unknown, aspiring writer in today’s world faces the same problem as any unknown, aspiring writer did in generations past–obscurity. He has many more tools at his disposal than his equivalents in the past did–he can start a blog, podcast, and connect with others on social networks to promote his work. There are also many, many more places he can submit his work–there are still magazines in the traditional sense, but there are many more online outlets of widely varying audiences.

These tools are available to any aspiring writer, however–in fact, the barriers to putting out your writing in public are so low that huge swaths of people who wouldn’t have even tried in the past are also putting their stuff out there. If anything, the web and the new opportunities it affords have actually reduced the probability that any one aspiring author will make it big.

If they want to set themselves apart, they will have to innovate. Of course, as touched on above, most of these innovations will fail to gain any traction. The new and exciting things happening in writing, however, will come from the successful subset of these innovations.

Scott Sigler is an example of a successful innovator in digital writing. After losing his book deal ten years ago, he learned about podcasting and decided to record and serialize his book himself, and put it out for free. He continued to do this after the first book, and eventually had built up a big enough audience to catch the attention of Dragon Moon Press, a small independent publisher. On the strength of his online following–who helped not only with sales but with marketing the book–the book managed to rocket up Amazon’s bestseller list. This caught the attention of Random House, with whom he currently has a contract. His second book with them was a New York Times bestseller. He isn’t selling Harry Potter-level blockbusters, but he has definitely moved up out of the long tail and into the head.

Sigler wasn’t the sole creator of the podcast novel; others were trying it out at basically the same time. But Kevin Kelly has documented how innovations and ideas tend to occur in parallel in art, as well as in science, math, and technology.

The podcast novel is a great example of how this dynamic works, too, because while it helped launch the careers of Sigler and some of his peers, the form itself has yet to become anything like mainstream. It has grown over time, but Podiobooks.com, one of the largest repositories for podcast novels on the web, still boasts a mere 569 titles, and a registered audience of 83,000. If you asked a random individual, even a random book enthusiast, odds are extremely low that they would have even heard of podcast novels.

Most innovations never make it even this far–but there is still no guarantee that podcast novels will get to the level of mainstream adoption, or even mainstream awareness.

The Head of the Tail is Conservative

The big record labels, publishing houses, and movie studios will never try something truly new. I am confident on this point–anything that is celebrated as being new from these big institutions will in fact just be the first time that big money has been spent on a form that was tried out first by individuals in the long tail.

It makes sense–a lone writer, musician, or filmmaker is working with a very small budget. In a writer’s case, they may pay next to nothing and face an opportunity cost made up primarily of their time. If they try something new and different and it fails, they may be out a few months of work. A big publishing house, on the other hand, has to pay the salaries of its army of editors, not to mention the costs of promoting a work. In dollar terms at least, failure hurts a publishing house a lot more than it hurts the lone, unknown author.

And publishing houses still fail more often than they succeed. They just win really big when they do win, and that subsidizes the failures. Profitably depends on their ability to increase the fraction of the authors they sign on who end up being successes, and minimizing the failures.

For that reason, they are always going to stick to the tried and true. Innovations will have to gain widespread adoption in the long tail–and for a while–before they bubble up to the head.

Consider the movement towards ebooks. The formats that Amazon, Barnes and Noble, and Apple are providing consumers are essentially nothing more than the digitization of the print versions. They do not offer the increased capabilities that digital technology makes possible–of including video and audio files mixed in with the text, for example, something commonly done on blogs. They optimize for the tried and true, because all the money is being invested in the tried and true.

Mechanisms exist for making money from innovations–you could pitch an idea beforehand on Kickstarter, or make an app for smartphones and tablets and charge a price for it. Only after a respectable amount of money has been made by innovators will the institutions at the head of the tail start to take notice.

So while I don’t agree with Chris Anderson’s original hypothesis that the long tail will be of increasing monetary significance to businesses, I do think that it will be an even greater engine of innovation in the digital era than it was in the analog one.