December 21, 2004

2005 Crystal Ball

I usually don't like to do predictions because, as an optimist, they end up being just a wish list. But finally some things on my wish list might come true .... so without further a due ... Scott Knowles' 2005 Predictions:
  1. First and foremost, 2005 will be known as the year of the long tail. The efficiency found in the 80/20 rule will no longer be necessary and old, traditional industries will struggle to adopt. As Chris Anderson puts it, 99% of the market can act efficiently as a marketplace because scarcity doesn’t exist in the digital realm. This applies to everything from music distribution to Aunt Nelly’s frilly fabrics to how we manage the radio spectrum. The long tail embodies the the concept of micro markets. Peers reaching peers. No control of the masses, but by the masses. Chris has more in Wired and on his new blog supporting a book he is writing on the subject:

    To get a sense of our true taste, unfiltered by the economics of scarcity, look at Rhapsody, a subscription-based streaming music service (owned by RealNetworks) that currently offers more than 735,000 tracks.

    Chart Rhapsody's monthly statistics and you get a "power law" demand curve that looks much like any record store's, with huge appeal for the top tracks, tailing off quickly for less popular ones. But a really interesting thing happens once you dig below the top 40,000 tracks, which is about the amount of the fluid inventory (the albums carried that will eventually be sold) of the average real-world record store. Here, the Wal-Marts of the world go to zero - either they don't carry any more CDs, or the few potential local takers for such fringy fare never find it or never even enter the store.

    The Rhapsody demand, however, keeps going. Not only is every one of Rhapsody's top 100,000 tracks streamed at least once each month, the same is true for its top 200,000, top 300,000, and top 400,000. As fast as Rhapsody adds tracks to its library, those songs find an audience, even if it's just a few people a month, somewhere in the country.

    This is the Long Tail.

  2. Bloggers will become woven into newspaper content: A major print newspaper will fully integrate reader generated blogs into its content either via the offering of branded blogs or integrating outside blogs by correlating content between the two sites. As a side note, when my employment was a little less certain a few years ago, I was tooling around some business plan ideas that would involve this. I had visions of pitching Washington Post execs this concept and them wondering even what a blog was at the time. Now it’s obvious. Lemonde was the first to do something similar.
  3. Google will introduce a sell-side advertising model via web services.
  4. Only a few social networking sites will exist as a destination, and social networking will shift to be primarily a tool that’s layered across myriad aspects of the web. Foafnet will be the killer app of 2005. Meanwhile big media players keep buying up social networking sites but miss the importance of Foaf.
  5. Web Services will enable the customized aggregation to be integrated into search (think i-local meets Technorati.).
  6. Local Search becomes easy for local businesses through bid management companies like Local Launch and Reach Local and the hockey stick gets started.
  7. The music longtail becomes more enriched through Podcasting, which spreads beyond tech talk and sees the return of the DJ (or shall I say podjay). Traditional media tinkers with distributing content via podcasting but doesn't integrate user created podcasts into its own content (save that for 2006 or 2007).
  8. Out of fear of losing its power, the FCC settles with Fox over its indecent indecency fine and the Courts do not get to limit the self proscribed power of of the FCC.
  9. iPod allows a lossless music compression format (a la Flac).
  10. Tivo and other DVRs accept RSS video feeds.
  11. I drink too much egg nog on New Years Eve.

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