In today’s world of online business we see ‘out-sized rewards for a small number of stars’. This is a line from the book ‘The Fourth Industrial Revolution’ by Klaus Schwab (2016). It sums up for me what I have come to understand about the internet and businesses online. There are a relatively small number of online businesses which do very very well while the majority fight over the crumbs. Perhaps the ‘Pareto Principal’ on steroids is at play (80% of the benefits go to the top 20%). The vast majority of online businesses will fail to make a dent while some enjoy untold success. This seems to me to be a key rule of the internet and why if you write a book, start a blog, develop an online course etc. you will likely fail to make money. I have heard it described as ‘life in the tail’. There is a very long trail. If you are in the tail you will sell a very few copies of your book, course or product. Since the tail is very big with thousands and thousands of products then it is very profitable to own a tail but very unprofitable to be in the tail! Amazon own a tail of thousands upon thousands of products and make lots of money but if you are in the tail you will make pennies. I live in the tail online and this blog lives in the tail! If you start an online business you will likely join me to live in the tail as well.
Lets look at online business examples
Look at online social platforms for example. Take Facebook – who is the nearest competitor to Facebook? Well I just Googled this and below is the list of Facebook competitors according to Google:
- Vero
- Mastodon
- Ello
- Digg
- Steemit
- Raftr
- Diaspora
I have never hear of any of these! Facebook, worth somewhere in the region of $600 billion in 2018, is the winner and the winner takes all. The competitors live in the tail. This is due to Metcalfe’s Law about the value of a network. If there are few people on the competitors network then they have little value. Who would want to be on an alternative to Facebook if few people and none of your friends are there? Take another example of tech companies. Apple is now a $1 trillion dollar company. How many big phone companies are there? Apple, Samsung, Huawei etc. the big brands dominate the market and take the lions share of revenue. It’s winner take all again.
Inequality in the world
The online world reflects the world at large. Half of all the assets in the world are owned by the top 1% of the population while the lowest half of the population collectively own less than 1% of global wealth (Credit Suisse – Global Health Report 2015).
Maybe the tail isn’t that bad?
I live in the tail. This website lives in the tail. My books and courses live in the tail. I don’t make much money online. Does that mean I should give up and stop writing? If my only objective was to make money then I certainly should have quit by now. But my objective is much bigger than making money. My objective is to learn as well as to teach. At the end of the day I am only ever writing for an audience of two people. The first person is myself and the second person is you. I sincerely hope that you benefit from what I write but I do know with certainty that I benefit. That is enough to make my efforts worthwhile. If your great great grandfather or great great grandmother had written a book and you were the only reader would that book be worthwhile? I would say yes and I would love to be able to read such a book. Who knows my great great grandchildren may read what I am writing now.
In conclusion
In summary what I am saying is that the online world is unbalanced and there are a few winners while the vast majority will make no money. This reflects the inequality of the world at large. However apart from money there are still many great reasons to write your book or blog or record your course, podcast or song. Go on be creative you will learn and grow as a person. Write for an audience of at least one and perhaps two – that is enough!
Best wishes,
Tom