11.13.07

Wikinomics and The Long Tail

Posted in Uncategorized at 10:55 am by Michelle

Throughout the semester we have been examining the different collaboration tools available as a result of the Web 2.0 revolution.  Blogs, as described by Dan Gillmor, are opening doors helping to make everyone a journalist.  Additionally, Robert Scoble and Shel Israel demonstrate how blogs can be used a marketing tool and an internal communication tool; fostering collaboration among audience members.  In addition to blogs, texting and social networking allows us to both communicate and form virtual communities with people who have similar interests.  Smart Mobs looks at the texting revolution extensively and how the technology can allow us to communicate to virtually anyone without a computer or LAN line.  All of these technologies provide us the ability to communicate with anyone regardless of geographic location. 

The World of Mass Collaboration 

According to Wikinomics’ authors Tapscott and Williams, there are four principals to Wikinomics: openness, peering, sharing, and acting globally (p. 215).  These principals contribute to innovation through an open and collaborative environment. 

 Tapscott and Williams, in Chapter 6 of Wikinomics, demonstrate how information sharing has been around since the time of the Alexandrian Greeks who shared knowledge by storing works of literature in a centralized location. They go on to explain how scientists today, much like the Alexandrian Greeks, are sharing information not by storing documents in a building but by digitally collaborating.  This open collaboration according to Tapscott and Williams, will “forever change the way scientists publish, manage data, and collaborate across institutional boundaries,” (p.157).  In addition to creating scientific wonders, collaboration also lends itself to profitability.  By collaborating with other corporations or outside venders, companies can significantly increase their profits.  

The concept of profit making through global collaboration is explored by Tapscott and Williams in chapter 7. I found this chapter fascinating especially the information on Amazon.com. Amazon has a revenue-sharing business model, which allows people to become co-developers of the Amazon platform. The way Tapscott and Williams describe the Amazon business model, made me think of the Google business model as described by John Battelle in The Search.  Basically I am wondering; is Amazon the Google of the retail world? Or will Amazon’s willingness to be so open eventually hurt them in the end? In my opinion, Amazon’s acceptance of applications created by numerous developers will only help them.  The way links transform a static Web site into a virtual conversation or blog is the way these applications transform Amazon into a global marketplace.  Collaboration is at the heart of Amazon’s success. 

The final chapters of Wikinomics, reinforces the importance and highlights numerous successes of collaboration.  From the manufacturing plants of BMW and Boeing, who collaborate with other companies, to the employees of Best Buy’s Geek Squad who use Wikis and other technologies to collaborate in the workplace; collaboration continuously fosters innovation and success.  Additionally, collaboration has allowed the workplace to transform from being one of having a centralized corporate headquarters to one of employees working from home and other locations using collaboration tools, such as wikis, as a means of communication.  The true future of the workplace is yet to be seen.  Will offices exist or will the majority of employees work from home and if so, will this foster innovation or will creativeness be stifled because employees are isolated with only computerized interaction?  Additionally, as companies become more open will their competitive edge diminish, eventually leading to a decrease in profits due to the openness of their product?  

While Wikinomics demonstrates how Web 2.0 has turned our society into one without geographic limitations, it also shows the world is really not as big as one may have thought.  The world is actually one of many small groups looking for particular niche goods, which the Internet has now made available.  This concept is addressed by Chris Anderson in The Long Tail.

Moving From Selling Many Hits to Targeting Niche Markets 

Throughout the semester we have moved from studying the broad history of communication and technology to examining finite details of communicating and how technology has allowed us increased choices.  In the Long Tail, Anderson describes how many small purchases can be more lucrative than selling millions of one item. Web sites such as Netflix, Amazon and iTunes are able to carry a lot more inventory attracting small niche markets, where as their retail counterparts don’t have the space to carry anything other than what they know will sell to the masses. Therefore, these online retailers are able to tap into a market that traditional retailers can not afford to target, simply because their brick and mortar spaces drives up their cost of doing business and provides limitations as to how much inventory can be stored; where as online retailers are able to carry a lot more with lower overhead costs and storage is generally not an issue.   

The concept of the Long Tail provides a visualization of how the Web has created a marketplace for those seeking specialized goods.  From personalized items and old songs, to rare books, users are given many more choices and they are making these choices.  I was amazed by Anderson’s statistic of how all of Rhapsody’s songs are streamed at least once a month. Additionally, the fastest-growing part of businesses, such as Rhapsody and Amazon, “is sales of products that aren’t available in traditional retail stores,” (p. 24).  While, online retailers have been the leaders in targeting niche markets traditional retailers are starting to create virtual Web spaces in addition to their retail stores.  Many of these sites offer sales not available in the stores.  Examples of companies that have created online stores are Barns and Noble and Borders.   The Long Tail is not going away. As the Web becomes larger more niche markets are created.   

Search provides us with a means to find what we want, and online retailers and auction Web sites provide us with the goods we seek.  I wonder if in the future if stores will eventually move the majority of their business to the Web.  Also, will small niche businesses start opening stores targeting those who seek their products?  I think for certain goods such as books, movies and music, the Web is going to remain the leader in providing unique goods but for items such as apparel and furniture, a store will remain the sales leader because those are the types of items people want to see and touch before buying.   

The need and want for customization is not going away.  From creating our donuts at the local Fractured Prune to designing T shirts and shoes consumers are demanding products that are different from what the masses have.  Personalization makes customers happy and these niche markets allow the Long Tail to continually grow.

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