Growing Demand Blog

That was an actual quote from the UCLA class that I’m teaching with Peter Guber – specifically last week’s class. And our group of very, very smart students both bowed down to the Wired editor-in-chief and called him out. The discussion? Is Chris Anderson’s business theory of The Long Tail actually a business model at all, or is that too limiting a description for what is really a social phenomena? 

I’ve been fascinated by Chris for awhile now, and any of our investors will tell you that I was quoting him directly when initially pitching the Demand Media story and had never even met him.  In the last year I’ve been spending time with him in person, and he was kind enough to come down and join the classroom discussion.

Here are some of the highlights:

People will pay for the “privilege” to create content.  Chris’ position is that most of the long tail does not exist for commercial reasons.  And his bigger point is that believing people create content for money alone is OUTDATED – that passion is a driving force – be it for their kids’ soccer team or for hiking – and that people will actually PAY to have a voice to the tune of $12.95 a month to blog on wordpress.  I see his point but believe it’s still very early in the game.  Up until recently, there was no real way to make money from “producing” for the long tail.  But that is changing.   I look at how much a site like eHow.com has grown with its own “pay for publishing” platform and see endless possibilities.  While people feel good about having an outlet, even seeing a few dollars every month in their PayPal account is a great motivator.

It is necessary to redefine “professional.”  Chris’ point is that the post-Google web has helped to provide a platform that allows talented people to create content around what they are passionate about and 1) find an audience and 2) make some money.  He sees a world where professionals are now competing with the amateurs.  We debate these classifications of producers regularly inside the walls of Demand Media.  Our Demand Studios qualification process is pretty rigorous – with Emmy Award-winning producers creating content for us – but the lines do blur as a new generation of “amateurs” grow up knowing their way around their HD Flips and an Avid system.

Free is a monetization model.  This is really just an anecdote because the debate around Free vs. Premium could go on for hours and in class it was hotly debated.  Chris’ perspective was intriguing and well argued.  I will wait until you all get a chance to read the book to add my 2 cents (free advice really!)  Chris mentioned that his first book, The Long Tail, was published in China but quickly pirated.  His book made the best seller list there but he did not earn any royalties.  However, he still indirectly monetized the “freeness” because  he was invited (and paid) to speak at a couple events in China as a result of the book’s popularity there – so in essence he was building his brand and making money while the book itself was “free.” 

The class was fascinating.  And that was only half of it because Terry Semel also joined us for this class and to see him and Chris together was a real one-two punch – but worth its own blog post entirely.  My goal has been to blog about each class but I am a bit behind.  Will try to keep them coming – got another one tonight with Hillary Schneider (EVP of North America at Yahoo!) and Scott Stanford (Managing Director of Goldman Sachs).