by CIO Knowledge Space

Tail Wags Dog

Jan 07, 20076 mins

Many of my peers have been wondering if Web 2.0 is a fad. I too had been wondering that. Things became clear for me after reading Chris Anderson’s book, The Long Tail, hearing him speak at a recent event and spending quite a bit of time over the past year or so poking about in the land called Web 2.0.

I am here to report, for better or for worse, Web 2.0 is not a fad. Not only that, CIOs should already have or begin making plans on how their firms can utilize Web 2.0.

Stop! Don’t leave the page. If you found that conclusion too predictable, wait, there’s more. The reasons why I believe this are probably a little surprising, as I am far more cynical than hopeful about what Web 2.0 really is. The emperor has new clothes.

First, let’s examine what I think is one of the more relevant features of Web 2.0: the long tail. The other day, I walked into my nearby Blockbuster store (I hadn’t been there in a while) and I noticed it looked a bit empty, of people that is, not titles. I noticed Blockbuster is trying to promote online ordering of movies and in-store pick up, obviously a maneuver designed to counter Netflix’s online/mail distribution model. Now the reason I haven’t been to Blockbuster in a while is I’ve been using Netflix.

As we know, Netflix is distributing the thousands of less popular titles that collectively represent a sizeable amount of business. They are attempting to solve a problem that plagues many distribution models: the last mile problem. It is often unprofitable to distribute products beyond a retail store or a distribution center of some kind. However, Netflix and Blockbuster share a common commerce model: customers pay money for the product they receive, so not much is new here either.

YouTube is another story. Here, anyone can publish any video for free. And publish away they do! Bruce Springsteen got it wrong in his song “57 channels and nothing on.” He should have titled it “3,651,731 channels and nothing on.” Web 2.0 proponents are claiming that this aspect of the long tail is a good thing in that the tools of production and the tools of distribution are democratized – that is they placed in the hands of the people who can now free themselves from the yoke of capitalistic oligarchies. Power to the people! Rock on!

Whoa. Not so fast. Let’s think deeply for a second. What exactly is being democratized? To find out, let’s follow the money.

In most economic transactions, a consumer gives a producer money and a producer gives the consumer a product or service. In a YouTube transaction, who is the producer and who is the consumer? One way to look at it is that the person who is publishing the video on the web is the producer. If so, then YouTube is the distributor and other people on the net are the consumers of that video. Notice that no money flows through this exchange.

I think this is the wrong way to look at it. I contend the person publishing the video on YouTube is the consumer and YouTube is the producer. In this case, the consumer with the video has a need to fulfill — the need to express him- or herself in a social setting. Consumers wish to see themselves being published. I call this vanity. YouTube provides a technical infrastructure for this vanity and provides a network of many other consumers who might want to see what you have produced. In this case, what is being democratized? The right to be vain in public. Boy, that gets me whooping and hollering in favor of Web 2.0. Karl Marx, I am sure, would be proud. All that has happened is that production has become consumption. Since the video published is nearly valueless (no one pays for it), something else must be going on.

Now let’s follow the money. What does the consumer pay for the right to be vain? They pay for the tools of production, a video camera and their own time. They also pay in that they are exposed to advertising which may induce them to indirectly pay YouTube some money.

Are profits being democratized? Is the economic welfare of mankind being altered in this ‘new’ order? Heck no. In fact, I contend Web 2.0 is a tool created by capitalistic oligarchs to continue to maintain a position of power on the net. To that end, they exploit the vanity of mankind, which is bottomless, keep the long tail fragmented so consumers can’t gang up together and go their own separate ways, and use Web 1.0 companies like Time Magazine to sprinkle fairy dust (obfuscation, actually) on Web 2.0 to keep consumers narcissistic and happy. Profits still go disproportionately to larger and more powerful players. (Please pardon my hyperbole. It’s for effect.)

We can throw a cherry on top of the sundae by including one more piece to this puzzle. Consumers in the long tail can compete with each other to see who among them will move up the food chain and attract a larger and larger audience until they become famous. Where have we seen this before? American Idol? Survivor? The Apprentice?

In this regard, Web 2.0 is actually Capitalism 101. And that is a good thing because it means that nothing, economically speaking, is new. Google is holding a bigger party (the long tail of products/people) with more life insurance sales agents planted as shills (the advertising model). In fact, I have a prediction. When a sizeable number of consumers do become aggregated, a dominant player will have to purchase that new collection of consumers to ensure their advertising money stream grows. We don’t really have to wait for this prediction, as the Google acquisition of YouTube is proof that old-fashioned capitalism is alive and well.

What does this mean for CIOs?

That we can probably find uses for Web 2.0 in our firms following traditional economic thinking. That because human vanity knows few limits, Web 2.0 will be a permanent feature of the landscape. That web advertising model is mature and established and will be where the money and profits are.

On the flip side, Web 2.0 has created some social good. Groups of consumers and citizens can more easily find each other and talk about their problems.

And that has both companies and governments concerned.

-Vince Kellen

Vince Kellen is Vice President for Information Services (CIO) at DePaul University and a member of the faculty for DePaul’s computer science graduate program