New Sweetbird Release

Christine Yandell and I just released our new record "Soul Fire." You can listen to it and, if you like, purchase a copy, at this link:

http://www.cdbaby.com/cd/sweetbird2

ps: the music should also be available on iTunes and many other digital downloading services shortly.

The Long Tail

Here's a good overview of "The Long Tail" from The Economist.
enjoy!

Profiting from obscurity
What the “long tail” means for the economics of e-commerce

DISRUPTIVE technologies, learning curves, tipping points—every so often a trendy new term enters the business lexicon and becomes a staple of business plans, conference speeches and PowerPoint presentations. The latest example, generating buzz among entrepreneurs, technologists and bloggers, is the idea of the “long tail”. The term is not new, having long been used in statistics to refer to a feature of “power-law” distributions, such as the frequency with which different words are used in English: there are a few common words that are used a great deal, and a long tail of increasingly obscure words that are used less often. But the idea is now in vogue because of its particular relevance to the economics of e-commerce. Its popularity in this context is due to an article* published last year by Chris Anderson, formerly a correspondent for The Economist, who is the editor-in-chief of Wired, a technology magazine. The article struck a chord: Mr Anderson is expanding it into a book, and talk of long tails is becoming a venture-capital cliché. “Business plans now have to have an obligatory long-tail passage,” he says. So when people invoke the long tail, what do they mean?

The short answer is a shift from mass markets to niche markets, as electronic commerce aggregates and makes profitable what were previously unprofitable transactions. Consider book sales, which obey a power-law distribution: there is a small number of very popular books, which sell millions of copies, and then a long tail of less popular books. A real-world shop can only stock so many titles on its shelves, so it generally holds those most likely to sell, at the head of the curve: even the largest bookstore carries only around 130,000 titles. But an online store, with no limits on its shelf space, can offer a far wider range and open up new markets further down the long tail. In the case of Amazon, for example, around a third of its sales come from outside its top 130,000 titles. Similarly, Rhapsody, a streaming-music service, streams more tracks outside than inside its top 10,000 tunes. Mr Anderson's point is that the collective demand for obscure items is very large, is growing, and can be aggregated over the internet, so that selling obscure books, music CDs or movies could prove to be just as lucrative as selling hits.

This has a number of intriguing implications. For one thing, opening up those previously uneconomic niche markets should increase overall demand: as people are better able to explore niches, they are more likely to find things they like, and may well consume more of them. This will then shift some demand, at least, away from hits. Indeed, the long tail reveals the hit-driven nature of the entertainment industry to be, in part, a vestige of scarcity. With limited space on store shelves, media providers are traditionally very discriminating about what they release, and use intensive marketing to generate a handful of hits. The shift towards electronic sales and distribution, however—music can already be purchased and downloaded instantly, and movies will be next—means that content providers can afford to be less discriminating. “The long tail says rather than trying to guess what the market wants, put it all out there and you'll find demand you hadn't anticipated,” says Mr Anderson.

But how can people find content they want when it is buried far down the tail? Already, a number of mechanisms have emerged, based around user recommendations. Perhaps the best known is “collaborative filtering”, in which purchase histories are analysed to work out what else is likely to interest the buyer of a particular product (“Customers who bought this item also bought...”, as Amazon puts it). This approach allows users to navigate from hits that they know they like to more obscure titles further down the tail. “You need not just variety, but information about variety,” says Mr Anderson. “A long tail without good filters is just noise.” Many people find even the amount of choice on supermarket shelves overwhelming—in large part because there is so little information on which to base a rational choice. But a mere 27 flavours of jam is nothing compared with millions of music tracks or thousands of movies, so providing filters to help people find what they want is vital.

From mass market to niche nation

Perhaps the most profound implication of the long tail, however, is its impact on popular culture. As choice expands and people can more easily find niche content that particularly interests them, hits will be less important: so what will people talk about when gathered around the water cooler? In fact, says Mr Anderson, the idea of a shared popular culture is a relatively recent phenomenon: before radio and television, he notes, countries did not operate in “cultural lockstep”. And the notion of shared culture is already in decline, thanks to the rise of cable television and other forms of market fragmentation. The long tail will merely accelerate the effect. There will still be blockbuster movies, albums and books, but there will be fewer of them. The companies that will prosper, says Mr Anderson, will be “those that switch out of lowest-common-denominator mode and figure out how to address niches.”

Many successful online businesses, such as Amazon, Rhapsody or the iTunes Music Store, already exploit the effects of the long tail. So too do other internet companies, such as Google (which makes money not just by selling adverts to big firms, but also by placing obscure adverts alongside obscure web pages) and eBay (which aggregates low levels of demand for obscure products to make a huge business). Hence the venture capitalists' enthusiasm for long-tailish business plans—and, now that the term is deemed to be cool, its use and misuse in other spheres. The misuse, says Mr Anderson, is painful. But it is arguably a sign of success: the “long tail” has passed into common parlance.

* “The Long Tail”:

www.wired.com/wired/archive/12.10/tail.html

Do You Grok?

Here's a cool new XLM-based search engine called "Grokker" that Yahoo is launching. It still has some bugs, but it looks like it has some potential as a disruptive technology to Google.

Here's the link that explains more about Grokker:
http://www.groxis.com/service/grokker/grokker.html?id=KIPvL5pu

Heading to FiRe 2005

I'll be away next week in San Diego hosting two panels on Nanobiotechnology at Mark Anderson's FiRe 2005 technology conference, so blogging will be light until I get back. One of the people sitting on my panel is Michael Knapp, CEO of Cambrios. I love the company's strategic focus and I'm looking forward to hearing Michael speak about the cool things they are doing. For those that are not familiar with Cambrios, here's a little background on the company:

Cambrios

Nature is a large-scale, precision, automated manufacturer of nanostructures.

The simplest organisms assemble complex structures from the chemical components of their environment. In the process, they make the most advanced human-made products look primitive. At Cambrios, we seek to harness nature’s efficient manufacturing ability to produce better, cheaper electronic devices.

Our directed-evolution technology platform uses genetic approaches to rapidly evolve biomolecules that express specific control over materials synthesis and assembly. As a result, we can produce inexpensive and uniform nanostructures and fibers that self-assemble and attach to other structures via molecular affinity. And unlike other methods of producing nanostructures, ours can be made from an extremely large variety of inorganic or commercially useful material, including semiconductors, metals, ceramics, and magnetic materials.

For more on Michael and Cambrios, check out their website: www.cambrios.com

Appreciating the Underappreciated

I was intriguied -- and delighted -- to find Nanotech as #4 on Sam Jaffe's list of under-reported news stories by the media. As I noted in my book, Quantum Investing, investors who take their eye off exponentially growing technologies often get knocked on their butt (and many times they are so weakened they can't get back up!)

steve

Four Under-Reported Stories

Here are four stories that should be huge, but seemed to have been missed by most journalists.

*Al Zubaydi—The Pentagon keeps catching 'important lieutenants' of Zarqawi's, and we all yawn (mainly because the car bombs keep happening at a terrifying rate). This one is different though. Most of Zarqawi's who have been captured to date have been Ansar al-Sunnah graduates from pre-war Kurdistan or foreign Jihadis. Ammar Adnan Mohammed Hamza Al Zubaydi, on the other hand, was a high ranking, trusted apparatchik of the Baath regime and part of a family that was very close to Saddam. Just the kind of person who would have been given the directive to foment a post-invasion insurgency with the help of Al Qaeda. Now that we have him, we can ask him: Did Saddam order you to liase with Al Qaeda? If the answer is yes, then we have first-rate proof that the war was justified for the simple reason that Saddam had aligned himself with our number one enemy. Even if we had found a few beakers of Yersenia pestis in Saddam's underpants, few Americans would really have cared. But it would be hard to find an American outside of Manhattan who would disagree with the invasion if he knew that Saddam and bin Laden were rowing the same boat. Of course this is all hindsight, but as we have seen with the issue of WMD, hindsight matters in our pop culture.

*I Spy with My Little Eye in the Sky—The New York Times reported that U.S. Satellites observed a massive tunnel being dug in North Korea, and then being backfilled with concrete. And then they saw what looks like a reviewing stand. Either it's a makework program for North Korean pep squads or...In fact there is not other explanation besides the one that says: They're going to test a bomb. This has been mentioned in many news sources, but the gigantism of this fact is understated. North Korea is about to test a nuclear bomb! If it happens, that means that the whole world is about to change in huge ways. Why isn't the front page of every newspaper covered with think pieces, news analysis and preparatory graphics? Why is any journalist assigned to cover the Michael Jackson trial instead of being sent to Beijing, Moscow, Tokyo and the Chinese/North Korean border?

*GM and Ford are Junk—Downgrading corporate bonds to junk status is not done lightly. It takes a huge amount of ill will, bad management and poor decisions to get so low. Yet Ford and GM were both downgraded last week to junk by the major credit rating agencies. One of the sharpest investors out there, Kirk Kerkorian, is amassing GM stock. This all points to one thing: GM is on the auction block. In fact, who wouldn't want to buy a company where you get more than $10 in annual sales for every dollar you spend on stock. And maybe Ford is acquirable too (although family control issues make that a much harder sell). The most likely winner? Toyota. Imagine the headlines such news would make. But anyone who doesn't read the business pages regularly (which is about 95% of the population), have no inkling that such a bombshell might drop. Stay tuned because this one is going to get ugly.

*Nano for the Masses—Product launches don't usually have Earth-shattering implications, especially when the 'product' is only a prototype. Motorola's announcement of a carbon nanotube-based television is enormously important, and it has nothing to do with televisions. Sure, it drops the price of an HD monster TV to less than $500 (that's a factor of 10). But the more important implication is that this will be the first consumer killer app that can be attributed to nanotechnology research (no, pants that stain less don't count). It also opens up the door to dirt-cheap computer monitors, which in turn make the $100 laptop that runs for a week eminently achievable. And this is just the beginning of the nano-age.

The Next Frontier

I came across this quote from Craig Venter that echoed one of the points I made in a post yesterday.

"We know far less than one percent of what will be known about biology, human physiology, and medicine."

Food for thought...

Neanderthal Computers

I'm intrigued when I hear pundits argue that technological invention/innovation in the U.S. is nearing the end of the road. It reminds me of statement by the U.S. Patent Office in 1899 declaring that: "Everything that can be invented has been invented." (I have a framed copy of that statement on my desk in my office as a gentle reminder each day of how silly expert opinion can be sometimes).

The basic fact of the matter is that we are at the beginning of our technological quest. Consider today's computer. It is the poster child for Pete Townsend's 'Pinball Wizard' -- deaf, dumb and blind. Sometime in the 21st century, this will not be so. Neuromorphic microchips and other quantum-based technologies (including not-yet-invented self-assembly nanotech processes) will be developed and commercialized. These technologies will change the entire global information technology landscape, just as conventional chips displaced basketball court-sized vacuum tube computers. In the 20th century, computing was more about engineering. In the 21st century, I believe computing will be more about biology. As Caltech physicist Carver Mead points out in George Gilder's book "The Silicon Eye:"

"When you examine how biology processes visual information, several facts are clear. Even the brain of a fly as it eludes a swatter outperforms any real-time computer image system by as many as nine orders of magnitude (billions). We have almost no idea of how the fly does it. And if we cannot figure out how the fly does it, we do not know how the far more complex human brain does it."

Next time you go to swat a fly, think about this and then remember that today's "Tommy" computers are neanderthals compared to what we'll see in coming decades.

The Silicon Eye

I just finished reading George Gilder's new book "The Silicon Eye." I've been following Carver Mead and Federico Faggin since the early 1990s when I was Editor of the now defunct "Journal of Bionomics." Over the years, I've gotten to know Carver Mead. I think he's one of most astute scientists on the planet. Unlike others of his ilk, Carver is down to earth and very approachable. A scientist with a big heart -- a rare combination. I highly recommend Gilder's book, which lays out the story of Mead and Faggin's journey into analog processors and the quest to build intelligent technology. I found this passage illuminating and bang on:

"Like the railroads that bankrupted a previous generation of visionary entrepreneurs and built the foundations of an industrial nation, fiber-optic webs, storewidth breakthroughs, data centers, and wireless systems installed over the last five years will enable and endow the next generation of entrepreneurial wealth. As Mead states, 'the hardest thing I ever had to do in my life was to get a company going during the bubble. Now, Mead says, there's space available; you can get fab runs; you can get vendors to answer the phone. You can make deals with people; you can sit down and they don't spend their whole time telling you how they're a hundred times smarter than you. It's absolutely amazing. You can actually get work done now, which means what's happening now is that the entrepreneurs, the technologists, are building the next generation technology that isn't visible yet but upon which will be built the biggest expansion of productivity the world has ever seen.' "

Amen.

(steve)

Stone Age Health Care

"The inability, and reluctance, of doctors and hospitals to use information technology more widely is killing thousands of people."

The Economist
Special Report: IT in the Health-Care Industry


As the son of a general practitioner and author of a book on the future of technology, I can only shake my head at this. Read the article and weap, folks. The full piece is here:

http://www.economist.com/research/articlesBySubject/PrinterFriendly.cfm?Story_ID=3909439&subjectID=348909

Look Ma -- No Bell!

Well, I just had my office phone line disconnected. Free at last! All calls will now be handle via Skype's innovative "Skype In" VoIP service, which includes a conventional phone number and voice mail (other cool features will no doubt be added in the weeks ahead). I'll be saving hundreds of dollars per month in fixed line charges and long distance calls. The next move is to purchase a phone that will allow me to access Skype in the same way I would acceses a conventional phone line. There are Skype-enabled phones available for purchase in Europe, and I suspect they will soon hit the U.S. market.

If you haven't yet checked out Skype VoIP service, I highly recommend it (www.skype.com). It's the future of communications.

Bye bye Ma Bell.

(steve)

ps: Someday in the not too distant future I will be using Skype on my mobile unit. I'll only pay for Internet access. That should save me at least another $100 in phone charges per month. :-)