I mentioned a few days ago an article written by Kevin Kelly, about the new revenue model for this-generation artists: what’s being nicknamed as “1000 True Fans.” The gist of it is this, in Kevin’s words:
Assume conservatively that your True Fans will each spend one day’s wages per year in support of what you do. That “one-day-wage” is an average, because of course your truest fans will spend a lot more than that. Let’s peg that per diem each True Fan spends at $100 per year. If you have 1,000 fans that sums up to $100,000 per year, which minus some modest expenses, is a living for most folks.
This goes up against the grain of another popular distribution and business theory that’s been kicking around the ‘net for a few years now (fitting, as the internet is exactly where this sort of model thrives, as keenly noted by my friend Colin): The Long Tail.
The theory is this: if you were to model a demand curve for a certain market, like books or movies, there will be some products that garner a lot of attention (your Godfathers or Kite Runners or *shudder* The Secrets), but also a “long tail” of niche-based demands (your Faster Pussycat Kill Kills and Night on Earths and Complete works of Charles Bukowskis, for example). The Long Tail takes an 80-20 split: looking at the top 20% of titles (the “hits”) versus the rest of the titles (the “long tail,” or “niches”). Used to be that resource restrictions like space and inventory would force most conventional stores to cater primarily to the safer 20% “hits” sector, leaving the other 80% “niches” by the wayside. Now, due to the myriad of technology improvements seen in the past ten years, companies like Amazon and Netflix and Apple’s iTunes can do good business by catering to the niches of the world, and for good reason: research suggests that with a large enough market (such as the world’s online demand for music and books) the 80% actually takes up a substantially larger part of the whole than the top 20%. To translate that to the True Fan theory, this could mean finding the right balance between being a long-tailer and a superstar, right on the cusp of that 80-20 split. For more on this, see Kelly’s article.
The Guardian in the UK recently posted a rebuttal to Kevin Kelly’s theorem: the article, written by economist Will Paige, criticizes Kelly’s simplicity. Paige notes that this theory doesn’t reconcile a lot of the realities of the music business. For example, this $100,000 in raw income (1000 fans x $100 a year) does not incorporate the costs of doing business in the entertainment world: sure, fans may be willing to pay $100 to an artist in a given year (I’m pretty sure I’ve done that with Tom Waits, for example), but how much of that does he see? Let’s break it down.
