The Micro Economy

A couple of nights ago I went to watch Danny Vaughn and his band play. As an old rocker, I think they’re brilliant, but draw a crowd of only a few hundred to a small venue in North London. But they’re on the road constantly and are able to pull similar crowds in everywhere from Riga to Belfast. And those fans buy t-shirts and albums. Hey, they might even download the music. That means that it’s economically worthwhile for them to carry on, especially since the tools now exist for them to self-publish and distribute. Remember that dot com word, disintermediation ?

My colleague, Andy is similarly in a band, and although they gig less extensively, they draw a crowd. In fact, most young bands carry their crowd around with them and are paid for the gig based on how many ‘affiliates’ they brought into the venue. Talk about pay per click for the real world..

Welcome to the Micro Economy. The single greatest thing that major media companies are failing to grasp at present, IMHO, is that their massive audiences of old have gone forever.

In future, media companies will survive by delivering targeted content to small audiences and aggregating them.

Similarly, they will need to do the old t-shirt, download and gig ticket trick as they aggregate different revenue streams to maximise the revenues from one of these audiences.

The only company that’s truly been able to engage the long tail model predelicted by the micro economy is, of course, Google, with MySpace and eBay on their tail, albeit in different contexts. But it’s interesting to see that there are more than a few companies moping up the distressed assets that are old world media companies and looking for economies of scale across diminishing or smaller audiences.

The trick is to build a networked community, however small it is, something that goes against the grain for ‘pile ‘em high’ TV networks.