Sometime last week I learned that podcasting startup PodTech was acquired for less than $500,000. This is a rather ignominious exit for a startup that initially entered the public consciousness with its high profile hire of Robert Scoble and the intent to build a technology news media empire using RSS and podcasts instead of radio waves and news print.

When I first heard about PodTech via Robert Scoble's blog, it seemed like a bad business to jump into given the lessons of The Long Tail. The Web creates an overabundance of content and products, which is good for aggregators but bad for creators. Even in 2006 when PodTech was founded you could see this in the success of "Web 2.0" companies that acted as content aggregators like Google, YouTube, Wikipedia and Flickr while content creators like music labels and news papers were beginning to scramble for relevance and revenue. 

Kevin Kelly has a great post about this called Wagging the Long Tail of Love where he writes

So as one crosses the sections -- going from the short head to the long tail -- one should be consistent and view it from the aggregator's point of view or the creator's point of view. I think it is a mistake to conflate the two view points.

I've been wrestling with this for a while and I think the only advantage to the creator that I can see in the long tail is that aggregators can invent or produce a long tail domain that was not present before.  Like Seth's Squidoo does. Before Squidoo or Amazon or Netflix came along there was no market at all for many of the creations they now distribute. The proposition that long tail aggregators can offer to creators is profound, but simple: you have a choice between a itsy bitsy niche audience (with nano profits) or no audience at all. Before the LT was expanded your masterpiece on breeding salt water aquarium fishes from the Red Sea would have no paying fans. Now you have maybe 100.

One hundred readers/watchers/listeners is not economical. There is no business equation that can sustain profits for continual creation from so few buyers. (It can of course support the business of aggregation above the level of creation.) But the long tail niche creation operates perfectly well in the realm of passion, enthusiasm, obsession, curiosity, peerage, love, and the gift economy.  In the exchange of psychic energy, encouragement, meaning of life, and reasons to live, the long now is a boon.

That is not true about profits. Economically, the more the long tail expands, the more stuff there is to compete with our limited attention as an audience, the more difficult it is for a creator to sell profitably. Or, the longer the tail, the worse for sales.

The Web has significantly reduced the costs of producing and distributing content. Anyone with a computer can publish to a potential audience of hundreds of millions of people for as little as the cost of their Internet connection. This is great for content consumers but it has significantly increased the amount of competition among content creators while also reducing their chances of generating profits from their work since the Web/Internet has provided lots of options for getting quality content for free (both legally and illegally). 

All of this is a long way of saying that in the era of "Web 2.0" it was quite unwise for a VC funded startup to jump into the pool of content creators and thus become a victim of The Long Tail instead of becoming a content aggregator and thus benefiting from the Long Tail instead. Of course, even that may not have saved them since the market for podcast aggregators pretty much dried up once Apple entered the fray.

Now Playing: Lil Wayne - I'm Me


Tuesday, July 22, 2008 8:45:08 AM (GMT Daylight Time, UTC+01:00)
We're discussing PodTech's woes on FriendFeed here:
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