The economics behind why attending SXSWi is important
(Note: Revised this slightly following SXSWi’s conclusion; if you had a great time and feel ready to take over the world, this post may, in part, explain why that is ;-)
John Furrier had a typically great post over on SiliconAngle on Friday, riffing on the latest Twitter research du jour. The original coverage on Mashable reports on the facts, but John expands on the larger point…and it’s a shocker: a minority of the users create a majority of the content and attract a majority of the attention (the “80/20” rule).
John ties this back to the “early adopter” phenomenon and the fact that SXSW has become a bit of a technology early adopter jamboree (for lack of a better term ;-)
There are some distinct economics at work here that make “early adoption” of social media tools strategic (and not just consultantspeak).
So, allow me to put a finer point on John’s post with a couple quotes from Clay Shirky, Duncan Watts, and Umair Haque, and conclude with a couple of my favorite heuristics for business and marketing.
In 2003, Clay Shirky wrote the following explaining why there is always an 80/20 wealth distribution in systems like Twitter (he was referring to the nascent “blogosphere” at the time):
In systems where many people are free to choose between many options, a small subset of the whole will get a disproportionate amount of traffic (or attention, or income), even if no members of the system actively work towards such an outcome. This has nothing to do with moral weakness, selling out, or any other psychological explanation. The very act of choosing, spread widely enough and freely enough, creates a power law distribution.
(“Power law”, aka “the 80/20 rule”, aka the “long tail effect”)
Clay continues, in a section titled “Freedom of choice makes stars inevitable”
To see how freedom of choice could create such unequal distributions, consider a hypothetical population of a thousand people, each picking their 10 favorite blogs. One way to model such a system is simply to assume that each person has an equal chance of liking each blog. This distribution would be basically flat - most blogs will have the same number of people listing it as a favorite…
But people’s choices do affect one another. If we assume that any blog chosen by one user is more likely, by even a fractional amount, to be chosen by another user, the system changes dramatically…with a small number of blogs becoming increasingly likely to be chosen in the future because they were chosen in the past.
Duncan Watts brings Clay’s point home in his 2007 New York Times Magazine piece “Is Justin Timberlake a Product of Cumulative Advantage?”
…when people tend to like what other people like, differences in popularity are subject to what is called “cumulative advantage,” or the “rich get richer” effect. This means that if one object happens to be slightly more popular than another at just the right point, it will tend to become more popular still. As a result, even tiny, random fluctuations can blow up, generating potentially enormous long-run differences among even indistinguishable competitors
If your incessant “checking in” has distracted you from these two rather genius explanations of The Way Things Are, the point is that early adopters (in relatively open media environments) have an inherent advantage in their ability to gain attention. And it’s incredibly hard to dislodge leaders after they build this advantage.
Two quick points, in an attempt to make this practical for professional communications folk:
1. Don’t get paralyzed by [what I call] the Marketing Innovator’s Dilemma. Failing to enter, test, and learn conversational media markets (“social media”) early in their maturity today is a recipe for paying $$$ for marginal attention tomorrow. And that attention is typically WAY lower quality (mostly because you paid for it)
2. “Everyone is a prosumer of something.” What does that mean? For the purposes of this discussion, it means that the top consumers of any Thing typically produce a lot of social media banter (“information”) about said Thing. It means that everyone (and I do mean 100% of everyone) has something they are REALLY passionate about. If you agree that in the very near future everyone will prosume the things they love, then you [the business] need to have a communications strategy that can deal with that. Why? Because anyone can become Dooce. And because social media is an economic substitute for advertising…my reliance on the Advertiser to tell me a) a product exists and b) what I can expect from it diminished when I have so many other sources.
So, enjoy SXSW if you’re there, your GoWallaSquare badges might be building a real economic advantage!
