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It's All Relative

It doesn't make sense to pretend we live in a world of absolutes any more.

July 27, 2007 | RSS | EMAIL | PRINT | 6 COMMENTS

This whole entry is about an insanely simple idea: Everything is relative.

That's it.

Success is not an absolute number, rather it's an equation based on the value you extract from an investment. Value, of course, doesn't have a hard definition either. These ideas are not particularly easy for people to deal with.

Take this blog, for instance, I have made $0 in direct revenue: I don't sell ads or anything else here. However, the value I've received as far as friendships, networking, jobs and projects more than make up for the time I've invested here. I've found that's not particularly easy for people to understand that value can be something other than money (but I digress).

I first started thinking about this in relation to power laws (those things that look like hockey sticks laid on their side). One of the core characteristics of a power curve is it's scale-free distribution. Essentially what this means is that no matter how much you zoom in on any part of the curve, you're just going to see another identical curve. (This made me think about "turtles all the way down" but I digress again.)

Anyway, because of the scale-free nature we start to understand that success is relative. If you're looking at blogs, for instance, there's a power curve across the category and then each sub-category (say marketing) is also going to be a power curve, meaning that very few will dwarf the rest in terms of traffic or incoming links. So what's the point of all this? Easy: It's all relative. Indie records, for instance, aren't successful when compared to big label affairs if you're measuring purely on units sold. However, if the measurement is return on investment I don't think it would be all the surprising to see indies win out (especially if you consider the fact that people don't actually need tens of millions of dollars).

This isn't a new idea, people have always understood ROI, however, I think we got distracted by things like platinum records. All of a sudden as a people we started to believe that success was some absolute number ($1 million is a popular one). When cost of production started to lower, however, success began to mean very different things. If I can make a video with my $200 camera and 5 hours of time that 1,000 people watch I may declare it a wild success. Major media outlets could never do that because they have a machine to run and the only way they've figured out to monetize it is with advertising sold per impression (CPM).

But what is a site with few visitors to do? Is it less valuable? The answer is no: It's actually more valuable to advertisers, but less valuable to the publisher (from a purely monetary standpoint). Being able to efficiently target an audience is worth a lot of money, however, if a site or other niche property doesn't have big numbers it may not be able to survive the CPM game. Instead of thinking about other ways to add value, however, most just end up folding. That's sad. While I don't have a definite answer for how to fix it (Google figured out one way, job boards are another interesting one), it's clear that Scott Karp is right when he says page views and CPMs are suppressing online advertising.

That's because everything is relative.

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COMMENTS

1Andy

there's a possible paradox here. The same technologies that are freeing the world from absolutes are also homogenizing the planet's reference points for relativity. eek.

i don't even know if that makes entire sense. where's that coffee?...

July 27, 2007

2Noah Brier

Andy, I don't have a particularly good answer for you, but I think you might enjoy this entry about binary code and ambiguity.

July 27, 2007

3David

I think using the music analogy works well with your point. For example, If you look at physical music retail numbers overall they are looking pretty dismal. Yet, if you start looking around the news about this you start to notice an interesting thing happen. You start to see all these articles about certain shops that curate their music very highly Particularly in the vinyl medium that are thriving. This seems counter intuitive to most in the music biz seeing as vinyl numbers have also been going down and they consider it to be in certain ways a"dinosaur" medium. Yet if a shop understands their audience and curates well, they can get in a 1000 LPs of a particular artists and sell out of them in a few days. The point here is that there is a huge advantage to this because a big music retailer like Virgin or the now defunct Tower could never really do that because they depend on the platinum artist to keep their margins alive. Whats funny is that these small boutique shops still exist and tower is out of the game. So maybe if you use power laws and do some real in depth research into the lifestyles and music that people are into and create small shops around that you might be able to create a sustainable business model for yourself, where you don't have to rely on the crappy loansharking business model that the majors have been subscribing to for years. So put someone who really knows about music at the head of these shops not some bananahead in a suit because it won't work. finally, If you fancy opening a big store then think about creating an experience not some shitty "Get em out the door" place because people hold music in a special place in their live so shouldn't the retailer? Rough Trade is doing it in England very ambitiously lets see if it works out.

The record shop's last spin

July 30, 2007

4Noah Brier

I think you're exactly right, Dave. and thanks for pointing to that Rough Trade article. It's a perfect example of readjusting your perception of success. Clearly they do not hope to make as much profit as the megastores on high street, otherwise they wouldn't make a commitment to customer service and things like reviewing every record they carry. Rather, they believe they can make a healthy living and supplement the regular sales with additional services that regular record stores could never dream of. It sounds like a perfect example of reimagining a business from scratch, let's hope they succeed.

July 30, 2007

5stephanie gerson

i used to think everything is relative but i've since decided everything is relatively relative. sure, success can be relative, but you're either in business or you're not. or sure, there's grayness at the boundary of life, but you're either alive or you're dead. so everything is locally absolute, but relatively relative.

i could go on but this post is so old, doubtful that my comment will find its way to interested eyes. which reminds me: if you're gonna dip into your folder of unfinished entries and re-post them, perhaps you ought to hack some way for your readers to find out that they've been re-posted, e.g. so our feed readers let us know to re-check them out.

January 23, 2009

6Noah Brier

Hey Stephanie, It's funny, I wrote about something similar in a post about Binary Code and Ambiguity ...

Oh, and re: the old posts - I actually meant I never posted them. They're half-finished entries.

January 24, 2009