Bnoopy: The long tail of software. Millions of Markets of Dozens.:
In Excite’s heyday, we were handling millions of searches a day. While the top 10 searches were thousands of times more popular than the average search, these top-10 searches represented only 3% of our total volume. 97% of our traffic came from the “long tail” – queries asked a little over once a day.

You know the real reason Excite went out of business? We couldn’t figure out how to make money from 97% of our traffic. We couldn’t figure out how to make money from the long tail – from those queries asked only once a day. Overture figured it out, Google perfected it and we all know what happened from there. Those guys figured out something revolutionary -- the long tail of search was a advertising marketplace. But it wasn’t a traditional advertising marketplace like television, where a handful of large advertisers reached out to a handful of very large markets. It was a special kind of marketplace where small advertisers could reach small markets efficiently.

Let’s look at the Amazon example. This graph shows that Amazon sells roughly 2.3M books and that the average Barnes and Noble retail store stocks 139,000 books. So, Amazon stocks roughly 2.2M more books that Barnes and Noble. 57% of Amazon’s sales come from books you can’t even buy at a Barnes and Noble. This runs totally counter to the traditional 80/20 rule in retailing – that 80% of your sales come from 20% of your inventory. In Amazon’s case, 57% of their book revenue comes from 0% of Barnes and Nobles inventory.

iTunes has over one million songs in it’s catalog.You know how many have been bought at least once? - Every one. Completely counter to the traditional 80/20 rule, every iTunes song has been purchased at least once.

What all these data points mean to me(and to most folks who are interested in long-tail stuff) is that the most interesting, transformative businesses that have been built over the last decade and that will be built over the next one are going to operate in and make money from the long tail. Google, eBay, Amazon, Rhapsody, Netflix, iTunes. What do they all have in common? They all work the long tail and they’re all radically changing the dynamics of their more traditional businesses.

The market doesn’t like a vacuum and people do solve their software needs in the long tail. They do it using two basic tools: Microsoft Excel and email. I’ve seen so many business that run on Excel+email. While normal users don’t think of it this way, what they’re really building is an long-tail application – a custom application, built by the end user and networked over email.

Excel and email are the wrong tools for software in the tail and we all know it. It’s really easy to start with, which is fantastic, but it suffers from.

1. Versionitis. We all know what happens with spreadsheets like these. You create it, you mail it to 10 people. One of them changes and mails it back out. Rinse, lather, repeat until everyone’s inbox is full of this thing and no one knows who has the latest version.
2. Updates. You only know the sheet has changed is when someone emails it to you.
3. No integration. What about the stuff that doesn’t fit in the grid? – the email and documents that go along with these spreadsheets?

That’s where JotSpot comes in. JotSpot is a company that is building a platform to make it easy and affordable to build long-tail software applications.To take those Excel spreadsheets and turn them into real web-based applications where you don’t have versionitis, where updates find you instead of you looking for them and where you can integrate data in your hard drive with data from the web, email and other applications.

So, my tip for entrepreneurs? It’s all about the long tail. Whatever business your starting, think about how to serve millions of markets of dozens instead of dozens of markets of millions. Serving the head isn’t a bad strategy. You can build a great business. But, figure out how to serve the tail of your market efficiently and you’ve got a blockbuster.