Sunday, August 08, 2010

Long-tail economics extended to physical objects

Chris Anderson, editor of WIRED magazine, gave an excellent talk on August 5, 2010 at the PARC Forum. He explained how the long-tail economic models which have driven digital content (allowing consumers to access books, music, and movies in the 80% of the market that is not blockbusters) are now starting to appear in the world of physical goods.

The process of realizing long-tail economics in any sector is that of going one-to-many; democratizing the tools of creation, then the tools of production, and finally the tools of distribution. This is what happened with internet content such as publishing, where it is now easy for anyone to create, produce, and distribute content with blogs, twitter feeds, YouTube, etc. This has also happened with other digital content and some physical goods that are ordered and distributed via internet models (e.g.; Amazon, Zappos, etc.).

The new industrial revolution, argues Anderson, is in opensource hardware factories. The supply chain has now opened up to the digital and the small. The ability to make and distribute anything massively decentralizes traditional manufacturing and could completely reorganize industrial economies…atoms are the new bits. Matthew Sobol’s holons (communities of local resilience and sustainability) are in the works. Goods can be self-designed or crafted from available digital designs (e.g.; communities like ShapeWays and Ponoko), and then printed locally on the MakerBot or ordered from Alibaba or other global manufacturies. Opensource manufacturing is starting to have an impact on industries like auto design and construction (e.g.; Local Motors), drones (e.g.; DIY Drones), and general hardware design (empowered by the Beagle Board and Arduino).

It is likely that long-tail economics can be applied to many other areas. Medicine is the next obvious example, where health care, health maintenance, drug development, and disease treatment are already starting to shift into n=1 or n=small group tiers of greater customization and ideally, lower cost as more precision is obtained in the measuring and understanding of disease and wellness.

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