Wired editor Chris Anderson's new book, The Long Tail: Why the Future of Business is Selling Less of More comes out at an opportune time. Big businesses -- especially big media businesses -- seem to be sluggish, but the economy is booming. Why?
One reason, as I've suggested here before, may be cottage industry, which I've written about here before on more than one occasion, and Anderson's book explains a lot about why that's happening. Lower costs of doing business, and lower costs for customers to find sellers and vice versa, mean that the minimum efficient scale for many enterprisers is quite small. This lets all sorts of niche markets flourish that couldn't exist back in the old days.
I find this idea congenial, since it's not far from the argument I made in my own recent book, An Army of Davids, though Anderson's emphasis is rather different from mine. And just last week I had an experience that suggested Anderson is on the right track: I spoke with a University of Tennessee undergraduate who has paid her way through college by buying adult diapers from a factory in China (cheap) and reselling them at a steep markup to the adult diaper-fetishist market in the United States. All her business is done on the Internet, and it's done well enough, at least, to pay for college. Talk about your niche markets!
With over three quarters of a million people making all or part of their living from eBay, there are a lot of stories like this out there, though most aren't quite so outre.
Then, just the other day I spoke to a couple of brewers. They make their living at a local brewpub, and they seem to do pretty well. They also like their work a lot, and they noted that ten or fifteen years ago there were hardly any jobs like theirs. There still aren't a whole lot, but there are now several brewpubs and microbreweries in most towns of any size, each employing brewers. Another case where small-scale production and employment are offering opportunities that didn't exist just a few years ago, though in this case it owes something to consumer tastes as well as to improved technology.
Now, it's possible to make too much of this trend: Most people won't make a living off of eBay, and it takes an awful lot of breweries to employ as many people as a single auto plant. But all these different niches add up, and it's also virtually inconceivable that all those brewers could be laid off at once, while it's quite common for everyone in an auto plant to suddenly wind up out of work.
It seems to me that while big enterprises will always be with us, we're going to see a much more vibrant small-business (and even micro-business) sector over the next decade or so. I also suspect that neither the culture, nor the people who purport to measure and manage the economy, are really up to understanding the impact of this trend. I would say that there's a good book in it, but Anderson has already written one.