10/6/2004 » Entrepreneurs, Musings

Wired has a piece on how online businesses like Amazon, Netflix, iTunes and Google can inexpensively aggregate niche markets into a larger, virtual whole. The same dynamic holds with blogs, of course, where intelligent discussion breaks the lowest-common-denominator, dumbed-down monopoly that is TV news.

The story says that in content markets, at least, the 80/20 rule breaks down. When you can actually get media related to highly specific interests, you tend to dig in: for me, films about debate (Talk to Me), hyperverbal love (Speechless), competitive dance (Strictly Ballroom and the otherwise atrocious You Got Served), the Where's the American Desi Chai Party, Yaar? genre, and so on. It doesn't, of course, exclude my interest in larger genres (giant! flying! killer! robots!), but the very scarcity of these films adds to their value.

Netflix claims that, unlike Blockbuster, 99% of its extensive catalog is rented out every single year. Someone somewhere is interested in every weird film imaginable. This is virtually a given, in fact, since people are wired differently from birth and then actively fragment their interests. This comes as no surprise to anyone who's skimmed the morass of offbeat personal Web sites or who lives in a neighborhood where uniqueness is a badge of honor. Nor should it surprise readers of Sepia Mutiny or one of its spiritual ancestors, the Usenet group alt.culture.us.asian-indian in its heyday.

But what does surprise new Netflix members is the service's extensive selection of Bollywood films, which it apparently rents out profitably. The trouble with niche and vertical markets (e.g. small businesses), of course, is the cost of aggregation. Outside Netflix, in the absence of a local desi grocery / pirate video house, the situation is grim:

An even more striking example is the plight of Bollywood in America. Each year, India's film industry puts out more than 800 feature films. There are an estimated 1.7 million Indians in the US. Yet the top-rated (according to Amazon's Internet Movie Database) Hindi-language film, Lagaan: Once Upon a Time in India, opened on just two screens, and it was one of only a handful of Indian films to get any US distribution at all. In the tyranny of physical space, an audience too thinly spread is the same as no audience at all.

Since the U.S. has no concentration of desis comparable to that in the U.K. and Canada, short of moving to a couple of major cities, virtual aggregation is our best-case scenario. Either that, or start making babies!