In the technology industry there is a tendency for markets to be "winner takes most." That means that most categories in technology start with dozens or even hundreds of competing firms and eventually coalesce down into two or three with one of the remaining firms "owning" most of the marketplace. Take search for example. In the early days of the Internet, there were dozens of search engines. I recall Lycos, Hotbot, AskJeeves, Yahoo, Inktomi, Dogpile, Overture and a host of others. Fast-forward to today and search equals Google...with Bing being a far distant second (and the existence of Bing is only due to the remarkable fact that Microsoft is willing to lose hundreds of millions of dollars to prevent Google from having a true monopoly.).
This is the reality of the technology industry and, let's face it, many industries. We can look at hardware: Smartphones are dominated by Apple and Samsung. PC's are dominated by Dell and Lenovo. Even many creative industries: In music, the top musicians take nearly all of the market. In movies, the top actors command nearly all of the money.
This reality in technology leads to a race of sorts, and a sort of pervasive fear that drives many companies. For example, it would be nice to have a small to medium size business and balance it with a nice lifestyle. However, knowing that most markets are "winner take most", none of us can ever slow down. If, in the end, you're not one of those top 2 firms, then you're likely gone or struggling.
The reality is that most markets really do follow "the long tail" idea where most of the profits, fame and recognition accrue to the top two (or maybe three) players. Many people were excited at the idea of the "long tail", but what it really means, in most industries, is that if you're not in the "fat head" part of the curve, well, you're not going to make much money. Al Ries, co-author of the famous marketing book Positioning called this the "law of duality", with each major industry coalescing around two major firms. This makes it extremely difficult for the "little guy" to break into the market, or, indeed, even remain in the market. Imagine, as a minor player, trying to launch a new smartphone against Apple and Samsung. It would be almost impossible. Even Amazon, with all of their resources, failed with the FirePhone.
There's only two ways to survive in these markets. The first is to be one of the top two (or, occasionally three) winners. If you can't win one of the top spots, then you must play a different game. You must scale down and focus on a niche...or you must find a different market to play in. This follows the spirit of what Charlie Munger (Warren Buffet's business partner) once said, "...occasionally, scaling down and intensifying gives you the big advantage. Bigger is not always better."
Bigger is not always better. And that's an important thought.
Think about Apple with their line of Macs. They've never been close to being a top two player in computers. But they are the "better" choice, especially for creatives and developers. Facebook might be the biggest social network. But NextDoor is the best social network for you to connect and socialize with people who live in your neighborhood.
Think about FASO Artist Websites. We're not the biggest website builder, that honor goes to Wordpress. But we're the best website builder for fine artists. That's why we're the leading provider of professional artist websites. While I called this strategy "focusing on a niche", it's really what Positioning author Al Ries calls "creating a new category." Websites is one category. Websites for fine artists is yet another. We didn't invent websites. But we did invent Websites for fine artists.
The market for art...at least original art is different. And that's a very, very good thing for individual artists.
The original art market has always has been...different. And by "original art market", I'm talking about the original art market for living artists. Not the original art market for deceased artists (the market for deceased artists has already consolidated into duality with Sotheby's and Christie's controlling the vast majority of market share). So far, nobody has been able to "corner" the original art market for living artists the way that they have in other industries.
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