The Webs Winner Take All Effect
It’s been well established that the internet is a consumers best friend. When increased connectivity of the internet opens up opportunities for broader access to the worlds best talent, it’s undeniable that the internet is a clear net positive for all internet consumers.
However, on the other side of the fence sit the creators of content. For these creators, the internet provides huge potential upside if you win, given its enormous audience and global reach. Yet, the challenge for creators, is that with increased access comes increased competition, very few people can win, so when the competitive set widens, the more the winners take, the less the losers get.
The Winner-Take-All Effect
This concept is known as the ‘Winner-Take-All Effect’, it’s commonly used in financial markets, and is a market in which a product or service which is only slightly (1%) better than the competition, gets a disproportionately large (90–100%) share of or all revenues for that class of products or services.
Essentially, when you give more people access to the same set of options, they’ll opt for the one which is best, even if its only slightly better.
The impact on content creators
This is often applied to financial markets, however its applications exist for any industry or person who produces content too. The easy access to content makes it just as possible for someone to access the best (and worst) piece of content in the world on a given topic.
In the pre internet era, there was potential to spread out winners based on the limitations of local access, but now with global access, the winner takes more than ever before. Those who would have won in a smaller, geographically limited competitive set, now lose out almost completely as their audiences flock to the new found best. Even if they are only slightly worse than the best in the world, they’ll still lose nearly everyone.
‘Winner-take-all’ affects creators of all sizes
This ‘winner-take-all’ effect is not just for small content creators in niche topics, it also impacts some of the worlds largest content catrgories. This is most obviously seen in the cannibalisation of local content by global content, particularly in the sports and entertainment industries:
Celebrities: Global celebrities now have social media to expand their fame globally, the only restrictions to access them are internet access and (sometimes) language. Local celebrities who benefited from localisation now cannot compete on a global stage.
Film and Television Series: Netflix, Hulu and Amazon Prime have the budgets to produce and license the best TV series, making it almost impossible for local networks to compete with lower budgets.
Sports Leagues: Increased, global broadcast and digital access rights have made local leagues redundant, as the best talent exists in the best leagues, which are now easier to access and drawing almost all the attention.
Key takeouts for the winner-takes-all:
The winners now win more: Although the internet is a huge win for the consumer with increased access, for creators, this increased access means far less makers win, but the rewards are much greater if you do.
The larger an audience pool, the more the winners will win: With the internet shifting geographical access to now a global stage, you need to aim to be the worlds best, not just the best within the local area.
Content will continue to consolidate: We will continue to see one entity own a specific content topic or space, as the slightly worse competitors will continue to be beaten by the entity which is ever so slightly better.