Okay, so I just finished a four day visit with various LEGO staff, MCPers, and other people of interest at WorldFest... and some of the conversations got me thinking. One discussion in particular caused me to immediately re-read "The Long Tail" by Wired magazine Editor-in-Chief, Chris Anderson. There's so much stuff in there, it's hard to know where to start, but it got me focused on the concept of micro-commerce. Years ago, the LEGO MINDSTORMS division had a well-known piece of paper hanging in an office that said "What Apple is to music, LEGO will be to robotics"... or something like that. What did they mean?
Some might say the obvious answer is iPod, but for me, the answer SHOULD be iTunes. Yes, the iPod is everywhere - in all colors, shapes, and storage capacities. It could be argued that we now have the NXT in white, gold, and black, but inside it's the same NXT. So let's look at iTunes. iTunes started out selling individual songs for 99 cents each. We no longer had to buy an entire CD with 15 or so songs, half or more of which we rarely listened to. (Has anyone else noticed that the music industry has changed to a One-Hit-Wonder model? The days of super bands is really over - we buy this song from Band 1, that song from Band 2, and on and on... I can't remember the last time I bought a full album.)
Anyway, let's try and fit the iTunes model to LEGO. It's not easy. Yes, we have the LEGO Factory where you can build your own designs, upload them, and others can select them and purchase the pieces needed to build their own. But the software is extremely limited - I'm held to a few small collections or groupings of similar parts and I can't stray. I'm not impressed.
"The Long Tail" says that we're niche consumers these days... and it's completely true. But not when it comes to LEGO. We are stuck, really, buying whatever pre-packaged models they choose to offer us. Many of them sell a ton, but LEGO appears to be missing out on The Long Tail of the market. Yes, we have Bricklink if we wish to purchase individual pieces, but there's some real issues with costs on that site... while many pieces are cheap and can be bought in bulk, other parts that might be considered "rare" are priced sky-high and out of reach of most consumers. We're talking about plastic here! Just like the diamond market, LEGO controls the flow of parts and this in turn affects pricing. I don't know what the difficulty would be for LEGO to make every variation of molded plastic it sells available for individual purchase - but this is the age of the Internet, folks... there's some talented programmers out there that could probably figure out how to create an online catalog of every item LEGO sells and a whiz-bang shopping cart system to boot. Maybe LEGO only sells 1 piece of Part#123456 a month, but if 100,000 people each buy 1 unique piece at a reasonable price, now LEGO is dipping into The Long Tail - more variety of parts sold in smaller quantities. As Chris says, a large number (the total # of parts LEGO makes) multipled by a small number (the number of people purchasing each part) is still a LARGE NUMBER!
Chris talks about Producers - about how the tools to create are democratized. Well, this doesn't exactly happen with LEGO because of intellectual property. You can't go make your own molds and sell your own LEGO-compatible parts - you'll have lawyers camped on your doorstep tomorrow morning. (But Producers do exist in another area of the LEGO world, especially when it comes to MINDSTORMS, and I'll address that in a separate post soon.) So, unless LEGO offers to make parts available for individual purchase, consumers will be held to purchasing big kits (Technic kits, for example) at big prices so they can have that one special part included in the package. Yes, LEGO is making money on the sale of that kit, but I'll bet you that they'd sell more of that ONE SPECIAL PART at a reasonable price than they will of the BIG KIT... and still make a nice profit. At least that's the argument in "The Long Tail" and I can't find a hole in the claim. My Calculus is rusty, but the area under the curve of The Long Tail is still a hefty volume (or profit) of sales compared to the "Hit" section that is basically all of LEGO's packaged kits.
The question, ultimately, is this: What do I want? (And by "I," I mean ME... the lone consumer.) I want to expand my ability to design cool robots by shopping online and purchasing those specialty items that I lack. I like Bricklink, but I'd really prefer to buy from LEGO - no offense, Bricklink sellers. I can buy 30 or 50 or 70 unique pieces from one place rather than 30 or 50 or 70 individual sellers... I have a place to ship a part back to if something is damaged and KNOW that I'll be taken care of... and I know I'm not being gouged with an unrealistic price. If LEGO monitors its sales, it'll know when something is priced too high and can immediately fix it and watch sales start to grow.
Chris has a new book coming out in July 2009 called "Free" - it's based on an excellent article he wrote for Wired magazine a while back. I won't even get started in this post to address how LEGO might take some of his concepts there and implement them - yes, another post for later... sorry.
Some might say the obvious answer is iPod, but for me, the answer SHOULD be iTunes. Yes, the iPod is everywhere - in all colors, shapes, and storage capacities. It could be argued that we now have the NXT in white, gold, and black, but inside it's the same NXT. So let's look at iTunes. iTunes started out selling individual songs for 99 cents each. We no longer had to buy an entire CD with 15 or so songs, half or more of which we rarely listened to. (Has anyone else noticed that the music industry has changed to a One-Hit-Wonder model? The days of super bands is really over - we buy this song from Band 1, that song from Band 2, and on and on... I can't remember the last time I bought a full album.)
Anyway, let's try and fit the iTunes model to LEGO. It's not easy. Yes, we have the LEGO Factory where you can build your own designs, upload them, and others can select them and purchase the pieces needed to build their own. But the software is extremely limited - I'm held to a few small collections or groupings of similar parts and I can't stray. I'm not impressed.
"The Long Tail" says that we're niche consumers these days... and it's completely true. But not when it comes to LEGO. We are stuck, really, buying whatever pre-packaged models they choose to offer us. Many of them sell a ton, but LEGO appears to be missing out on The Long Tail of the market. Yes, we have Bricklink if we wish to purchase individual pieces, but there's some real issues with costs on that site... while many pieces are cheap and can be bought in bulk, other parts that might be considered "rare" are priced sky-high and out of reach of most consumers. We're talking about plastic here! Just like the diamond market, LEGO controls the flow of parts and this in turn affects pricing. I don't know what the difficulty would be for LEGO to make every variation of molded plastic it sells available for individual purchase - but this is the age of the Internet, folks... there's some talented programmers out there that could probably figure out how to create an online catalog of every item LEGO sells and a whiz-bang shopping cart system to boot. Maybe LEGO only sells 1 piece of Part#123456 a month, but if 100,000 people each buy 1 unique piece at a reasonable price, now LEGO is dipping into The Long Tail - more variety of parts sold in smaller quantities. As Chris says, a large number (the total # of parts LEGO makes) multipled by a small number (the number of people purchasing each part) is still a LARGE NUMBER!
Chris talks about Producers - about how the tools to create are democratized. Well, this doesn't exactly happen with LEGO because of intellectual property. You can't go make your own molds and sell your own LEGO-compatible parts - you'll have lawyers camped on your doorstep tomorrow morning. (But Producers do exist in another area of the LEGO world, especially when it comes to MINDSTORMS, and I'll address that in a separate post soon.) So, unless LEGO offers to make parts available for individual purchase, consumers will be held to purchasing big kits (Technic kits, for example) at big prices so they can have that one special part included in the package. Yes, LEGO is making money on the sale of that kit, but I'll bet you that they'd sell more of that ONE SPECIAL PART at a reasonable price than they will of the BIG KIT... and still make a nice profit. At least that's the argument in "The Long Tail" and I can't find a hole in the claim. My Calculus is rusty, but the area under the curve of The Long Tail is still a hefty volume (or profit) of sales compared to the "Hit" section that is basically all of LEGO's packaged kits.
The question, ultimately, is this: What do I want? (And by "I," I mean ME... the lone consumer.) I want to expand my ability to design cool robots by shopping online and purchasing those specialty items that I lack. I like Bricklink, but I'd really prefer to buy from LEGO - no offense, Bricklink sellers. I can buy 30 or 50 or 70 unique pieces from one place rather than 30 or 50 or 70 individual sellers... I have a place to ship a part back to if something is damaged and KNOW that I'll be taken care of... and I know I'm not being gouged with an unrealistic price. If LEGO monitors its sales, it'll know when something is priced too high and can immediately fix it and watch sales start to grow.
Chris has a new book coming out in July 2009 called "Free" - it's based on an excellent article he wrote for Wired magazine a while back. I won't even get started in this post to address how LEGO might take some of his concepts there and implement them - yes, another post for later... sorry.