Double Jeopardy in the Long Tail: Measuring the Internet in A

DOUBLE JEOPARDY IN THE LONG TAIL: MEASURING THE INTERNET IN A FRAGMENTED, NICHE SUBCULTURAL AGE _______________________________________ A Thesis presented to the Faculty of the Graduate School at the University of Missouri-Columbia _______________________________________________________ In Partial Fulfillment of the Requirements for the Degree Master of Arts _____________________________________________________ by MARY KATE BAUMANN Dr. Harsh Taneja, Thesis Supervisor JULY 2015 © Copyright by Mary Kate Baumann 2015 All Rights Reserved The undersigned, appointed by the dean of the Graduate School, have examined the thesis entitled DOUBLE JEOPARDY IN THE LONG TAIL: MEASURING THE INTERNET IN A FRAGMENTED, NICHE SUBCULTURAL AGE Presented by Mary Kate Baumann, a candidate for the degree of Master of the Arts and hereby certify that, in their opinion, it is worthy of acceptance. ____________________________________________________ Professor Harsh Taneja _________________________ ___________________________ Professor Margaret Duffy ____________________________________________________ Professor Esther Thorson ____________________________________________________ Professor Peter Bloch iii DEDICATION I would like to dedicate this paper to my mother and father, Neal and Mari-Anne. You have pushed me since I was young to be the best that I could be. You have supported me professionally, athletically, emotionally and of course financially. For that, I am forever in debt (literally). I also want to thank my brothers, without whom I would have spent lonely Thanksgivings by myself. Thank you for being there when I am hating everyone else. Thank you to my good friend Christine for keeping me sane and grounded while trying not to drown in work. You’re the best studying and drinking partner a girl can ask for. Additionally, I would especially like to thank Professor Lori Franz at the Robert J. Trulaske College of Business. You had zero obligations to help me with my thesis but you did it anyway with a smile on your face. You said it well you noted I would have been the last person you guessed needing JMP Pro software after your data analytics class. Finally, thank you to my chair, Dr. Harsh Taneja, for having patience with me, believing in me, and holding my hand throughout this whole process, it was quite the roller coaster ride. ACKNOWLEDGEMENTS This project would not have been possible without the contributions of friends, family, former and present colleagues, and even my MBA friends who consistently asked me what my thesis topic was and forced me to explain it easily and in laymen’s terms. Primarily though, I need to acknowledge chair, Dr. Harsh Taneja, for believing in my abilities to finish my thesis in one semester instead of two. You believed in my vision and signed on when others would not – for that, I am eternally thankful. ii TABLE OF CONTENTS ACKNOWLEDGEMENTS………………………………………………………...…………ii LIST OF TABLES…………………………………………………………………………….v ABSTRACT……………………………………………………………………………….....vi Chapters 1) Introduction……………………………………………………………………….…...1 Why Study Audience Fragmentation……………………………………………….....1 2) Literature Review……………………………………………………………………...4 Audience Fragmentation………………………………………………………………4 Double Jeopardy………………………………………………………………………5 The Long-Tail Theory…………………………………………………………………8 Criticism in the Long Tail……………………………………………………………..9 Genres in Double Jeopardy…………………………………………………………..11 Double Jeopardy in the Long Tail…………………………………………………...13 3) Methodology…………………………………………………………………………16 ComScore Data………………………………………………………………………16 Data Collection………………………………………………………………………17 Measures……………………………………………………………………………..19 Analysis………………………………………………………………………………21 4) Results………………………………………………………………………………..24 Correlations…………………………………………………………………………..24 Regression Models…………………………………………………………………...25 iii Deriving Effect Sizes………………………………………………………………...26 5) Discussion……………………………………………………………………………29 DJ at the Head of the Tail …………………………………………………………...29 DJ Within Categories………………………………………………………………...30 Extending the Analysis (With International Data)…………………………………...32 DJ in the Internet……………………………………………………………………..32 The Nature of Websites……………………………………………………………...35 Mobile Data vs. Desktop Data……………………………………………………….37 References……………………………………………………………………………………43 Appendix……………………………………………………………………………………..46 iv LIST OF TABLES Figure Page 1) Plotted Percent Reach of top 2000 domains in the United States 18 2) Correlation of US Total Unique Visitors vs. Avg. Pages Viewed 38 3) Correlation of US Total Unique Visitors vs. Avg. Time Spent 38 4) Correlation of Total Unique Visitors vs. Total Pages Viewed 38 5) Correlation of Total Unique Visitors vs. Average Visits per Visitor 38 6) Correlation of Total Unique Visitors vs. Total Minutes 39 7) Regression Models to Explain DJ in Long Tail with Log Avg. PV as DV 39 8) Regression Models to Explain DJ in Long Tail with Log Avg. TS as DV 40 9) Regression Models to Explain DJ in Long Tail with Log Page Views as DV 40 10) Regression Models to Explain DJ in Long Tail with Log Time Spent as DV 41 11) Effect sizes corresponding to model (3) in Table 3 41 12) Effect sizes corresponding to model (4) in Table 3 41 13) Effect Sizes corresponding to model (3) in Table 4 41 14) Effect Sizes corresponding to model (4) in Table 4 41 15) Effect sizes corresponding to model (3) in Table 5 42 16) Effect sizes corresponding to model (4) in Table 5 42 17) Effect sizes corresponding to model (3) in Table 6 42 18) Effect sizes corresponding to model (4) in Table 6 42 v DOUBLE JEOPARDY IN THE LONG TAIL: MEASURING THE INTERNET IN A FRAGMENTED, NICHE SUBCULTURAL AGE By Mary Kate Baumann Dr. Harsh Taneja, Thesis Supervisor ABSTRACT With a multitude of options to choose from on the Internet, consumers are faced with turning their attention towards domains with mass appeal versus domains that would be considered niche. In this niche, subcultural age where all consumers are consuming their personal preferences and attitudes, on what basis do audiences fragment? This is a study examines users and usage of the Internet, and weather that usage falls under the marketing law of Double Jeopardy. vi Introduction Why Study Audience Fragmentation Digital media technologies provide audiences unprecedented choices and allow them control over their media consumption. Consequently, their attention is fragmented. Given the multitude of options, do most users still stick with hits and popular items, or do users consume and stick to niche items? This thesis is an empirical study to address this rather broad question. To achieve this, I situate the study in two competing scenarios offered by the existing theories, introduced as follows. The first prediction is based on a well-known theory of consumer behavior called “Double Jeopardy”. Introduced by social scientist William McPhee in 1963, Double Jeopardy, is an empirically derived law in marketing according to which, barring a few exceptions, brands with lower market share in a market have fewer buyers who are also less loyal than buyers of popular brands. In other words, it challenges the highly intuitive idea of “small but niche” consumers. Scholars found double jeopardy to hold for television audiences in the 1980s (Ehrenberg, 1990), and it persisted even when options increased. Many scholars believe and have demonstrated that digital media markets will also follow the patterns predicted by double jeopardy (Goel, 2010). We’d continue to live in a hit driven culture dominated by a few blockbusters (Elberse, 2013). There is a camp that disagrees. In 2006, Chris Anderson, the editor-in-chief of Wired Magazine, introduced long tail theory. Long Tail Theory proposes that due to the introduction of the Internet, small, niche products will take up more and more market share, while the demand for popular products will continue to decrease. He said the classic Pareto rule (that 20% of all the products generate 80% of overall revenue) will no longer hold and that popular products (hits) will make up a smaller and smaller portion of demand (Anderson, 2006). Many academics from various disciplines support Anderson’s general argument and show evidence of it. Both these competing theses speak to the larger theoretical question of audience fragmentation, which, simply speaking is the division of audience attention across a wide array of media outlets. As methods of consumption become more diverse and new niche media are added, fragmentation increases. Double jeopardy and long tail are essentially two conflicting theories about what patterns of audience fragmentation emerge in a high-choice media environment. In this project, I hope to resolve this conflict. Based on the literature, which I review in the section that follows, I hypothesize that the effect of double jeopardy strongly suggests that long tail theory would not apply to the Internet. I propose to test this hypothesis through an empirical analysis that associates user numbers and usage, on a the top 2000 websites in the United States, sourced from ComScore media Metrix. These sites command the lion’s share of all web traffic originating in the United States. Specifically, I operationalize popularity using Total Unique Visitors. I operationalize usage both at the average user level and the website aggregate level (using visits, page views, and time spent). I perform several pairwise correlations on the data to see to what extent users and usage relates to each other for all websites in the sample, as well as for subsamples of several categories. Additionally,

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