[Chapter 608: A Joke]
Eric heard Chris's question and smiled faintly. He picked up a pen and casually sketched a simple diagram of the long tail theory on the writing board. With a confident tone, he stated, "Of course it makes sense, and it's significant. Everyone knows there are many B-movie companies in Hollywood, right?"
Although the others were unsure why Eric suddenly brought this up, they nodded and curiously looked at the simplistic diagram he had drawn.
Eric finished illustrating the long tail theory, which companies like Google, Amazon, and Netflix relied on in the original timeline. He said, "Take some B-movies in Hollywood as an example. The revenue structure of B-movies resembles this chart. We can call it the 'long tail chart.' The head of this chart represents the box office revenue of a B-movie that is fortunate enough to reach theaters. This part accounts for the majority of the area of the long tail chart. For a B-movie that typically costs only a few million or even hundreds of thousands to produce, getting into theaters usually leads to a decent profit. However, most B-movies find it hard to get theatrical release, which leads the average person to think that B-movie companies struggle to survive. But that's not the truth; many B-movie companies thrive. Their survival strategies are like this diagram."
As Eric spoke, he drew a dashed line through the biggest section of the chart and marked an 'X,' then quickly cut out sections of the tail area with vertical lines while annotating and explaining, "As shown in the diagram, even if they can't secure the largest profits from the 'head,' they can still gain income comparable to that area through home video distribution, cable television rights, and vast overseas market rights sales. Just think about it: a B-movie that costs two million dollars can recoup a significant portion of its production cost in the U.S., but overseas, even the bundled rights sales can yield substantial income. Selling for $200,000 in the UK, $150,000 in France, followed by Italy, Germany, Spain, and Portugal... After Europe, there's the equally vast Asian market and relatively wealthy countries in Latin America and Africa. All these scattered revenues can add up to make a small company quite profitable." He paused, setting down the pen and looking at the others present. "So, do you see what I'm getting at?"
Chris appeared to ponder seriously, while Tina Brown, more familiar with Hollywood, countered, "Eric, I think few small B-movie companies have the kind of extensive channels you mentioned, aside from the big seven Hollywood studios. This ideal state seems non-existent."
"But it's a fact that production companies like Roger Corman's have thrived in Hollywood through the distribution methods I just mentioned, isn't it?" Eric replied, smiling. "And I'm only using this idealized example to demonstrate Yahoo's future profit model."
As an outstanding finance graduate, Chris quickly grasped Eric's point. "Eric, I think I understand what you're trying to express. You mean if the sales channels for a 'product' are extensive enough, even if the profits from those channels are minimal, they can still accumulate into impressive figures."
"Bingo," Eric raised his right hand, attempting to snap his fingers but failing, much to the light laughter of the group. He lowered his arm and continued, "Considering the current online environment, the entire cyberspace already has hundreds of thousands of websites of varying sizes. If we could develop a simple and client-approved advertising distribution technology and enlist 100,000 decent traffic websites into the Yahoo advertising network, even if each website only generates a trivial income of $10 per month, Yahoo would earn $1 million each month. While that amount would still be far from covering Yahoo's current operating expenses, the recent growth of internet users and websites has been staggering. If the number of websites in Yahoo's advertising network could increase tenfold or a hundredfold in the following years, our income would increase geometrically."
Tina Brown asked, "Eric, if I set up a website and successfully grow it to a certain scale, I definitely wouldn't join the Yahoo advertising network and would choose to operate independently. That seems to yield more revenue."
Eric pointed to the 'X' on the head of the long tail chart. "The focus of the Yahoo advertising network isn't on those websites in the 'head.' We aim to tap into the tail that produces revenues comparable to that of the 'head.'"
Tina smiled slightly embarrassed, having overlooked the rule Eric had just explained.
Eric didn't mind and continued, "Moreover, the plan I previously mentioned involving $100 million in funding to support the growth of small to medium-sized websites can actually be categorized as part of the Yahoo advertising network. Any website wanting angel investment from Yahoo must join the network. We're still in the early stages of the online industry's emergence and I think there aren't many investment options for those smaller websites. We can seize this opportunity to incorporate the more promising ones into the Yahoo advertising network and promote them using Yahoo's vast portal website channel effects. In the coming years, the most influential websites on the internet will mostly emerge from the Yahoo advertising network. Even if these websites choose to break away later, I'm sure Yahoo will have grown strong enough to explore other profitable channels."
The so-called other profitable channels refer, of course, to search engine services.
At that moment, Yahoo already had a rudimentary search engine function, but due to the limitations of the internet industry scale, its potential hadn't fully erupted. The original timeline's reason for Yahoo's failure primarily rested in its blind faith in the unshakeable position of its portal website, which overlooked the development potential of search engines. Otherwise, with the immense resources Yahoo had at the time, it would never have allowed Google to take its place. But now, Eric certainly wouldn't make such an error.
...
This small executive meeting lasted until 3 PM. After Eric finished discussing Yahoo's two major development plans, Chris, Ian Gurney, Tina Brown, and others shared their suggestions with enthusiasm. After the meeting, Eric and Chris left the Yahoo headquarters together while Ian and the others remained in the conference room, excitedly discussing topics.
Chris had just attended a Nokia board meeting in Finland and hurried back to Boston, already feeling extremely fatigued. Upon arriving at his hotel, he swiftly went into his room for a much-needed nap.
After wrapping up the day's meeting, Eric also had little left to do in Boston. Any details for Yahoo's upcoming development could easily be discussed via email. If his meeting with John Chambers and Steve Case went smoothly the next day, Eric could return to Los Angeles. Unlike Chris, Eric still maintained a slightly excited demeanor from the meeting and didn't seem the least bit tired after a full day of discussions.
...
May in Boston showed no signs of summer heat. The afternoon sun was warm and gentle. After seeing Chris back to his room to rest, Eric changed into casual attire and went downstairs to exit the hotel.
Having been in Boston for a week, except for the gathering he hosted for all the employees, Eric had limited his activities to the Cambridge Hotel on Massachusetts Avenue and the Yahoo headquarters a few blocks away. Now that he had mostly finished all his tasks, he intended to take a stroll -- something he did in every city he visited. Moreover, just less than two kilometers west along West Avenue, where it intersected Massachusetts Avenue, was the renowned Harvard Business School. Although Eric had long since lost his admiration for the institution that produced a slew of political and business luminaries, he was still curious.
As Eric stepped outside the hotel, Carter Moen appeared right on cue and asked, "Boss, need a car?"
Having been neglecting his personal appearance lately, a faint stubble covered Eric's jaw, lending him a more mature vibe. He pulled out a light-colored pair of sunglasses from his pocket and put them on. Given his casual outfit, Eric believed not many people, apart from extremely familiar friends, would recognize him easily. "I'm just going across the river to look around, so no need for a car."
Carter nodded and watched as Eric strolled towards a street corner, resembling a relaxed college student, before following him from a distance with another companion.
Turning onto West Avenue, though its name suggested it was a commercial street, it was merely a two-lane asphalt road. Most of the buildings lining the road were classic red-brick houses, triggering some of Eric's compulsive tendencies. Brownstone culture thrived in Boston, and these seemingly shabby red-brick structures were typically home to well-off middle and upper-class residents, while lower-income communities still resided in cheap wooden houses.
After walking a few hundred meters along West Avenue, Eric noticed an ATM next to a supermarket. Realizing he hadn't brought any cash and might need it soon, he headed over to withdraw several hundred dollars with his credit card.
Upon exiting the ATM, he saw a lady wearing a light blue jacket, carrying two overflowing grocery bags toward a red Ford. She cautiously reached out to open the trunk. Eric approached her and offered, "Ma'am, need a hand?"
"Thank you, you're such a kind person," the lady smiled as she stepped aside. Eric helped her pull open the trunk, nodded in acknowledgment, and continued walking ahead.
The lady meticulously arranged her groceries in the trunk and, as she closed it, she looked up and noticed Eric's figure walking away. She remembered catching a glimpse of his profile earlier, which gave her a strange sense of familiarity. However, she couldn't pinpoint where that feeling originated, ultimately dismissing it as deja vu.
Still, even with sunglasses on, he was a handsome guy.
With a quick mind, the lady mentally scolded herself for being silly. Just as she was about to get into her car and leave, she remembered she had forgotten to buy some items her roommate had asked her to pick up, so she turned back towards the supermarket.
After exiting the supermarket the second time, the lady casually tossed a bag of items onto the backseat and climbed into her Ford. As she dug for her keys, she couldn't help but glance ahead. That figure was still in her line of sight. Feeling inexplicably fluttery, she drove alongside Eric, slowed down her vehicle, and courageously asked through the open window, "I'm heading to the Soldiers Field up front. Want a ride?"
Standing on the curb, Eric slightly leaned forward and waved his hand sitting in the driver's seat of the Ford, smiling, "Thanks, I'll be across the river shortly."
The lady appeared to be around his age, with silky light brown hair and a fair, lightly made-up face, radiating an air of elegance. Eric wouldn't have minded an encounter like this in a foreign city, but if he got in the car with this beauty, his bodyguards, Carter and his companion, would surely lose track of him. His bodyguard had previously advised him to avoid actions that might catch them off guard, for his safety.
He thought the lady would leave after he declined the offer, but she smiled and said, "Didn't you know? Right across the river is the Soldiers Field."
Eric paused, honestly shaking his head. He had only glanced at a map to get the Harvard Business School's location and had no idea what the lady referred to as the Soldiers Field. "I'm from Los Angeles, just wanted to check out Harvard Business School."
"Are you planning to apply to the business school? Perhaps I can show you around," the lady said, her gaze sparkling, still maintaining a slow speed. "By the way, my name is Melanie."
Eric had no interest in inventing a fake name or introducing himself. Hearing her accent, he casually shifted the topic, "You're not from Georgia, are you?"
"Oh," Melanie replied, surprised. "How did you guess?"
"Does someone in your family enjoy reading Gone with the Wind?" Eric casually asked.
"Yes, my dad. My name comes from Melanie Hamilton in Gone with the Wind. I can't believe you guessed it just from that. That's amazing."
"I couldn't have guessed just based on your name," Eric laughed. "The main reason is that I can hear your Georgia accent. I have a... friend from Georgia."
Actually, the reference to Gone with the Wind was indeed a lucky guess, but the rest wasn't entirely random. Eric felt that this lady named Melanie shared specific phonetic habits with Julia, who also grew up in Georgia.
"Haha," Melanie lightly drummed her fingers on the steering wheel, grinning. "I get it; you're referencing the joke about Conan Doyle and the cab driver."
*****
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