Further thoughts on:
http://aintnolai.wordpress.com/2007/10/13/battelle-ask-the-right-question-that-microsoft-shareholder-needs-to-know/

Many related issues (e.g. magazine publishing, attention economy, etc.) display distributions that resemble “power laws” (the Zipf curve is basically y=1/x). Now the “normal” English vocabulary is well under 1 million words — perhaps less than 100K (and a quite refined directory may have less than 1K categories).

Certainly a category such as “books” or “office supplies” will get an immense amount of traffic — but I guess that is traffic with very low margins. Let’s *assume* that the very high traffic to a category such as “books” would receive only 1 cent per “hit” and a category with relatively low traffic such as “surgical instruments” would receive $100 per “hit”. All of the screaming and shouting about long tails appears to be overlooking something: how large is the vocabulary?

If the vocabulary is very small, then 1 or 2 sites may be able to take XX% of the pie. As the vocabulary gets larger, each individual site will take a smaller slice. The .COM vocabulary (remember: .COM stands for “commercial” is approaching 100 million, dwarfing the size of the English vocabulary. (IMHO, it is ridiculously oversubscribed Turning babies into “commercial entities” is equally ridiculous.

Let’s pretend that 99% of these domains didn’t exist: that leaves about 1 million (still more than all of the words in the dictionary, but let’s just pretend it were somewhat “reasonable”). Would it take 250,000 websites to reach 25% of the revenue? Or would 1 site be the one-stop advertising platform for both “books” and “surgical instruments”. If so, how will you be able to discern the “Harry Potter” prospect from a person who might be more receptive to hot deals on scalpels? If not, how many site would you suppose would be required to meet the target of 25% of revenue (either as a number or as a percentage of some “abstract total”)?

How does spending more money on digital advertising resolve this problem? If Google, the search leader, has had trouble growing the space as fast it would like, then what does Microsoft have which can solve the problem?

And, how would Microsoft resolve the problem of click fraud in search advertising?

2) Does Microsoft have the guts to act as a middleman between publishers and advertisers, picking the best tools from aQuantitative and give’m away for free (think adsense + paypal + small publisher media agency).