The On the Spiral blog discusses an important article and argument by Venkatesh Rao:

“Venkat attacks the notion that the average “long-tail” content creator should aim to attract 1000 raving fans.

This basic model of creative capital is just not believable for two reasons. First, it reduces a prosumer/co-creation economic-cultural environment to a godawful unthinking bleating-sheep model of community. … The second problem is the tacit assumption that creation is prototypically organized in units of 1. The argument is seductive. The bad old corporations will die, along with its committees of groupthink. The brave new solo free agent, wandering in the woods of cultural anarchy, finds a way to lead his tribe to the promised land of whatever his niche is about.

He proceeds to argue for creators to organize themselves into groups of about twelve people – small enough to foster collaboration while at the same time large enough to motivate competition. In this model creation is still an individual act but is perpetually spurred by the pressures and opportunities created within the group dynamic. Venkat also asks that we consider a more intimate market for our creative output:

– Your actual goal as a creative today is to find and keep your 150, to whom you pay individual attention. Pass-through crowds don’t deserve much attention. In fact, the monetary value of your transaction with them is exactly $0.00. Anderson hammered home the point that to the masses, the right price for your work is $0.00, but he didn’t address the flip side. They are also worth only $0.00 to you on average. Which means you should put no marginal effort into pleasing them. If one of them finds something you did for your 150 useful, let them have it. You get paid in word-of-mouth, they get free stuff. Small serendipitous barter transaction. Aggregate over 100,000 and net hard-dollar value is still 100,000x$0=$0. The barter is non-zero sum, but doesn’t pay your rent.

As the closing comments make clear, Venkat is concerned with how the creative earns the “hard-dollars” that enable him to satisfy material needs. While your group of twelve provides motivation and co-creation opportunities, it would be your 150 devoted customers who pay real money for highly personalized, high value service.”

Here are two extented quotes from the original article by Venkat:

1. Explaining the economic logic of the 12 – 150 number:

“You cannot break the crucible rule. 12 is always the magic number for optimal creative production. The reason people make this mistake is because they draw a flawed inference from the (correct) axiom that the original act of creativity is always an individual one. I’ve talked about this before: I am a believer in radical individualism; I believe, as William Whyte did, that innovation by committee is impossible. Good ideas nearly always come from a single mind. What makes the crucible of 12 important is that it takes a group of competing/co-operating individuals, each operating from a private fountainhead of creative individual energy, to come up with enough of a critical mass of individual contributions to spark major revolutions. Usually that’s about 12 people for major social impact, though sometimes it can happen with smaller crucibles. These groups aren’t the deadening committees of groupthink and assumed consensus. They are the fertile, fiercely contentious and competitive collaborators who at least partly hate the fact that they need the others, but grudgingly admire skills besides their own.

What happens when you exit the dream team level in a mature disciplinary game is that you get out there and start innovating beyond disciplinary boundaries; places where there are no experts and no managed progression of levels with ritualistic gatekeeper tests. But you don’t do that by going solo. You look for crucibles of diversity, multidisciplinary stimulation and cross-pollination. But you still need the group of 12 or so, training your brain muscles to failure.

This gives me a much more believable picture. As a blogger, I am the primary catalyst on this site, but I am not creating the value solo. If I try to think of the most valuable commenters on this site, I can think of no more than 12. My best writing has come from trying to stay ahead of their expectations, and running with themes they originally introduced me to. But that’s far from optimal, since I still am the dominant creator on this blog. The closer I get that number to 12 via regular heavy-weight commeters, guest bloggers and mutually-linked blogroll friends (I’ve turned my blogroll off for now for unrelated reasons), the closer I’ll get to optimum. Think of all the significant power blogs: they are all team-acts. Now, I may never get there, and there’s multiple ways to get to 12, but the important thing is to be counting to 12. At work these days, I am pretty close to that magic number 12, and enjoying myself a lot as a result.

So the important number for the creative of the future is 12, not 1 or 1000. But what about money and volume? Don’t we need a number like 1000? Not really. As the creative class matures, you won’t really ever find 1000 uncritical sheep-like groupie admirers. That is a relic of the celebrity era. The real bigge- than-crucible number is not 1000 but 150. Dunbar’s number.

Why 150? That’s the Dunbar number. The most people you can cognitively process as individuals (the dynamics are entertainingly described in the famous Monkeysphere article). That’s the right number to drive long-tail logic. By Kelly’s logic though, I have to get to, say, 100,000 casual occasional customers before I find my 1000 raving fans (1% conversion is realistic).

Face it: there’s no way in hell most of us will get there.”

2. Building your Personal Economic Neighborhoods

“By carefully curating your Dunbar neighborhood of at most 150 (in practice, likely much less), in collaboration with your crucible of 12 (each curating their own 150-neighborhoods, with a good deal of overlap), through actual personal attention, you create the foundation for your life as a cultural creative and information worker. Free agency is an important piece of this, but don’t dismiss traditional economics: a good part of your 150 is likely to remain inside the formal organizations you are part of.

The Kelly number, 1000, is important, but not in his sense. If you and your crucible of 12 are creating value in a loose coalition, and each have a 150 circle with some high-value overlap, the total is probably near 1000. So that’s 12 people sharing a community of 1000, each of whom gets personal attention from at least 1 of the 12. The members of the 1000 get the overhead savings of finding more than 1 useful, personally-attentive creator in one place.

Count the 12 most valuable co-creators you work with. Now consider the overlap in your Dunbar neighborhoods. If the average level of overlap isn’t in the double digits (the actual set-theoretic math is tricky), you probably haven’t reached critical mass yet. Guess where you can still find such critical mass today? Inside large corporations. Any pair of people in my immediate workgroup of around 12 can probably find 20-30 common acquaintances. Our collective personalized-attention audience at is probably around 1000. Large corporations still allocate collective attention pretty badly (they hit the numbers, but get the composition wrong), but still do a better job than say, the blogsphere. But the free-agent nation is catching up rapidly. The wilderness is becoming more capable of sustaining economics-without-borders-or-walls every day.

So how will you create and monetize your Dunbar neighborhood? By definition, there are no one-size-fits-all answers, because the point of working this way is that you’ll find opportunities through personalized attention. Not a great answer, I know, but still easier for most of us than dreaming up ideas that can net 100,000 regulars of whom 1000 turn into raving fans.”