Is The Bad Economy Killing The Business Meme?S

There's no time like a recession to reassert the conventional economic wisdom that making money is harder than those guys on cable pretend. Viral marketing was huge in the mid-90's before the dotcom bubble burst and everyone realized that eyeballs didn't necessarily translate into dollars. It was only a matter of time before the next crop of counterintuitive pop business theorists — from Malcolm Gladwell to James Surowiecki to Chris Anderson — were doused with the cold waters of cash flow. What's so interesting about this latest cycle of backlash and disillusionment, though, is that the assailants are almost all former apostles turned heretics. After the jump, the spats and surprisingly friendly debates about whether the new memes of trendsetting will remain trendy for very long.

Is The Bad Economy Killing The Business Meme?

1. The Tipping Point Tipped Over.

Thesis/Antithesis: Network theory scientist Duncan Watts, who left Columbia to go work for Yahoo, says Malcolm Gladwell's golden Law of the Few — "The success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social skills" — is false. A small cadre of hipsters does not determine the retro market for Hush Puppies and it doesn't take Jacob Weisberg's mom to put you in touch with all the fun, quirky types of downtown Chicago (I hear the Obamas are good at that, too).

"A rare bunch of cool people just don't have that power," Watts says. "And when you test the way marketers say the world works, it falls apart. There's no there there." In order to demonstrate it, Watts repeated and updated sociologist Stanley Milgram's groundbreaking "Six Degrees of Separation" experiment, upon which Gladwell based his Connector theory.

In 1967, Milgram had found that it took around six people to pass a given piece of information from point A to point F, but that in order to make it through the home stretch, a handful of savvy and tapped-in messengers needed to gather at point E. Milgram was restricted to a comparatively small messenger group and dissemination by snail mail. His trick was for decades not retested because its results sounded pretty commonsensical, and they were sexy. (If you want to appeal to marketers, tell them they need only appeal to a charismatic and influential few instead of a blundering and disparate many.) But in 2001, Watts made use of the Internet and vastly expanded the messenger group, enlisting around 61,000 people to forward emails to 18 targets around the globe. True, it did take on average six people to complete the chain of information, however, the "hubs" weren't important after all. Only 5% of the emails, Watts found, ever passed through them; almost all reached their targets through a conduit of nobodies.

The tussle between Watts and Gladwell is largely over marketing metaphors. The Tipping Point creepily described consumer trends as being disease-like in the way they spread. Connectors act as viral vectors by increasing the rates of infection. Watts prefers to think of trends as forest fires because, as he sees it, both depend more on the environment than they do on who started them.

The Debate: Gladwell is all peaches and puppy dogs in responding to his challenger and possible debunker: "Duncan Watts is exceedingly clever, and I've learned a great deal from his research," he told Clive Thompson of FastCompany.com "In the end, though, I suppose that I feel the same ways about his insights as I do about Steve Levitt's disagreements with me over the causes of the decline in violent crime in the 1990s. I think that all books like The Tipping Point or articles by academics can ever do is uncover a little piece of the bigger picture, and one day—when we put all those pieces together—maybe we'll have a shot at the truth."

If I say that means "full refund at Barnes and Noble," will it spread like avian flu?

Is The Bad Economy Killing The Business Meme?

2. The Stupidity of The Wisdom of Crowds.

Thesis/Antithesis: As we reported last week, Jason Calacanis, early blog impresario and long-time industrial frenemy of Gawker, has quit blogging. He says he still loves the medium but laments what it's become – namely, a playground for irate and ignorant commenters, who, taken as a whole, disprove the fashionable argument of pooled intelligence.

Calacanis refers frequently and derisively to James Surowiecki's notion of the "wisdom of crowds" – all set down in the New Yorker finance columnist's 2004 bestseller by the same name – which posits that a group of loosely confederated independent minds will be smarter and more prescient than a single mind acting alone.

Surowiecki has plenty of rules to distinguish the functioning crowd from the unruly mob (Germany specializes in both), but his thesis did nothing if not propel the user-generated content movement of Web 2.0, of which Calacanis is now a sad and shattered ornament. He stormed off the Internet with all the passion of a jilted lover because he used to be a big fan of comments and the scads of traffic they produced for his site Engadget. Now Calacanis likens the squawking anonymities to trolls who reside under houses and drunken hobos who are allowed to critique Carnegie Hall performances (because when you think of blogs, you think of sturdy architecture and symphonies).

The Debate: There isn't one, really, probably because Surowiecki isn't mentioned by name and because in lieu of blogging Calacanis has taken to sending out private emails to an exclusive list of 750 subscribers. Jason's keeping it real and kicking it old school, except that in his desire to pare down, he forgot that everything eventually gets leaked to blogs anyway. In the maiden installment of his one-man newsletter, he writes: "For the record, crowds are really frackin' stupid and to put your stock in crowds is about as bright as putting your faith in a dictator; they'll love you for as long as they feel like it, then they'll ripe [sic] you apart without mercy."

If you want to know how the Nazis got started, you could do worse than scan the user-generated content at the Guardian's Comment is Free.

Is The Bad Economy Killing The Business Meme?S

3. The Long Tail Gets Lopped

Thesis/Antithesis: In 2004, Wired editor Chris Anderson wrote a much-discussed article – later turned into (what else?) a bestselling book – entitled "The Long Tail" about how the web was changing our buying habits. Whereas brick-and-mortar stores were bound by conventional inventories and thus more likely to sell what everyone wanted to buy, Anderson argued, the Internet had opened up enormous vistas of cult shopping. The "long tail" referred to used and out-of-print books, indy records, vintage clothes and other niche goods that could only thrive in an virtual marketplace where consumers also acted as critics and advertisers. Netflix, iTunes, Amazon were not bound by the supply structures of Wal-Mart, and so patrons of those sites would opt away from the mainstream fare — what Anderson termed the "head" of the demand curve — in numbers impressive enough to constitute a genuine marketing trend.

Evidence: The unexpected success of the mountaineering book Touching the Void, a commercial failure when it was first published in 1988. It found an eager audience for high-altitude disaster and triumph when it was listed as an Amazon recommendation for readers of Jon Krakauer's popular Into Thin Air, which Touching the Void soon surpassed in sales.

A few weeks ago Anita Elberse, an associate professor at Harvard Business School, published a strong rebuttal to the Long Tail in the Harvard Business Review. She found that the web had not in fact changed anything: consumers were herd-driven conformists at the keyboards just the same as they were at the shelves.

The Debate: Elberse's piece led to a polite back-and-forth with Anderson, who pointed out that their analytical difference was rooted in the "concentration" of sales – i.e., an online retailer carries more products than an offline one, and so whatever doesn't overlap should be counted as part of the Long Tail, not the Head, as Elberse counted it.

Technology writer Farhad Manjoo at Slate put it well: "There is no winning this technical debate. (Elberse calls Anderson's definitions ‘arbitrary.') But even if Anderson is right and Elberse is wrong, the shift from hits to niches is obviously slight-we are not entering an era devoid of blockbusters."

Which means that Anderson is still less right than many of his futuroid acolytes have made him seem. Ironically, the Long Tail theory is now a fixture of the Head of the marketing industry, which makes Anderson the Mad Hatter of the paradoxical business meme.

And that fact gets at the heart, I think, of why people are turning against the svengalis of new marketing. They've all become hugely famous and sought-after on the 5-figure lecture circuit by penning ephemeral "bibles" about the next big thing, proving only that they themselves were it. Can you really blame skeptics in a time of scarcity for denying them the ability to have their cake and pop out of it, too?