John points at an Economist article that mentions The Egalitarian Effect of Search Engines, which is based upon a thesis that search engines tend to send more traffic than expected to lower popular sites.
The study is under scrutiny, but it is a bit counter to the commonly held thought of the rich get richer effect of linkage often mentioned in the SEO sphere.
It is a bit hard to isolate any one factor to determine how search interacts with it. You also have to consider the effects of most popular lists and how those build more linkage at things that are already popular. You know it is getting out of hand when their are aggregators like Diggdot.us that mash up the most popular items from different bookmarking channels.
I believe that as you go to more competitive fields generally competition scales faster than profit, and there is great value in being in a number of smaller niches. Perhaps the single best reason to have a high profile site in a competitive market is to make it easier to launch other channels.
When starting a new website it is cool to look at the power laws that guide the web and try to understand them and use them to your advantage, but I think it is far more important to:
- see how they apply specifically to your sector of the web
- think of other sectors near your topic that may be able to give you broader coverage
- pick topics that would be easy to dominate
- learn how to become an exception to the rule
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