Review: The Long Tail

13 07 2008

The Long Tail: Why the Future of Business Is Selling Less of More. Chris Anderson. New York: Hyperion, 2006. 226 pp.

A local journalist recently interviewed my indie rock band. “What are your aspirations for success?” she asked. “We don’t expect radio play because we don’t sound like what’s on the radio right now,” our drummer replied. “We just want to get our music out there because a lot of people don’t want to hear what’s on the radio,” I added.

Using online tools like MySpace, Pandora and Last.fm, my band is hoping to capture what Wired editor Chris Anderson defines as the Long Tail – the niche market.

The Long Tail is an extension of an article Anderson wrote for Wired in late 2004 and explains the economics of abundance. “The theory of the Long Tail can be boiled down to this: Our culture and economy are increasingly shifting away from a focus on a relatively small number of hits (mainstream products and markets) at the head of the demand curve, and moving toward a huge number of niches in the tail,” Anderson says.

Long Tails, according to Anderson, are enabled by digital markets democratizing the tools of production, cutting the costs of consumption by democratizing distribution, and connecting supply and demand via increasingly intelligent filters. In the case of my indie band, the costs of recording and producing technologies are so low that we can create an album for just a few hundred dollars and make the music available for free via MySpace. People can find our music using search engines like Google. We’re riding the Long Tail economy.

Anderson supports his thesis by analyzing data from Amazon, Rhapsody and Netflix among others. He shows that their demand curves are similar. A few blockbuster titles are in high demand, and the rest are in low demand – but those low demand titles are the majority of the total market, and their sales add up to a significant proportion of total demand. Anderson justifies that these low demand, niche markets are growing due to digital efficiencies and people’s innate desires, supported by culture, for increasing choice. Anderson credits Sears, Roebuck and Co. for its 1897 “Wish Book” mail order catalog – 786 pages containing 200,000 items for sale – for hooking America on abundant choice and paving the way for digital models today.

The Long Tail works because Anderson speaks to the economic plebeian. The only prerequisites for reading the book are understanding basic supply and demand curves and familiarity with the major Internet consumer retailers. Even when he delves into identifying the Long Tail as a “powerlaw,” he avoids treading formulas and graphs and simplifies the definition of a powerlaw to the lowest denominator: “…Powerlaw distributions occur where things are different, some are better than others, and effects such as reputation can work to promote the good and suppress the bad.”

The Long Tail excels where Anderson provides interesting examples of Long Tail elements. He provides especially colorful examples of “new producers” – amateur astrologists help to identify a supernova; small-time comedians landing roles on Saturday Night Live based upon low budget, viral videos. He makes a compelling argument for how Wikipedia is the most comprehensive encyclopedia ever created and, equally impressive, built by volunteers.

However, not all of Anderson’s case studies of Long Tails economies succeed. In his example of how blogs and mainstream media comprise the Long Tail for online media, he provides a Technorati chart measuring popularity by incoming links. Four blogs – Boing Boing, Engadget, PostSecret and Daily Kos – are present in the chart’s top 48 Web sites. Thus, these blogs are actually part of the “short head” of the curve, and likely even more blogs have entered this list in the two years since The Long Tail was published. The chart is a better argument for the success of blogs than for how blogs extend the Long Tail of online media. Anderson could have improved his argument by providing evidence for the number of new media blogs Technorati records daily.

The Long Tail also falls short where Anderson asserts the Long Tail extends beyond the economics of online businesses and into culture. His example of the rise of house music in Chicago is ineffective because he focuses on a music genre that has no mainstream and therefore does not have a Long Tail demand curve.

Though Anderson provides unsteady evidence to identify the Long Tail in culture, his assertion can be supported with alternate examples: People can choose from the thousands of niche groups on Facebook or recreate themselves as avatars in Second Life and become part of niche online communities within that virtual world. Chris Anderson himself participated in Second Life for a discussion with a niche audience – those interested in The Long Tail.

Looking back, I can see Long Tails in social environments, too. A small number of students in my high school were popular, “the cool kids.” The rest of us didn’t command the same attention but still made the majority.  Niche interests and activities defined us. Four of us that wanted to make rock music formed a band. Today, the same four of us have access, via Internet distribution channels and aggregates, to a broader audience that shares our niche taste for music. Vying for acceptance with “the cool kids” – the mainstream – is less important than ever.

The Long Tail is profound because it articulates what we can easily see in digital markets and increasingly in culture. The theory of abundance isn’t revolutionary – Sears, Roebuck and Co. recognized it more than 100 years ago – but it has never been presented in such a digestible form. Anderson’s book is a valuable addition to the public discourse about digital marketplaces and the impact of the Internet on consumers and culture.

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5 responses

16 07 2008
peterlux

Paolo,

This is a very well-written, balanced and thoughtful review of The Long Tail.

You made an excellent point that the inclusion of four blogs in the top online media sites is not a good example of the long-tail phenomenon, but rather of the success of blogs.

Still, I thought it was an interesting chart in that it showed how blogging as a technological tool allows for writers to reach a huge audience without a large investment in resources and can in fact outcompete large media organizations. (I was sent an list yesterday of the top 100 health-related blogs (http://www.edrugsearch.com/edsblog/healthcare100/). The first big-media blog of the WSJ is only at #15; NYT’s Well blog only makes it to #44).

It’s an example of how in the digital world, the playing field is leveled because production and distribution is easier and cheaper. It will be interesting to see if this will remain the case once big media puts massive resources against outcompeting the upstart amateurs, and if big production companies will find a way to recuperate the success of blogs in a way that will again concentrate revenues and profits in the hands of the happy few.

One could argue that this cycle of long-tail amateurs outshining professionals, with later the amateurs getting firmly ensconced in the head of the curve, is not a new one. Isn’t this how culture renews itself?
Before punk was just another music genre, it started off as a genuine youth movement giving the finger to the music industry.

In Two or Three Spectres, a diatribe railing against the purely profit-seeking music industry, on the 1975 proto-punk (vinyl) album Nadir’s Big Chance, Peter Hammill captures the outrage of that generation:

“Sod the music,” said the man in the suit,
“I understand profit and without that, it’s no use.
Why don’t you go away and write commercial songs;
come back in three years, that shouldn’t be too long…”
He’s a joker and an acrobat,
a record exec. in a Mayfair flat
with Altec speakers wall to wall,
a Radford and a Revox and through it all he plays
strictly nowhere Muzak.

“Hey, listen, baby, this band’s got a lot of soul…
if we can beat that out of them I see a disc of gold!
Give them an image, maybe glitter, maybe sex,
maybe outrage, maybe elegance –
how about as nervous wrecks?”

So if you can skip the record industry altogether, why not do it? That’s certainly how most punk bands started out (with the notable exception of the Sex Pistols), and there’s probably no reason right now to not go the independent route. As you point out, production and distribution are really cheap right now, and once you have an audience, you stand to profit more from independent ownership of your own label than from a shoddy record deal with a big label.

One thing I wonder about, though is this: Yes, it’s true that costs are lower for bands producing in the tail, therefore creating a potential for a higher profits. But will the profits come? The fact that production is cheaper, and distribution is easier also means that competition is much fiercer; the battle is no longer about overcoming production and distribution hurdles, but about fighting for an audience with many other bands who are enjoying the same advantages.

If punk history’s a guide, the current wave of amateur production could crest and fall when the spirit of “anyone can do it” gives way to a realization that monetizing such enthusiasm has always been more difficult than it seems.

Anderson’s description of abundance may then seem like nothing more than mystical worship: “Many phenomena are simply left to other disciplines, from psychology to physics, or left without an academic theory at all. Abundance, like growth itself is a force that is changing our world in ways that we experience every day, whether we have an equation to describe it or not.”

16 07 2008
pmottola

Hey Peter,

The idea of amateurs becoming part of the head of the curve as an action of renewing culture is a great insight. In class Monday we discussed the Long Tail curve not being stagnant, but active, with many new goods starting at the head of the tail and moving down the curve as their replaced by newer goods. Looking at goods affecting culture, this head to tail movement probably is the slower form of cultural evolution. Niche, or in this case amateur, products moving against the stream, from tail to ahead probably ignites more radical change. I like that train of thought.

I dig that you’re keeping to my reference to music. To answer your question, “But will the profits come?” I can tell you they haven’t yet and they’re nowhere in the forecast. Ha! As I stated in the review, the only tangible benefit to the lower costs of production and distribution due to technological advancement is inherent access. Could be worse, right?

Now I must Google this Peter Hammill…

17 07 2008
peterlux

One thing is for sure, access won’t ever replace marketing and efforts to spread the word. So… what’s the name of your band and where’s your myspace page? 😉

20 07 2008
Paolo

focuspoint is the band (http://myspace.com/focuspointmusic). We’re working out a show for August 17 at the Showbox at the Market. I’ll probably make a shameless plug somewhere on the blog as soon as it’s finalized. Thanks for asking!

21 07 2008
TWoN - Part One « Net-Centric Economics

[…] Peter on Paolo (review – note: interaction! ) […]

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