The Long Tail: Why the Future of Business is Selling More of Less
by Chris Anderson
Perhaps the most influential business book of 2007, the title of the book, The Long Tail, has become part of the English language. In his best-selling book, Chris Anderson attempts to puts forth this business case:
1. The Internet reduces to nearly zero the cost of marketing and distribution of digital goods.
2. Inversely, the amount of shelf space for digital goods is nearly infinite.
3. Hence, it is now possible to profit from the sale of very low-demand goods -- those items that populate the end of the long tail.
(At the front of the long tail are high-volume sales, such as blockbuster movies, hit records, and this season's must-have toys. In the middle are things that sell all the time, such as potatoes, shoes, and gasoline. At the end, in the thinnest part of the tail, are custom wedding dresses, hometown bands, and rarely viewed DVDs.)
Mr Anderson repeatedly provides examples of Amazon (vs Borders), NetFlix (vs Blockbuster), and Rhapsody (vs Tower Records). Each of these online retailers has found they can make significant income by stocking books, movies, and albums that the physical stores cannot. They benefit from the low cost of distribution and high shelf space offered by the Internet.
This is great stuff, I thought to myself, and I cheered as I read lines like these:
-- What we thought was the rising tide of common culture actually turned out the be less about the triumph of Hollywood talent, and more to do with the shepherding effect of broadcast distribution. (p.4)
-- ...the Long Tail is really about the economics of abundance.... (p.11)
-- For too long we've been suffering the tyranny of lowest-common denominator fare... Many of our assumptions about popular taste are actually artifacts of poor supply-demand matching -- a market response to inefficient distribution. (p.16)
As a personal example, I am thrilled that I can again buy jazz music records (MP3 files, actually) made on the ECM label through Amazon.com -- music that no store in my community of 140,000 stocks.
Mr Anderson does not say that the long tail will replace blockbusters and hits; rather it is a new option that we never had access to before. We still need the mega-grocery, clothing, and automobile chains to efficiently sell us everyday products that are sold physically.
But there is the complimentary reality -- that of the author, producer, and musician. This reality is ignored by Mr Anderson. For you see, it is only the Amazons and NetFlix's of the world that benefit from the long tail. While they may make 25% extra revenue from selling things that have very little demand, the producer of those things are making very little money. It looks like this:
A: Amazon makes millions from selling millions of long-tail items that sell just one item per week or month.
Not-A: Millions of producers of long-tail items are making close to $0 from selling just one item per week or month -- less the 40% Amazon takes for itself.
Mr Anderson never answers the question: where is the demand for creating long tail items, except for these cases:
a. It's a hobby, and so no profit is expected.
b. It's a once-popular item that has already paid for itself, and so any profit is residual.
c. It's the result of a long-tail producer being deluded by "The Long Tail" book.
From personal experence, I know that Amazon has no time for long-tail producers such as myself. It will not stock my line of ebooks because I need to have at least 1,000 titles (not copies, but titles!) before they will show any interest. (My collection currently numbers just over 40 titles -- 960 left to go.)
So, yes, the Long Tail exists, but like other economic systems (whether capitalism or communism), it only profits the very few at the top. For everyone else, it's just another case of the many toiling for the few.
Published by Hyperion in 2006
In hardcover for $16.47 from Amazon.com; also available used. Click for more information: [amazon.com]