The Essential Reader: The Long Tail

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.

ISBN 1-4013-0237-8
xiv+238 pages
Published by Hyperion in 2006

In hardcover for $16.47 from Amazon.com; also available used. Click for more information: [amazon.com]

Comments

[Kelly]

I think that the author might suggest that you no longer need to work with the bottle neck of the Amazon's of merchandizing by setting up your own store and getting 100% of the sale per week. Of course you then need to deal with credit card processing etc. but it would then leave you free to do the marketing etc. yourself - essentially moving your fate into you own hands instead of dealing with large companies and their agendas - either publishers or Amazon types. You basically just have to be able to be found by Google so that your small but targeted audience can find you, and then cut out all the middle men that siphon off the small bits of profit to be made. Making a discreet post in the relevant forums would also raise your profile with people that care about the topics you are working on.

I don't know how the TidBits http://www.takecontrolbooks.com/ model of PDF publishing is working economically, but they created their model early and are still at it, so I would guess that it is working for them enough to keep doing it. The idea of selling PDF books for the same cost as paper books just doesn't work for me as a buyer. I believe that the author should be compensated for their work and ideas, but the production and distribution costs are so much lower that I expect those savings to be shared with the readers.

I think that we need to step back and re-examine the system as a whole to see what the new economics really mean. I have electronic reference books on my computer and I have paper books hanging around too - both are good and I see the merits of both. My mind is open on the topic and would welcome discussion, because I really do think the market and the world of marketing is changing.

Kelly

[Josh]

Hey Ralph, great write up.

I've never liked Anderson's term he came up with, but I guess it describes the phenomenon the best.

I look at it in terms of finding information. It's relatively easy to find a lot of info on cars, but when you get more specific, the sites that provide that more specific info can build a bigger audience than a mega-site like amazon.

Glad you read the book. Nice to see someone interested in this side of business.

[Steve]

Amazon v. Borders and Netflix v. Blockbuster is not an accurate comparison. Netflix is nothing like Amazon. True, they're both online, with almost infinite online catalogs, but Netflix is a flat rate for unlimited content, where Amazon is just a store that keeps costing and costing. I think that BookSwim may have been a better analogy. Just like Netflix, they rent books online for a flat monthly fee. They even run on Amazon's gigantic catalog, so the selection is definitely there.