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The Long Tail

By Chris Anderson
Hyperion, ISBN: 1401302378

Reviewed by Margaret Teichert and Oleg Kaganovich

In 2004, Wired magazine editor Chris Anderson wrote a startling article that heralded a shift in the economic model for the media and entertainment industries. He noted that the past century of entertainment has focused on making smash hits — the kind that “fill theaters, fly off shelves, and keep listeners and viewers from touching their dials and remotes.”
    With the combined forces of cheaper hardware, reduced distribution costs, the infinite shelf space of the internet, and increasingly sophisticated recommendation software, he claims, the era of the smash hit is ending. We now have an unlimited selection of options that are “revealing truths about what consumers want and how they want to get it in service after service,” from DVDs at Netflix to books at Amazon, to songs at iTunes and Rhapsody. Without the constraint of artificial scarcity, Anderson wrote, consumers showed an appetite for a much broader selection than what was available in their local video, music, or book store.
    That article (to date, the most the commented on in Wired  history) became the foundation of Anderson’s new and fascinating book “The Long Tail: Why the Future of Business Is Selling Less of More.” While conducting research for the book, Anderson was approached by the CEO of a digital-jukebox company called Ecast with some shocking corroborating evidence of his long-tail theory. The 80/20 rule, the assumption that 20 percent of the products generate about 80 percent of the revenue, would suggest that most of Ecast’s inventory — about 10,000 albums ready for download — is worthless. But 98 percent of the albums in Ecast’s library sold at least one track every three months. “And because these were just bits in a database that cost nearly nothing to store and deliver,” Anderson writes, “all these onesies and twosies started to add up.”
    To his amazement, Anderson found the same incredible sell-through rate at Netflix, where out of their entire movie catalog (65,000 and counting), roughly 99 percent have been rented at least once in the last year. Not because of any marketing effort by the studios, but because of the increasingly sophisticated recommendation systems (both peer-to-peer and algorithm-driven) that tap into the online-purchasing habits of consumers and match them with products that are likely to interest them the most.
    “The story of the long tail,” Anderson writes, “is really about the economics of abundance — what happens when the bottlenecks that stand between supply and demand in our culture start to disappear and everything becomes available to everyone.”
    Though Anderson relies (perhaps too heavily) on the data of a few companies to support his point, his thesis is certainly provocative. Consider the long-tail business model of sites such as Google and Amazon. On Google, companies pay to get their ads placed next to the search results of certain keywords. But much of Google’s revenue, which now exceeds $5 billion annually, comes from tiny companies that bought keywords such as “vintage PEZ dispensers” rather than major corporations that bought phrases such as “cell phone service.”
    At Amazon.com, about a quarter of all book sales come from outside the site’s top-100,000 bestsellers; yet the aggregate sales of these scattered individual purchases add up to a surprisingly large market. As Anderson puts it, “if you combine enough of the nonhits, you’ve actually established a market that rivals the hits.”
    The cost, according to the author, of our access to (and appetite for) all these nonhits and niche markets is a loss of “common culture.” However, and this is perhaps the main flaw in an otherwise excellent book, Anderson fails to demonstrate any real departure from the mainstream: Even if we choose not to “join the herd” with respect to our overall media choices, we still want to keep tabs on where the herd is going.
    For every obscure book, song, TV show or documentary that finds an otherwise unreachable audience thanks to the long tail, there are still lines wrapped around the block to see the latest X-Men film, or buy the latest Harry Potter book whatever the reviewers have to say — either because people want to see it, or they want to be part of the social event that it represents, and see what everybody’s talking about. 

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