“The Long Tail” By Chris Anderson

The greatest song that has ever been recorded is sitting on a server somewhere on the internet right now. At least, the greatest song to you, that is. Likewise, the most amazing film you’ve ever watched is sitting in a film canister on a shelf in a dusty warehouse, waiting for you to find it. The exact tool to fit the needs of the project you’re planning this weekend awaits you across the country, where right now, no one is even considering trying such a task. Why don’t you know where to go to find these items, or perhaps that they even exist?

The Long Tail

I suppose in the spirit of The Long Tail, Chris Anderson offered to send free review copies out to the first readers of his blog who would be willing to write reviews. I fortunately acted quickly and have enjoyed getting to play media journalist for the past week. To his credit, there’s no critic more vicious than the anonymous blogger, and Anderson obviously is taking something of a risk putting early review copies in the hands of such people. I like to think I’m a nice guy, but let’s face it: a lot of bloggers are vindictive bastards who love the idea of taking down celebs a notch or two.

Chris Anderson’s book, “The Long Tail – the Future of Business is Selling Less of More,” explains that the tools to help you find them, or even create them yourself, are the keys to that form the new economy. This future of commerce was long prevented by the bottlenecks of production, distribution, and discovery which technology and savvy business thinking have swept aside. Now, nearly every written or spoken word, recorded track or video, or even fashion or implement is a simple search term away from you.

While researching technology trends, Anderson was discussing download statistics with the CEO of Ecast (a networked jukebox system) and underestimated the percentage of the total track collection that gets played at least once per quarter (nearly all do). Puzzled by the actual data he had been presented, he went on to try and see what other areas of economics this showed up in. The alpha result of that work showed up on a slide presentation. However, the beta, and truly groundbreaking element came in the form of the article Anderson wrote for the October 2004 issue of Wired Magazine (where he serves as editor-in-chief), titled The Long Tail. That article has become the most cited in the history of the magazine and offered evidence that there was a great deal of niche variety, that it could now be economically made available, and this all adds up to a sizable market.

In short, the Long Tail (as it applies to sales, say) is a curve plotting individual sales versus sales ranking. Now, it’s easy to imagine that this falls of very rapidly. The hidden secret, is that never actually drops to zero. The curve obeys a Pareto distribution, at type of power law distribution, which while reaching very low numbers, always stays above zero. Anderson quotes Eric Schmidt, CEO of Google, who explains where his company sought opportunity underneath this curve:

The surprising thing about the Long Tail is just how long the Tail is, and how many businesses haven’t been served by traditional advertising sales. The recognition that businesses such as ours show a Pareto distribution appears to be a much deeper insight than anyone realized. It’s something that scientists have known for a long time, but it’s never gotten any attention. When we looked at our business, we concluded that we built a model that works well in the middle of the curve. After reading the [original Wired] article, we looked at the Tail and asked ourselves, Howe are we doing against this opportunity?

The Long Tail

The Long Tail distribution, as show here non-dimensionally, represents a Pareto distribution. The red area under the curve (the Short Head), indicates where traditional retailers and distribution models cut off sales for bottlenecking reasons. The yellow area (or Long Tail), represents “latent demand,” according to Chris Anderson’s book. Image courtesy of Wikimedia Commons.

I cannot say that Anderson agrees with me here, but after reading the book, I get the sense than it is the filter (or search system), which connects supply to demand, which is the linchpin to the long tail economy. There has, always been a tail, albeit far shorter before the advent of accessible production tools and distribution methods. However, the inability to find what one wanted (especially when they probably didn’t eve know exactly what they were looking for) allowed or caused the hit-driven economy of the past. The book discusses the issues with too much choice, and not only does Anderson mention Barry Schwartz’s The Paradox of Choice : Why More Is Less, one could argue that The Long Tail is a rebuttal to that argument. It’s not that having an overwhelming choice isn’t what people want, it’s just that having no way to hone in on signal in the noise makes everything, in effect, noise. It may be the engineer in me, but I see the tools of search, recommendation, and filtering (collectively called filters, by Anderson) as the key to the argument (feel free to disagree with me, Anderson relies on three points, and he’s the one whose done the homework).

One key example cited, and one that has rattled around in my head for years, is mp3.com. At one time, it served as the evidence cited that the internet is nothing more than a collection of crap. It had thousands upon thousands of tracks and virtually no way to find anything of interest. It wasn’t until I recently discovered Pandora.com that I began truly see how mp3.com might have actually worked if it had actually had intelligence in it’s database. Anderson states, in response to a study done on consumers apparently refusing to come to a decision as often when presented with too many choices, that the paradox of choice turned out to be more about the poverty of help in making that choice than a rejection of plenty.

Filters come in more than just internet searches, though, and as Anderson points out, they were around long before the internet existed. Profitable filters have come in the form of the yellow pages or TV Guide and recommendation engines have always been your opinionated friends. However, word-of-mouth is far more than just a small circle of friends in the place in which we live, as the rise of blogs and social software has shown us repeatedly. Tastemakers used to be record DJ’s or movie producers, but now, they’re anyone with an opinion and the time to express it. Trust levels are higher when we feel that the person expressing that opinion is speaking from experience, and not for profit, or as Anderson puts it:

The new tastemakers are us. Word of mouth is now a public conversation, carried in blog comments and customer reviews, exhaustively collated and measured. The ants have megaphones.

Regardless of the keystone, if Anderson is right, then the stakes here are tremendous. In discussing the advent of the online super-store, which is nothing less than the story of Jeff Bezos‘ Amazon.com, Anderson tells us just what kind of figures in retail this means:

Today online shopping has passed catalog shopping and now accounts for about 5 percent of American retail spending. It’s still growing at a whopping 25 percent a year, and is well on track to fulfill Bezos’s original prediction that online retail would eventually reach around 15 percent of total retail, which would give it more than a tenth of the $12 trillion American economy.

That’s over $1,200,000,000 dollars a year. And now we’re seeing a massive amount of that coming from items that could have never justified shelf space in even the country’s largest retail super-stores just ten years ago. Further, to understand the Long Tail is to see just what latent markets are available to us. There are countless wants and needs down in the skinny and endless part of the tail that the old means of business simply could not address.

Another important point the represents a shift in the way we must view business is one of resources. Online stores have effectively infinite shelf space because storage and bandwidth are, for all intents and purposes, free to them. The ability to recognize what resources are ‘free’ allow a business to leverage that to it’s advantage. This is one of the keys to so many successful online media sites, such as the iTunes music store, Flickr, YouTube, and more. The niches way out towards the end of the tail take no more resources in a online store such as these as do the hits at the head; that is: a sale is a sale. Once the infrastructure is in place, having users get some use for free or having them scour the most obscure items on your servers costs you essentially nothing in extra overhead and it will only augment your sales.

Anderson attempts to point out some of the potential pit falls of the Long Tail. One, is essentially if we filter out too much, especially in the form of news, that we may essentially unplug ourselves from the real world. Can we really run the risk of filtering out everything but that what we know we already want to hear, further polarizing ourselves from others? Well, as Anderson also points out, a good filter isn’t going to just be a feedback loop, it will force you into new arenas in order to bring you new things. I may not have as much faith in the world making its way to everyone (there are some who seem bent on keeping out that which they do not want to hear, in news, music, books, or more), but I do agree you’ll have to work pretty hard to carve out a chunk of the internet that only agrees with you. The Long Tail, as Anderson sees it, needn’t be fragmentization of culture and society, but rather democratization of both. Further, the fact that any one of us laps over into a vast number of sub-cultures (or tribes, if you like), will tie us back into the sub-cultures by way of network.

I do have some reservations about Anderson’s book. First, this is the sort of argument where one would expect lots of data. There are numbers given and charts to visualize the concepts, to be sure, but I couldn’t help but think that some of the arguments given felt as though the numbers had simply been guessed at or cobbled together on a Post-It pad. For example, there are some numbers given for just Amazon’s CD business as compared to all music potentially available to sell. The numbers don’t seem to add up and even Anderson’s words make them feel very fuzzy and vague (and this from the individual who linked to spreadsheet data on his blog for most charts shown). Also, Anderson doesn’t cite where many of these came from to verify them ourselves (some information is contained in an appendix for further reading, but far from all of the date given is sourced). I read a few sections like this and couldn’t help but long for a hyperlink on those to do some background work. I am somewhat well versed in who’s who in the tech and online word (hey, I got the Anil Dash t-shirt reference he made), but just attributing a quote to some name I’m not familiar with seems like cutting short in a book. Perhaps I’ve just been spoiled on social science books written by lawyers, who footnote every statement of fact as a matter of course.

My reservations on data and citations aside, there is plenty of evidence to suggest that Anderson has really come across something significant there. The book comes around to entertainment media often as a source of evidence, and that is really more a result of the maturity of those markets in the digital realm than it is evidence that the Long Tail only applies to them. There are some non-entertainment examples as well that indicate that the Long Tail does, indeed, apply outside of the hit or niche markets of the entertainment industry. However, within that industry, we can expect to find more to peak our refined tastes and have to put up with less lowest-common-denominator music and film.

The specific histories given for many examples, along with some admittedly sparse hard data and application to economic theory, make this book indeed The Long Tail v1.0, which is ready for public release. I’m hoping that this is something that Anderson feels is worth continuing to investigate and follow up on, be it in Wired, on his blog, or in future books. I do highly recommended this book to those who wish to see where business, Web 2.0, technology, design, and modern culture all come together under a single unifying theory.

The Long Tail – Why the Future of Business Is Selling Less of More is available July 11th from Hyperion Press. You can pre-order the book now online from Amazon.com and other fine book dealers, where no doubt the recommendation engines will suggest to you other great books on business, economics, and technology.

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