Thursday, August 24, 2006

The Long Tail

Talking about his band Crazy Horse, Neil Young once said, "We can't play fast. But we can play real, real slow." That's a bit like Yappa. I rarely have breaking news, but I sometimes take a look at stuff that others have already moved past.

Thus it goes with the book that came out some months ago about the revolution in the marketing of books, movies and music brought about by online shopping. The Longtail, by Chris Anderson, describes how in the old days a bookstore buyer would choose a tiny subset of available books and those were what we could read, while nowadays you can go on Amazon or whatever and buy anything - if it's out of print, Amazon will make it available through some used book dealer. (Aside: It isn't true that every important book is available. I have been trying for years to find a copy of Anna Koutsoyannis's essential text A Theory of Econometrics, which someone stole off my desk at work.)

Actually I haven't even read the long tail book. A while back my brother sent me the link to a 2004 article in Wired magazine that led to the book. In the article, Anderson cites the example of an once-obscure out-of-print book called Touching the Void about mountain climbing. After the success of Jon Krakauer's Into Thin Air, people started buying Touching the Void, mostly because of reader reviews on Amazon. It was reprinted and ended up outselling Into Thin Air.

About music sales, he cites an online music marketing business called Rhapsody, which in 2004 provided hundreds of thousands of songs - all of which were downloaded. The cost of delivering a small and big seller is the same, so it makes sense for companies like Rhapsody to have as much variety as possible. Anderson compares this to old-style retailers like Wal-Mart:

As egalitarian as Wal-Mart may seem, it is actually extraordinarily elitist. Wal-Mart must sell at least 100,000 copies of a CD to cover its retail overhead and make a sufficient profit; less than 1 percent of CDs do that kind of volume.

The "long tail" is the demand for the obscure items which didn't use to be available, but which now are not only available, but profitable. If there are only a few people in every US city who want to buy old copies of Dr. Who, that adds up to a lot of sales for a web site that offers it. Anderson's publisher writes in the book description, "After a century of obsessing over the few products at the head of the demand curve, the new economics of distribution allow us to turn our focus to the many more products in the tail, which collectively can create a new market as big as the one we already know." This changes the business of marketing, pricing and licensing. But it has other implications for society, many of which aren't understood yet.

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1 comment:

tom s. said...

You think I'm grumpy about lawyerbots? Wait until I get started on the Long Tail. Not only does it ignore Chapter 9 of my book, which is obviously a cardinal sin, but I think it is barking up almost completely the wrong tree. Next week, perhaps.

(Disclaimer: like you, I've read the original article, but not the whole book. But I live way down in the long tail, which Chris Anderson does not, so I know what it looks like down in these parts.)