We all know about the groundbreaking work from Chris Anderson from Wired about the Long Tail. In theory it makes a ton of sense - on the web, companies have no inventory costs and can stock as many titles or products as possible and that over time the one-offs or misses can generate as much or more sales than the hits. As you can imagine, this Long Tail meme gets mentioned by many an entrepreneur that I meet and saying "we are going after the long tail of X" is almost as popular as saying "I'm a Web 2.0 company." I have not read the book or the data, but as I said, in theory it sounds great. You could even extend this long tail concept to user generated content. For example, YouTube could be like the long tail of video - people get to see new content which would never sell at any traditional bricks and mortars store and YouTube has the opportunity to make money off all of this Long Tail content.
As for the Long Tail, the only question one can ask is when will it happen vs. if it makes sense or not. In today's Wall Street Journal, Lee Gomes (see his article here - sorry, requires login) challenges the timing of the Long Tail and comes up with some interesting data.
"By Mr. Anderson's calculation, 25% of Amazon's sales are from it's tail, as they involve books you can't find at a traditional retailer. But using another analysis of those numbers - an analysis that Mr. Anderson argues isn't meaningful - you can show that 2.7% of Amazon's titles produce a whopping 75% of its revenues. Not quite as impressive.
Another theme of the book is that "hits are starting to rule less." But when I looked online, I was surprised to see what seemed like the opposite. Ecast says 10% of its songs account for roughly 90% of its streams; monthly data from Rhapsody showed the top 10% songs getting 86% of streams."
Lee has a few other examples and one of the most interesting ones is when he states that when Chris looked at the data 2 years ago for eCast that 2% of songs did not play every quarter and now with a much larger inventory that number has risen to 12%. Maybe eCast just had the hits up in the first place? In short, Lee Gomes concludes that the Long Tail may be true but it will also take a long time before it happens.
From my perspective, I do believe we still live in a hits driven world but that it is definitely changing. In addition, if you apply the concept of the Long Tail more broadly to concepts ike YouTube, etc. then it is happening today. Regardless of what you think, Lee's article is one of the few that I have seen challenging the Long Tail meme that we all want to believe.
UPDATE: Since I posted from the train this morning and have been in meetings for most of the day, I did not get to see Chris Anderson's thoughtful response to Lee Gomes. Here is an excerpt from Chris' post:
What it does say is that the current data at Rhapsody, Netflix and Amazon show that the tail amounts to between 21% and 40% of the market, with the head accounting for the rest. Although I don't discuss this in detail in the book, in the case of Rhapsody, the trend data suggests that the tail (as defined above) actually will equal the head within five years. Which is why the language Gomes cites from the book jacket is actually all phrased in the future conditional tense ("What happens when the combined value of all the millions of items that may sell only a few copies equals or exceeds the value of a few items that sell millions each?"). I asked him to quote the jacket copy in full context, but it apparently wasn't convenient to his thesis to do so, so he didn't.
From this post, it seems that Lee misquoted Chris and that Chris agrees that it will take some time for the Long Tail to outsell the hits.
UPDATE 2 - Please read Lee Gomes' comment to my blog post below where he clarifies his thinking on the article and stands firm on his position especially in relation to Chris Anderson's rebuttal and my commentary where I suggest that he may have misquoted Chris about the impact of the Long Tail.
Ed, I usually don't respond to blogs, not because I don't value them enormously -- I do -- but simply because I write for a pretty big outlet myself, and think that once I have my say about something, I should shut up and let others have theirs. I need to comment, though, on your suggestion that I might have misquoted Chris. As I hope you appreciate, that is one of the worst things a journalist can do, even (or especially) when writing about a person whose views are being subject to scrutiny.
Here is how I described the book's premise about this matter: "In the book's main sections, Mr. Anderson writes that as things move online, sales of misses will increase -- so much so that they can equal or exceed the sales of hits." Note that it is written in the future conditional tense, exactly like Chris says own his sentence is. I never said that Chris said that misses were currently outselling hits; my point was simply that considering all the to-do he makes about this in the book, I was a little surprised that he didn't have any current examples. Had I had more space than I do for my column, which recall runs in the print paper and thus is limited to around 850 words, I would have happily quoted Chris' entire sentence, as well as this other one from the jacket. "Using the worlds of movies, books, and music, he showed how the Internet has made possible a new world in which the combined value of modest sellers and quirky titles equals the sales of top hits."
As for the suggestion, not yours, that I misunderstood Chris' methodology: I know perfectly well how he made the calculations he did, and explained them (I hope) very clearly in my piece. I added, though, that there was another way of looking at those same number, making it clear to my readers that Chris did not think that second method was meaningful. At least I gave readers a choice between two methods; the book didn’t even acknowledge that some other method existed.
Thanks for letting me have my say, Ed.
Wall Street Journal
Ok-this is done and I thank Lee for questioning the Long Tail meme and stirring the pot as I believe this healthy debate will only improve our thinking and analysis around this concept. Of course, I am curious to see the how the data around the Long Tail evolves as time passes as this transparency will help all of us get a better understanding of the timing and true impact of the tail in certain markets.