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'Long Tail' May Not Wag the Web Just Yet
Carl Bialik from WSJ writes "Expanding on an article he wrote in 2004 (and discussed on Slashdot), Wired magazine editor Chris Anderson argues in his best-seller 'The Long Tail' that the web is changing commerce from a hit-driven business to one focused on niches. But Wall Street Journal columnist Lee Gomes questions Anderson's data, and adds, 'I don't think things are changing as much as he does.' Gomes writes, 'At Apple's iTunes, one person who has seen the data -- which Apple doesn't disclose -- said sales "closely track Billboard. It's a hits business. The data tend to refute 'The Long Tail.' " ' On his blog, Anderson responds that Gomes 'stumbles over statistics and more, and in the end simply makes a muddle of what might have been an interesting debate over the magnitude of the Long Tail effect.'"
> [...] sales "closely track Billboard."
Right, but isn't that the point of the long tail? If Dan Brown sells a bazillion copies of "Da Vinci Code" and I sell 500 copies of PMD Applied, we're both happy since we're meeting the expectations that we budgeted for. Of course, he's then a billionaire, whereas I've still got my office in the laundry room, but, er, anyhow.
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If you don't understand profit, you probably shouldn't write at the Wall Street Journal. Profit = revenue - cost.
It seems that Mr. Anderson's book (I RTFA, but not the book) claims that higher sales in the tail will increase the profit of the tail and this will change the economics of the web. This doesn't make much sense to me, and the article rightly points out that there is not that much interest in the tail.
But that's not the point. The point is that to stock "tail items" (niche items) in a brick-and-mortar store COSTS a lot of money. It costs money in terms of the hit-items you can't stock because you've got limited inventory space (opportunity cost at work). But the cost of stocking niche items digitally is far, far less. The promise of profit from the tail is not based on increased revenue as much as it is on decreased cost.
Take the example of Apple's iTunes sales. Even if they do closely track Billboard sales, this doesn't change the fact that Apple is profiting MORE from their tail items than a brick-and-mortar store would be.
It seems as though both of these guys are missing the point: the promise of the tail is not in increased revenue, but in decreased cost.
-stormin
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A couple of years back, I was telling a friend about a great book I had as a kid, called "Who Needs Donuts" by Mark Alan Stamaty. My friend had just had a kid, and I was thinking it would be cool to get a copy for him, but it was long out of print. I shelved the idea for a few months, and then decided to try again, and if that didn't work, scan my old copy, which I had saved, and print a new one. In the intervening months, the book came back for a reprint, 30 years after its first printing.
My feeling is that it shouldn't have been that much work, and there's no reason the publisher should have to print up a whole multi-thousand book run. The occasional nostalgia buyer would do really well for publishers and authors who have low-volume books.
So if I want to find old editions of the Book of Knowledge from 1944, where the commentary following the story of "the first men on the moon" indicates that "maybe your children's children's children will walk on the moon", I should be able to.
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An excellent point -- there might not seem to be any way to advertise the other 90% of apparent "non hits," but that's only when you consider advertising in the traditional, fixed billboard and shelf-end type of way.
Advertising can take a lot of different forms, and I think Amazon is just scratching the surface with their recommendations. As advertising companies become less obsessed with just shotgunning a "message" out to as many eyes and ears as they can, and hoping they hit the right audience in the process, and instead catch on that you can get a lot more bang for your buck when you don't try to sell the same product to everyone, I think the "recommendation engines" type of ad-delivery will play a bigger role. (Because, when you get right down to it, the difference between a "recommendation" and an "advertisement" is just the context.)
There are always going to be hits, because people always want new stuff. Even if everyone had access to the entire back catalog of human civilization, for free and on demand, there would still be 'new hits.' Not as big, probably, because right now there are a lot of people who only listen to hits because they can't find the stuff from the back catalog that they want, but they would still happen.
What has to happen is that the music/movie companies have to realize that "hey, we make just as much money if you buy a song from 1994 than if you buy a song from 2006." That's the key thing that I don't think they've really understood yet, as evidenced by their seeming refusal to advertise anything but the newest stuff. A sale is a sale -- particularly when selling a back-catalog song doesn't mean that it's been sitting in a warehouse for 10 years, doing nothing but tying up capital.
What I see happening is more individually-targeted advertising that takes into account consumer preferences and offers up stuff from the catalogs for them to buy. Once you've accepted that it doesn't matter whether the consumer buys "MI:3" or "Dr. No," as long as they're both your products, you can advertise whichever one they're more likely to buy. In fact, it's stupid not to advertise whichever one you think they'll buy, because to do otherwise risks losing a possible sale. It just makes good marketing sense.
This requires that you have a lot of information on the purchasing patterns and preferences of each customer, but that's not hard to get (and a lot of people will give that up freely, if it means they get good recommendations).
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