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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.'"
Amazon doesn't keep their sales rankings private. There is clearly an element of hits ("best sellers") and long tail (everything else that isn't new). I've seen books from the 90s go from the 500,000s sales rank to the 1,000,000s range and back over the course of a year.
I don't see how having 3 million songs could not change everything. Even a good record store will only have a few thousand different CDs. Naturally the most popular will match the top 40 or whatnot, but there are millions of extra choices that will sell every now and then. As it grows to 30 million, we can expect the long tail to kick in more and more.
Man, you really need that seminar!
Part of the problem is, of course, advertising.
The biggest sellers are always the most heavily advertised/talked about.
How do you advertise the other ~90% of your catalog?
Hint: You can't. Not in any specific way.
[Fuck Beta]
o0t!
> [...] 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.
The Army reading list
The long tail is supposedly the collective worth of the niche markets. It may add up to a lot more than the mainstream market, but I believe the tail is naturally distributed among the smaller, specialized suppliers. iTunes can potentially offer to cater to those niche markets, but would someone go to a popular music service to purchase his unique and less popular music?
The sum of the unpopular music sold, or niche commodity for that matter, may be larger than the sum of popular music sold. Whether or not that's the case is not important to big business. They see in terms of numbers of units sold, and increase the supply (or marketing, or front page links) of the popular items. Any way you slice it, if you want to cater to the long tail, you're going to have to split your resources. And that might not make business sense.
Yeah. Now all the rest of you kids get off my internet! Using my electrons and clogging my tubes up with their pr0n and myspaces and Youtubes. Back in my day we had Gopher, and we were damn glad to have it, even though our electrons had to go uphill both ways. In the snow!
It seems to me that the only time you're going to see an obscure product selling better on the web is when it's on a page that's focused on a niche. This is just because most web sites with a large stock make it hard to find quality niche products. You really have to dig to find gems sometimes; and digging isn't what folks seem to do a lot of on the web unless the product's expensive or the digging is fun to do.
A music example is electronic dance music. I don't go to iTunes for this stuff, because all the major retailers have extremely limited stock, and the stuff they have is all mixes and it's usually crappy "anthem" tunes. But I've found websites like etn.fm that play EDM I do like, and a store (beatport.com) that sells it, so when I'm looking for EDM, I'll check out those sites for what's best in my nice. But there's still the "hit effect" in place, so to speak; I'm far more likely to check out the popular EDM in play.
If people master a search method that allows you to regularly find what you consider "good", that would probably change the "hit effect". But we're talking about a search tool that can understand people's opinions and current emotional state. I doubt we're going find that anytime soon. Though I'm sure Google's trying.
It is possible with items that take no physical space (music on your iPod or NetFlix rentals), but not so with anything else.
For items that take physical space, the limitation will be the space available to the average consumer.
If 100 titles account for 90% of your sales and you have 1,000 titles that account for the other 10%, adding 10,000 titles will just give people 11,100 options to take up their limited space. If they have space for 100 items, then most of them will be focusing on the same top 100.
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
The Southern Baptist Convention has creationism. On Slashdot, we have porn.
The point of the "long tail" isn't that the sales stop being weighted towards the "hits". You still have a power-law distribution, that doesn't change. The point is that today, the distribution is artificially restricted, because items are dropped from availability. When you extend the number of products available, you make more money from the "tail" products and the portion that came from the original set of hits is smaller.
I have "Story of a Young Heart" on vinyl, bought it when AFOS was still somewhat popular. I was listening to a cassette I made of the album in my old truck (cassette only) just last weekend.
.99 every few months or so.
It's true you don't have to advertise. It doesn't cost anything really to have it available for download. Just sit back and rake in the
I'd like to see the music industry change in a lot of ways, but one really cool thing would be for the top 40 to account for 10% instead of 99.9% of sales. I don't know if we're headed that way or not. People seem to be following the herd more and more, but at least technology might stack the deck a little.
Man, you really need that seminar!
Of course hits are going to continue to outsell the "long tail". I think what the author here misses is that when I buy a "hit" off of let's say Amazon, I may also be buying a long tail item as well. And I may be buying both off of Amazon *because* it lets me buy the long tail item as part of my purchase.
Stores always want the most selection. If it was all about hits, why stock anything other than the Top 40? Because people want other things as well, even if the Top 40 sells the most. What the long tail does, is makes offering selection much cheaper to the stores.
Say you have a mom and pop store in a town. They need to take a risk to buy one or two copies of a relatively unknown book or CD. Since they're not buying in bulk they don't get as much of a discount from their distributor. Then they have to hope someone in that area wants to buy it. If not, they're stuck with it because their customer base isn't large enough.
With an online store, suddenly your potential customer base is millions of people. Many more than the thousand or so that may come into a local store. Now you can order a small bulk order of an obscure item and most likely you will find people who want to buy it, regardless of where they are located.
In fact, people who find obscure items at your store will probably be more willing to buy other things from your store because you sell the niche items they like. Some of these may even be hits!
I think this is why the Long Tail is important.
Personally? I think the 'long tail' effect is going to be highlighted more in the blogosphere.
Case In Point:
Person A likes something really popular at the moment(Say, Pirates of the Caribbean), but also likes some less popular things at a constant rate for a longer period of time (the DS Lite, Gaia Online, Crocs) and some niche things that have a burst of interest for a short time period (Sonata Arctica, Super Princess Peach, Jibbitz)
Person A blogs about all seven items in a single entry, and most likely spends more time talking about the niche things in total than on the really big popular item. Likewise, while information about PotC is probably easily accessible on Wikipedia or elsewhere, the user may have to seek out (and link to) niche sites for the less popular items, and thus lead her readers to these niche sites as well. The niche sites generate interest for the niche item, and boom, we now have more people wanting the niche.
It's the rough equivalent about how Shopping Centers usually have an 'anchor' in the form of Wal-Mart or a Bookstore, and then have the specialty shops around it to fill out the real estate. As more people notice themselves doing this with their blogs/LJs/MySpace/whatever, the niche items gain swing and soon gain a sizable portion of the market in this way.
The internet's main impact on the Long Tail is its ability to piece together far-flung bits of interest in an item, allowing them to congeal into a sizable force. Saleswise, however, the impact is only noticable to internet sellers (or big volume concrete sellers, like department stores), since smaller concrete retailers still find the costs of marketing to a niche prohibitive unless they dive into specialties. However, with the Long Tail, the consumers of these niche items become far more entrenched than before.
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.
In short, no more dark ages. No lost wisdom. No lost idiocy, either.
The CB App. What's your 20?
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).
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
Citing the iTunes store as representative of anything but a "Hits Business" is flawed. I think consumers who represent the statistics in the long tail don't shop at the iTunes store. While I know it's not a vaild argument to cite what my own purchasing practices are, I for one spend a lot less on music at iTunes and more at places like Om Records, Defected, and other independent label online stores. In fact, if I do purchase at iTunes, it's usually a very popular song which is consistent with iTunes being in the "Hits Business". The arguer is right about that, but wrong about who it accurately represents.
Hades, PoD: Official Advocate
I think you're factually correct, but your conclusions are wrong. The long tail doesn't really help content creators who can't develop a large market for their work. Period. You can't make $200,000 a year, if you only sell $100,000 worth of stuff. "New media," or "the long tail," or any other buzzwords are not going to help you. (Creative accounting might, but not for very long.)
Where I think you're off-base is to somehow imply that the situation that your hypothetical band faces is any worse than the situation they have right now. At least in this model we're discussing, they have the possibility of making a few bucks from their music alone -- perhaps enough to make simply recording music a pleasant hobby, if not a day job. It might be enough for a garage band who previously played only for themselves to justify buying some better equipment, or justify it instead of some other way of spending their free time.
The band who is not going to make a professional career out of the "long tail" music scene, certainly wouldn't be able to do it in a purely corporate, hit-driven model, where your odds of success are comparable to what you'd find by playing the Lottery (and the effect roughly the same -- for every person who strikes it rich, dozens if not hundreds of other bands go bankrupt).
If you were a band that could have done well under the old hit model, then you can still do well today; the 'hit effect' still abounds, and by cutting out the middle man, a band today or tomorrow could conceivably make more money selling less songs, but cutting out the labels' overhead.
Furthermore, in your calculations you're leaving out the band's income due to non-music sales: concert tickets, merchandise, endorsements, etc. Those make up the bulk of a popular band's revenue today, under the studio-centric model, and that probably wouldn't change immediately. People are still going to want to go and see a band they like in person, wear that band's t-shirt, and companies trying too hard to be hip are always going to be willing to pony up dough to artists willing to promote their schwag. It's a mistake to assume that a band's main source of income must come from iTunes. In reality, a smart band would treat the iTunes income as a "bonus," and use it in ways that help to increase their real revenue sources.
Nobody ever said that being a musician should be easy: that you should be able to just make music and then wait for the money to roll in. Succeeding in that business is like any other, it takes a lot of hard work; under a 'long tail' model, the most successful bands would probably be the ones that stay endlessly on tour, working venues small and large, selling high-markup merchandise, and using their music essentially as an advertising vehicle for self-promotion and to establish a fanbase. If the Internet allows them to derive income from their music directly instead of having to pay radio stations to pay it (as the studios basically used to do), all the better.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
But did you read the blog post?
Gomes is refuting Andersons thesis by saying that 20% of the items still make up 80% of the sales (percentages of the old 80/20 rule used for illustration)
Anderson's response though is that with essentially *unlimited* inventory percentages aren't always the best or only way to measure the "tail". Anderson's definition has to do with the absolute numbers that used to get cut off. So Gomes is counting a bunch of sales as "head" which Anderson is counting as "Tail".
For example: Imagine a market in which the old brick and mortar stores could stock only the 100 most popular items and that only 20 of those items made up 80% of the sales. In the new world of unlimited inventory there is an ecommerce store has a 100,000 items in stock and the top 20,000 account for 90% of the sales. So before the web the top 20% of items accounted for 80% of the sales but afterwards the top 20% accounts for a full 90% of the sales. Gomes says this means that Anderson is wrong and that the web made things even *more* hit centric. Anderson's "tail" includes items 101 through 20,000 which Gomes is including in the "head". This overlap between Anderson's "Tail" and Gomes's "head" used to be unmarketable "misses" but are now able to find a market & have even increased sales individually and also now make up a significant percentage of total sales to the retailer. Sales that previously didn't exist because the old brick & mortar store didn't have space for the product
As Anderson said. If Gomes had been a little more intellectually honest about his argument there could have been an interesting debate over how long the long tail is & what the limits of the phenomena are etc. Gomes does have a good point which he simply overstated. 20% of the products *are* still accounting for 80% of the sales, which Anderson's thesis *seemed* to undermine. To be fair Anderson (at least in the original article, I haven't read the book) doesn't dispute that 80/20 rule. Instead I think he could be summed up as saying that with unlimited inventory the 20% of inventory is a much bigger absolute number and also that retailers can profitably capture the 20% of sales that come from the 80% of the inventory that they used to have to forego for reasons of limited physical space.
The web has FAILED!
Thank goodness for Web 2.0!!
So what? How many copies do you need to sell to get an Amazon rank of 500,000? How many for 1,000,000? I'm guessing that to qualify for a rank of one millionth you'd have to sell somewhere in the 0-1 copies range. So if two people bought your book in the last week you might 'spike' to 500,000th, then drop right back down until your next sale in 2020. Hardly a compelling argument to support the importance of the long tail.
yp.
I think the whole discussion about the long tail is interesting and worthwhile.
I think the truth between the two discussions (Anderson vs. Gomes) is more likely to be something in the middle, not at one extreme or the other. I don't think hits are going away, and I think hits make their mark on most any marketable thing/meta-thing. With that said, I think that niches are more meaningful and valuable than ever before.
The book example is great - I get more access to niche publications because of the long tail concept, largely because of funding and popularity of hits. Said a little differently: the niche stuff generally sits alongside the hits, and generally benefit from some of the hits' halos.
My music isn't hit music. That's OK, it's just stuff made from my soul, and I am not planning to quit my day job. The money made from niche availability on the internet (for me) fund dinners out, an occasional instrument upgrade, or a small household bill or two. Why is the long tail beneficial to me? Because when someone is browsing James Blunt, they'll often see me on the front page in a promo, and sometimes (well, briefly) listen to my stuff too. Similarly, iTunes/Rhapsody/Emusic/Yahoo! Music/etc. browsers often buy the latest hits, but will splurge on a Jimmy Bear tune or two - how do they find my tunes? Because my niche music is available with the hits, and because searches sometimes come up with one of my funky little musings.
My point is, that niche stuff isn't taking over the world, and hits aren't all there is. I think the niche markets of the world have been greatly enhanced by Internet access, and that they also benefit from proximity to the hits.
A Passionate Independent Musician