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Harvard Study Questions "Long Tail" Theory
mjasay writes "Remember 'the long tail?' That was the idea that there was gobs of money to be made in the more obscure tastes of any given market, enabled by the web. In recent research highlighted in the Harvard Business Review, however, the long tail theory comes under withering criticism. Not only is a hits-based business more profitable for vendors according to the new research, but the research suggests that consumers also derive more enjoyment from the hits, rather than the tail. In short, the researchers find that 'the tail is long and flat, and therefore that content providers will find it hard to profit much from it.'" Long Tail advocate Chris Anderson defends his theory, and it seems that most of the debate centers around how you define "head" and "tail."
But then try to explain porn websites. There is a lot of tail to be hit there.
I know I "derive more enjoyment" from my definitions of "head" and "tail".
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When you see anything being hyped on the cover of "Wired" magazine as the 'next big thing,' chances are it's a complete load of crap.
Pope's corallary to Sturgeon's Law. :)
It doesn't mean much now, it's built for the future.
why are they concentrating on how *profitable* the long tail is?
As far as I see it, the long tail isn't about PROFIT, but about how much society wants the entertainment.
How many REALLY old songs would you like to hear again? Well, given that each year older adds another pile of songs, the profit in EACH TITLE is spread thinner and thinner. Because what I'd like to hear again from the 70's isn't what YOU'D like to hear from the 70's.
The long tail is showing that copyright lengths ARE damaging society. And it not being profitable enough to make a business on shows that there is NO BUSINESS LOSS in shortening copyright to a time where works are still wanted.
Really, copyright now is more about the accountants' abject fear that someone else is making money and not them.
Shit, if you're not SELLING a good, why not let someone else do it, or even just release it for free and forget about it? Because in that case, there's no money for you to make. That you don't want to spend the effort to MAKE the money in the first place seems irrelevant to your accounting brain.
So I don't understand the ribbing. It's arguing that it isn't profitable when that's not what the long tail is about. It's about demand continuing BEYOND the profitable age of entertainment goods.
For a brick and mortar store, concentrating on the sure hits makes a lot of sense. Funny story, my dad had to pick up a new alternator for a 30-year old truck. The local parts store had one in stock. The parts man looks the box over and says "Yep, had this one on the shelf for about 18 years." That's a bit longer on turnover than most businesses would shoot for. But when you're talking about cheap warehouses in the bad part of town doing all of their selling and shipping online... this whole argument could probably be solved with access to Netflix's database and a few queries. My hypothesis:
1. A huge percentage (35%?) of their business will be new releases.
2. The next biggest percentage would fall into the "perennial classics" category, i.e. the kind of movies that aren't new releases that a Blockbuster would have, movies that do a steady, dependable business.
3. Everything else would fall into the "obscure shit" category, the stuff that Blockbuster does not carry because it's too infrequently rented.
I will wager that the revenue from #3 more than pays for itself AND serves as a draw for customers who rent across all three categories. Joe Customer chose Netflix because they carry obscure Asian chop-chop flicks but will also rent Cloverfield from them since hey, he has an account.
As another example, say I want to pick up some obscure, out of print book. I hit Amazon first out of force of habit. Good news, they have it. That makes it all the more likely for me to type in Amazon when I want to buy the next top-seller I saw on the Daily Show. If Amazon didn't have the obscure books I want, I might go to some other site by default, and then they'll be getting all of my New York Times Bestseller business.
If we're talking about a brick and mortar store, the carrying cost of the truly obscure could well be too high to justify itself. With online stores, there's no excuse not to carry the obscure.
Kwisatz Haderach
Sell the spice to CHOAM
This Mahdi took Shaddam's Throne
I can see where low volume stuff isn't worth the hassle.
The whole premise of the Long Tail idea is that it's NOT a hassle for internet companies like Amazon and Apple to keep the low-volume stuff in inventory. That's what gives them an advantage over brick and mortar. If Amazon only sells 5 copies of the The "Long Tail: Why the Future of Business is Selling Less of More" a year, it only needs to keep 5 in inventory. If a chain store wants to sell the book it has to keep hundreds in inventory to ensure they have at least one in each store.
A lot of people mis-characterize the Long Tail as "making money by selling obscure stuff." That's only half of the definition. The other half is building a business where it does not cost you anything to keep lots and lots of obscure things in inventory, or alternatively, having access to millions and millions of customers, so if you sell to 1% of your market, it still adds up to something. Long tail does not work unless all of those 1% niches add up to 80% of the total market or unless you sell to 1% of a billion people. The internet helps businesses do both of these things.