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Doubts Multiply About the "Long Tail"
fruey sends in a New Scientist analysis of the many second thoughts about the Long Tail theory. It summarizes four studies that show, in different markets, that the tail is both flatter and thinner than originally supposed, and that blockbusters are not going away in those markets — they are getting bigger. It's theorized that widely used collaborative filtering software is magnifying the winners' share of the various pies, and peer influence is a large contributor to consumer behavior.
For a visual, check out the graph in the article.
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The phrase "long tail" has a couple of related, but different meanings - both from the shape of a graph of sales (or popularity) on the Y-axis.
In this case, the X-axis is a listing of different titles, sorted by popularity. There are a small number of extremely popular items, tailing off to huge numbers of less popular items.
In the other use, the X-axis is time. Something can be hugely popular for a few days/weeks/months, but will continue to have greatly diminished sales for many years to come.
The concept of the "long tail" is that the combined popularity or profitability of the items in the tail can be a significant part of the overall profitability of the entire market, particularly when internet sized economies of scale make it efficient to stock and sell these items.
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What is the long tail? The summary, and TFA (I skimmed it so maybe I missed this) seem to indicate that the long tail theory means the more obscure stuff will be more popular.
The long tail theory is:
1) More obscure stuff will be more profitable (because distribution costs are down - you can distribute electronic goods for practically nothing, and even real goods are more profitable because you can keep them in a warehouse in Wisconsin instead of taking up premium shelf space at a retail store downtown NYC)
2) Because its profitable, people will actually carry it.
3) Because people will carry it, people that actually want it will be able to find it and buy it.
4) Because people can find and buy the obscure stuff they want they'll spend less on the popular stuff they don't want as much. So the blockbusters will lose some of their sales to the obscure stuff.
In reality, this doesn't seem to be happening.
Picture a graph: the y-axis is popularity (i.e. numbers sold) and the x-axis is products (e.g. each point is a book). If all the most popular products (e.g. Harry Potter) are closer to the y-axis, and as you move away from the y-axis popularity decreases, you get a long tail on the graph.
The idea here is that stocking, e.g., a few copies of a LOT of relatively unpopular books, allows you to cater to niche markets and can significantly increase profits compared to only carrying products that are in high demand.
Companies like Amazon are masters at exploiting the long tail. Oh, and here is the original article describing this idea.
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spuke4000 - you are correct in what you do say: "I thought it simply meant that you could make money off the obscure stuff when your distribution costs went to zero (because of the Internet)." you are missing part of what the "longtail" means. It's not really that you "can make more money off the stuff" because before your costs went to zero, you had to make decisions not to sell stuff below a certain point in the tail. Not only has the stuff in the long tail become cost effective to sell, but (and this is as much a key as what you said) the stuff in the long tail has become "more discoverable" by consumers. (because of internet technology, namely recommendation engines, tagging, categorization, and social networking) The consumers "cost to discover" also goes way down. Read "the long tail" by chris anderson. His findings are all backed up by scientifically designed experiements and professional statistical analysis. with that said, I don't think blockbusters are going to suffer, they will still grow, but so too will the long tail titles. It's not a zero sum game. Even if dispiosable income stays the same, the cost of blockbusters has decreased, allowing more discretionary spend in the long tail....blah blah now im just speculating. happy holidays
The summary sorta implies that "The Long Tail" means that the unpopular stuff will be more popular. But that isn't the theory, and TFA does a decent job explaining it. "The Long Tail" instead means that if production and distribution costs are low enough, a whole variety of niche products suddenly become viable. Traditionally people could only buy one of the top-10 books (or DVDs or whatever), because stores couldn't afford to stock anything but the best-sellers. But things like Amazon allow them to "stock" just about everything: so a previously untapped market appears, with stores catering to all of these niche buyers. The idea is that the potential in the long tail is massive: nothing in it is particularly popular or sells that many copies, but in aggregate it can be huge (maybe even bigger than the "best sellers"). This model has clearly worked for places like Amazon. Another stereotypical example is customized shoes or clothing; whereas traditionally you could only buy the shirts you saw at the local store, with the Internet you can buy all kinds of more niche styles. In fact, you can buy shirts that have user-chosen slogans or logos. The plethora of online stores that offer these services, or which capitalize on short-lived Internet memes by selling associated clothing, shows that this idea has merit.
The article notes that despite the long tail, we still have blockbusters. This isn't really in conflict with the theory of the long tail. Indeed the theory mostly talks about the (previously untapped) potential of the long tail... but blockbusters will always exist. TFA says that despite niche markets, most of the sales, and most of the money, still comes from the best-sellers or the blockbusters.
I think (part of) the explanation for this is from free content. I think that anyone trying to capitalize on the long tail will have a hard time competing with amateurs, enthusiasts, and free information. For mainstream content (e.g. a generic action movie), amateurs won't be able to compete with the budget and brand recognition of established studios. But for niche interests, amateurs will often be producing the "best content" and giving it away for free, making it impossible for commercial interests to capitalize on it. Think about the variety of niche blogs, forums, wikibooks, YouTube channels, creative commons music or books, and so forth.
So I would say that the long tail exists, and is healthy... but is harder to monetize than some people may have thought. The fact is that niche interests exist, but those niche communities are often finding that they can satisfy their needs themselves, leaving no room for commercial entities to capitalize.