"Long Tail Effect" Doesn't Work As Advertised, Say Wharton Researchers

Death Metal writes "In a working paper titled, 'Is Tom Cruise Threatened? Using Netflix Prize Data to Examine the Long Tail of Electronic Commerce,' Wharton Operations and Information Management professor Serguei Netessine and doctoral student Tom F. Tan pull information from the movie rental company Netflix to explore consumer demand for smash hits and lesser-known films. Netflix made its data available as part of a $1 million prize competition to encourage the development of new ways that will improve its ability to introduce customers to lesser-known titles they might find appealing." In short, the researchers say that the Long Tail effect described by Chris Anderson is much less important in the real world than popularly held. Says the article: "The key difference between the opinion of [Anderson's] book and the study by Wharton researchers is how they define 'hits' and 'niches.' In the book, Anderson focuses on the definition of hits in absolute terms such as the top 10 or top 1,000 products, while Netessine and Tan argue that, to take growing product variety into account, one has to define popularity in relative terms, such as the top 1% or top 10% of products, to properly assess the presence or absence of the Long Tail."

Comments

Re:Missing the point

[mangu]

The long tail doesn't threaten those at the top any more than it isolates those at the bottom. It only describes the shape of the market

But the shape of the market is exactly the point. In a competitive market profit margins are very thin and a relatively small difference may mean life or death to a company. In the entertainment industry we often see an effect where the biggest productions often seem to struggle to break even, while relatively small investments may bring huge profits.

Defining a "hit" as one of the top ten or top 1000 or any absolute number is stupid. It reminds me of a political joke in the Soviet Union, where the result of a race between two athletes, a Russian and an American, was reported in the press as "the Russian came in second while the American was next to the last". In electrical and electronics engineering threshold values are often defined as the point where the power is one half of the maximum, the so-called "-3 dB" points.