Book Review: The Long Tail

Author: Chris Anderson
Publisher: Hyperion
Year Published: 2006
Rating:
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In October 2004, Chris Anderson published an article on The Long Tail (named for what it looks like graphed – see picture) in Wired Magazine on how niches are becoming extremely profitable for online businesses. Almost 2 years later, Anderson’s book, of the same title, fleshes out the concepts he proposed:

Our culture and economy are increasingly shifting away from a focus on a relatively small number of hits (mainstream products and markets) at the head of the demand curve, and moving towards a huge number of niches in the tail. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly targeted goods and services can be as economically attractive as mainstream fare.

The book is laid out in 14 chapters that discuss the history of the Long Tail, economic trends and forces now in play, and what the future implications of The Long Tail are for businesses.

As a nation, we’re obsessed with what’s hot and what’s not. Every week, we hear which movies grossed the most, whether they’ve lived up to expectations, and whether they break any records. TV stations are lucky to get a few hit shows while a handful of hit songs get heavy radio play. But with so many choices, mass media is losing more of its audience to countless niche channels.

With the internet, we no longer need to rely on the big media companies to entertain us. The internet provides us with a virtually infinite number of choices from top selling music downloads through iTunes to amateur videos uploaded to YouTube to foreign tv programs like Japanese anime subtitled in English by fans and downloadable via BitTorrent. In other words, we’re moving from a one-size-fits-all, mass media society to one focused on niches where at low costs, anyone can find an audience.

The digital world changes the economics of business – specifically, it gives us a supply/demand curve with no scarcity. Traditionally, the thinking was that since the top hits generate the most sales, retailers should focus on them. Now that the internet has reduced the costs of finding niche markets, it’s becoming profitable to focus on those products that aren’t hits but are surprisingly popular to a particular audience. As Anderson writes, “There’s just so many of them that collectively they represent a substantial market.”

Long Tail Trends

The Long Tail is based on a number of trends. First, in virtually every market, there are far more niche goods than runaway hits. Previously, companies didn’t focus on the niche areas because they didn’t have the shelf space. As more media (music, movies, books, etc) is sold in purely digital format, the cost of distributing goods to those niches has fallen dramatically.

Just being able to distribute lots of niche products isn’t enough to be profitable. You also have to give customers the means to find things that suit their particular needs and interests. Online retailers are doing this with features like “people that bought X also bought…” and “recommended products.”

Finally, once there are enough choices offered and customers have the means to find these niche products, the demand curve flattens and it is just as profitable to serve niche markets as it is to focus on the Hollywood blockbusters and best sellers.

What Causes The Long Tail?

Anderson suggests that there are three major reasons why The Long Tail phenomenon occurs.

1. More Stuff – Internet users don’t just have access to what media companies provide them, they also create and distribute their own videos, music, articles, and other content. We now have services like YouTube.com to host videos, iTunes to distribute podcasts, lulu.com to self publish books, and Wikipedia to distribute information.
2. Lower Cost of Distribution – Unlike retail stores, which have limited shelf space, digital content is virtually unlimited by storage space. Companies can easily add more servers to meet demand.
3. Connecting Supply and Demand – As online stores collect information on purchases, they build algorithms to offer personalized suggestions and recommendations. There are also millions of niche blogs, discussion forums, and chat rooms that help spread the word about products that would have been virtually impossible to find 10 years ago.

The Long Tail is an interesting read and the term “the long tail” seems destined to become the next business catchphrase like Malcolm Gladwell’s “tipping point.” The book is a bit long and somewhat repetitive, but not overly so. I found myself skimming sections I thought he already covered in detail in previous chapters, but I can see why he’d want to be as thorough as possible in fleshing out his case.

This is a must read book for anyone selling online or anyone who’s interesting in the future of the internet.

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