The Long Tail review

Wendy M Grossman ZDNet.co.uk

Published: 23 Mar 2007

No matter what business you're in these days you'll be hearing about the 'long tail', a concept pioneered by Chris Anderson in a fairly lengthy article he wrote for Wired magazine in October 2004. Anderson is also the magazine's editor-in-chief and has previously worked on The Economist and as a researcher at Los Alamos. This book is the article expanded, with more details, figures and analysis.

The basic notion of the long tail is that although a handful of blockbuster hits take a massive proportion of the market, there is good business to be found in the large majority of non-hits that are sold into niches. Taken one at a time, those individual non-hits may not be worth much — but add them together and you have a huge market. Offline, that inventory is unmanageable; online, search makes everything accessible. The name 'Long Tail' comes from the shape of the frequency distribution you get when you plot products against sales: a short cliff dropping precipitously off to a long line (the 'Tail') that's almost at zero, but not quite.

Successful online businesses like Amazon, eBay, Google and iTunes have been living off this principle for years. They can afford to. Unlike physical-world retailers, they don't have to keep inventory as long as they have a way to source quickly anything people want. Instead of stocking the top-selling 10 percent of books in print, for example, they can afford to offer for sale everything that's available. In the mass-culture era, which Anderson believes peaked in the 1970s and 1980s, million-selling blockbuster hits were the way to make money; today's teens live in what Anderson calls a 'market of multitudes'.

The concept is simple enough, but what matters is backing it up with details, which Anderson supplies in abundance. The online audience is different. Consumers, Anderson writes, buy further down the Tail online; the bottom 80 percent of products accounted for 15.7 of offline sales — but 28.8 percent of online sales. Offline, the top 1,000 music albums are nearly 80 percent of the total market; online they are less than a third. And so on. Anderson goes on applying the Long Tail idea to everything from major cities to Google's AdSense (which makes its money from millions of small advertisers).

Not that hits are going away: as Anderson notes, customers are drawn in by the familiar, but stay to explore the new and different. A company like MP3.com never succeeded because it was all Long Tail. You could debate that point: MP3.com might have had a better chance if it hadn't been sued to death. And iTunes didn't just succeed because it made deals with record labels that gave it a base of popular, legal, music; it also had elegantly designed hit hardware on its side, and it had good timing.

Anderson finishes up with advice and a prediction. To make a Long Tail business, he says, requires following two primary rules: first, make everything available; second, help me find it.

 

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