May 9, 2005
Rethinking the long tail
The Economist has discovered the long tail—a little belatedly, considering that one of its alums (Chris Anderson) dreamed up the idea. (At least in its current incarnation—the concept is as old as statistical analysis.)
The article, though, is a little flaky when it comes to some of the long tail’s consequences:
[O]pening up those previously uneconomic niche markets should increase overall demand: as people are better able to explore niches, they are more likely to find things they like, and may well consume more of them. This will then shift some demand, at least, away from hits. Indeed, the long tail reveals the hit-driven nature of the entertainment industry to be, in part, a vestige of scarcity. With limited space on store shelves, media providers are traditionally very discriminating about what they release, and use intensive marketing to generate a handful of hits. The shift towards electronic sales and distribution, however—music can already be purchased and downloaded instantly, and movies will be next—means that content providers can afford to be less discriminating.
In reality, it’s unlikely that easier access to long-tail products will shift demand significantly away from hits, because they are two separate markets. People who never bought hits never will, but they will significantly increase their consumption of long-tail products, boosting overall demand. People who buy hits will continue to do so, and perhaps slightly increase their consumption of long-tail products too. But hits will continue to dominate, because their position in the marketplace is supported by other factors—such as dedicated marketing and advertising campaigns, media exposure, warranties and product support—that aren't found further down the tail.
The Economist’s conclusion—and, it seems, Anderson’s—makes no sense either:
Perhaps the most profound implication of the long tail, however, is its impact on popular culture. As choice expands and people can more easily find niche content that particularly interests them, hits will be less important: so what will people talk about when gathered around the water cooler? In fact, says Mr Anderson, the idea of a shared popular culture is a relatively recent phenomenon: before radio and television, he notes, countries did not operate in “cultural lockstep”. And the notion of shared culture is already in decline, thanks to the rise of cable television and other forms of market fragmentation. The long tail will merely accelerate the effect.
Far from going away, shared culture is morphing and growing. Sure, people who buy hits will still gather around the metaphorical water cooler to discuss what they’ve seen and heard. But a far richer seam of shared culture is already emerging online—Flickr to share photos, Last.fm to share playlists, del.icio.us to share links and bookmarks. If you have a band, you can use MySpace or Soulseek to promote and share music. And so on.
In other words, shared culture has already embraced the long tail and gone peer-to-peer.
Posted by Stephen at 12:24 AM in Economics | Permalink | TrackBack (0)
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