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What happens when the bottlenecks that stand between supply and demand in our culture go away and everything becomes available to everyone? "The Long Tail" is a powerful new force in our economy: the rise of the niche. As the cost of reaching consumers drops dramatically, our markets are shifting from a one-size-fits-all model of mass appeal to one of unlimited variety for unique tastes. From supermarket shelves to advertising agencies, the ability to offer vast choice is changing everything, and causing us to rethink where our markets lie and how to get to them. Unlimited selection is revealing truths about what consumers want and how they want to get it, from DVDs at Netflix to songs on iTunes to advertising on Google. However, this is not just a virtue of online marketplaces; it is an example of an entirely new economic model for business, one that is just beginning to show its power. After a century of obsessing over the few products at the head of the demand curve, the new economics of distribution allow us to turn our focus to the many more products in the tail, which collectively can create a new market as big as the one we already know. The Long Tail is really about the economics of abundance. New efficiencies in distribution, manufacturing, and marketing are essentially resetting the definition of what's commercially viable across the board. If the 20th century was about hits, the 21st will be equally about niches.… (more)
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The Long Tail is a book that focuses on one of my favorite subjects - Internet commerce. In his book, Chris Anderson proposes the theory that the Internet has/will change the future of retailing (and TV, movies, communication, etc.) from a culture of "hits" to one of hyperindividualism. He states that there are several reasons for this but two of the primary reasons are the limitless "shelf space" of the Internet and the superior search/filtering tools of the web.
He explains that the graphing of sales for almost any type of good when delivered through a shelf-driven delivery system (i.e. store) will show a very tall spike on the far left for those items which are extremely popular (the "hits") and then that tail drops quickly. Given the limited amount of shelf space, retailers are also extremely selective about what goes on shelves. Therefore, once that spike ends, the tail is rather short. If an item doesn't move a minimum level of product, it gets pulled from the shelves. This is not the case on the web. There is limitless shelf space because hard drives and bandwidth are cheap. With that constraint removed, they carry in the range of 10 - 100x the number of products of their brick and mortar competitors.
However, there are studies that have shown that when people are given too many choices, they go into a sort of analysis paralysis buying less than they would with a well-defined and manageable selection set. Is that the case with the web? Actually, no. Anderson explains that consistently across multiple web retailers (Amazon, Rhapsody, etc.) around 98% of the offered products sell at least one unit each month.
Why are they not going into this analysis paralysis? Anderson posits that it's because of the superior recommendation functionality built into the fabric of the Internet. You have intelligent search capabilities, peer ratings, peer and expert recommendation lists, etc. All of these pop up with the simple typing of a few keywords. For example, while there may be 2000 different books on guitars on offer (daunting if you saw them on the shelves), you can search for a book on guitar music theory and the field is narrowed to 50 that are ranked in descending order by customer/peer ratings. You can then filter that further with a click or two. Wow. As you can imagine, the average retail employee can't be an expert on every topic so your results in a store may be hit or miss. On the web, you have a collective intelligence and excellent tools to help guide you.
On the web, since so many of these products sell at least a few units, it detracts from the highest selling products. Sure, the best sellers will still be best sellers but the sales spike is flattened somewhat and a very long tail stretches out the curve. Anderson explains that >25% of total sales of Amazon and other examples are in that tail of selling one or two units per month. Interesting.
These are the two real takeaways from The Long Tail. For these two points and the support of them, the book deserves five stars. It's a revolution that we're seeing through the Internet and it won't slow any time soon.
So why did I give it 3.5 stars? Unfortunately, Anderson continues on to get into more theoretical topics that he doesn't do as good a job of supporting. There's a lot of "I would argue that..." going on and his opinions on the future impact of the Internet. For example, he debates whether or not human culture will suffer as a result of people creating relationships and communities online rather than in person. Will people become less social and suffer as a result? I would suggest that this is the topic for another book. Anderson makes a mediocre argument for the topic and it seemed out of place with the rest of the text. There were other similar discussion points in the book that were incongruous with the core theme of The Long Tail.
Nonetheless, this is a very informative book that brings into focus some of the changes we're experiencing as a result of our friend the World Wide Web. I'd recommend it.
That said, reading this book leaves you the way Neo must have felt when Morpheus explained "the real" world to him. The reason I say this is because I thought I was just getting old when I thought that they don't make hits these days like they used to in the 80's - I was very surprised to hear that it is in fact true!
Getting the inside track on modern day internet icons ala Google, eBay and Netflix and why they are taking their brick and mortar competitors to the cleaners was both fascinating and enlightening.
I would definitely recommend this book to anyone who wants to really understand how the internet is changing the world and why.
That said, the Long Tail idea is a big deal. Although the book mostly focuses on the business and economics behind it, it indicates far more fundamental shifts in our society and culture that won't be obvious for some time. The decline of mass media and the rise of personalized niche media is bound to have profound effects, given how much media shapes our attitudes and opinions. You can also take the concept and apply it to other domains: politics, for example. That to me is the most interesting part of the book - it made me think about things in a new way.
It is a fascinating read that
Anderson makes concrete suggestions on how to learn and change, if necessary, what the average consumer will discover about your company. Even suggesting a starter curriculum for social media coaching. For example, "How to get Digged?"
One chapter, The Long Tail Of Marketing, How To Sell Where "Selling" Doesn't Work, is worth the price of the book.
Anderson not only describes a new economic model, but also analyzes it - breaking it down to the three components that make it work - the democratization of production capacity, the democratization of distribution capacity, and the linking technologies that bring them together with interested consumers. I think it's a must read for anyone interested in the way the digital economy is different and who thinks about how it is going to change culture and society.
Chris Anderson believes the internet has changed the fundamentals of economics, for all places, for all time. He's not the first to think this, of course: legions of young investment bankers, now deceased, made a similar mistake in those first few giddy months of the new millennium before the bubble burst. I can still remember the hubris; the outrageous scepticism which greeted ginger mumblings that things might be in la-la-land. Traditional business models were over. No longer did you need to have anything old fashioned like cashflow, or a business model which might actually render some profit. Well, those young bankers, and their clients, got burned, and even now their successors and survivors shudder at the prospect of making the same mistake. And while Chris Anderson hasn't made that particular mistake, he's made an analogous one: he's assumed that some undeniable developments in that (actually fairly slim) part of the economy that he knows about will necessarily revolutionise the whole caboodle.
For Anderson now, just as for those currently redundant young masters of the universe then, we're on the cusp of a brave new world.
And, just as they were not, he's not completely wrong, either: There *is* a phenomenon called the long tail (there always has been; the difference is that it's now sometimes economic to venture down it). And it's true, that opportunity it has been created by confluence of technological developments we're beginning to call the digital revolution. It's also true that the internet has radically changed, forever, some business sectors: those that deal in the digital revolution, and in particular "intellectual property", which has been most profoundly affected by it: publishing; the music and film industries, and the industries surrounding the web itself.
But it needs to be kept in perspective. For the rest of the economic world - and for those not dazzled by the e-froth, that's quite a lot of it - it's business as usual. The long tail won't matter a damn. As long as there's a physical good that needs to be manufactured, shipped and warehoused somewhere pending sale, the long tail - which is as there as it ever was, will be just as inaccessible.
The point is that the long tail wags only for those artefacts whose main value is intangible - which can be practically separated from the physical "thing" that contains them. For example: shorn of the intangible intellectual property inside it, the physical manifestation of a book, as an artefact, is (largely but not completely) valueless. A compact disc, as an artefact, is completely valueless. The digital revolution has allowed each of us, as never before, to quickly separate the valuable bit from the physical bit. Being a string of ones and zeroes, and thanks to Moore's Law, the cost of replicating the valuable bit of intellectual property is nil. Once consumers can accept the valuable bit without its "thing" the supply/demand curve looks very different, since the supply curve starts at an enormous amount, for one unit, then immediately drops to a micron above zero for the second, and flatlines there until infinity. The only limiter is demand. And, though Anderson doesn't think so, demand isn't unlimited. You can only listen to so many CDs, and read so many books.
But for trucks, and bricks, and oil, and commodities most of the long tail effect will be muted at best, and unobservable for the most part. Sure: businesses will be able to minimise warehousing costs off the high street, on a more dispersed basis, but it won't do much other than save some marginal costs. Someone still needs to store your oil. Oil isn't a collection of ones and twos. Neither are bricks, nor SUVs, nor - well, most things in the economy. But, this doesn't seem to faze Anderson, who rounds off by saying, apparently without irony, that when the technology of "solid state printers" (which render three dimensional objects in polymer from computer instructions) develops, no longer will be need to warehouse much at all. I guess we'll just teleport things to our customers. Good Grief.
Anderson makes some enticing comments about the inherent shortcomings of intellectual property law given the digital revolution, but then doesn't really follow them to their logical conclusion. It could have been a nice, and ground-breaking, book had he done this, but the opportunity was lost, and this book sits a fairway down the tail of decent Web 2.0/new technology business books floating around at the moment.
Curate's egg.
In a nutshell, Anderson says that, thanks to the Internet, web-based businesses can hold their own
So the big boxes sell one item. But it's bought 1,000 times and the little guys sell 1,000 items but only make one sale per item.
This idea opens up all kinds options for web stores to carry niche items. I believe the world would be richer for it. But I have some reservations with Anderson's ideas and methodology.
This book started as a blog Anderson was keeping. Back in the beginning he interviewed some online businesses and formed his ideas and theories. Over the years, thousands of folks commented and helped out and a book was born. But what Anderson didn't do is go back to those businesses to see if his ideas panned out. He's just now written the book, but based on the old initial data. When reporters asked him if, in the years it took to write the book, he was able to see his ideas bloom at some of the companies he mentions, he said he hadn't looked. Why wouldn't he look?
If he had he'd see that a couple of the companies he bases his thoughts on had changed their strategies and made adjustments, because things weren't working out. So Anderson is writing from old assesments. No real harm in that. Unless you are a small business owner and think you just ran across a rock solid business plan and try to implement it yourself. So be careful.
So I think the basic idea here is solid. Or maybe I'm just hopeful. But I have serious problems with Anderson's case studies and evidence.
For more information look for an article that ran in the Wall Street Journal by Lee Gomes in the summer of 2006.
This would have been a great read had I read it in 2006 when it first came out, but 13 years later it is outdated as technology has moved so quickly. To [[Chris Anderson]]'s credit he was pretty much on the ball in this book about the extent to which the internet would affect our shopping habits for music, television and movie media and general products. By 2006 many of these patterns had already started to emerge, but were nowhere near developed to the extent they are today. For example, he refers to Blockbuster in this book, which hadn't yet been completely killed off by the market shift towards Netflix.
It was still an interesting read, as the long tail (i.e. finding hugely successful markets at the niche end of shopping habits) is what's made zillions of dollars for Jeff Bezos and lots of smaller entrepreneurs. Very simply, although less people buy certain goods at the long end of the tail (on a graph of purchasing habits), when you aggregate the numbers of those people times the number of niche products they're interested in purchasing it creates a huge overall market, and online stores (which aren't limited by physical shop shelf space) have enabled businesses to capitalise on that.
Still some interesting points to take from the book at a general business level, but just too outdated for where we've moved on to (Instagram wasn't even a twinkle in someone's eye in 2006, and Etsy and YouTube were just getting going). I think there's a more up-to-date version of this book that would have been a better read.
2.5 stars - interesting and well written, but just dated.