You know how the theory goes. As explained by Wired magazine editor, Chris Anderson, in his book “The Long Tail”, the idea is that the Internet is allowing society to focus less on a small number of popular hits and instead be more receptive to a large number of niches “in the tail.”
This was meant to show, for example, that Netflix could make millions from simply having available the thousands and thousands of movies that aren’t currently hits, because the unlimited availability of all those movies at a cheap cost would be big money makers for the company.
Anderson said companies like Itunes could offer their millions of songs cheaply over the Internet, for example, and these would prove to be money makers. So the new idea was that it wasn’t just hits that drove the industy, the Internet now allows folks to forego blockbusters and there’s plenty of money to be made in the niche offerings. The book was met with favorable reviews and universally acclaimed to be genius.
The only problem appears to be that it insn’t true.
As noted by Lee Gomes in today’s Wall Street Journal, a study by Anita Elberse, a marketing professor at Harvard’s business school found that folks shopping for videos and music online the same way they do in person. Current hits dominate and the Internet may be making it more so, not less.
Anderson claimed that the companies that will prosper are those that stop focusing on the blockbusters and figure out how to address the niches. The statistical research by Anita Elberse found just the opposite.
Money quote:
Although no one disputes the lengthening of the tail (clearly, more obscure products are being made available for purchase every day), the tail is likely to be extremely flat and populated by titles that are mostly a diversion for consumers whose appetite for true blockbusters continues to grow. It is therefore highly disputable that much money can be made in the tail. In sales of both videos and recorded music—in many ways the perfect products to test the long-tail theory—we see that hits are and probably will remain dominant. That is the reality that should inform retailers as they struggle to offer their customers a satisfying assortment cost-efficiently. And it’s the unavoidable challenge to producers. The companies that will prosper are the ones most capable of capitalizing on individual best sellers.
In short, the long tail is a theory that just doesn’t hold up.
Correct me if I'm wrong, but I don't believe Anderson's thesis is that companies will make bigger bucks out of the tail, just that the tail is worth more than it was pre-internet. It may still be flat, but it ain't as flat as it was before. Many small companies and individuals are making modest money out of it; that all adds up to more than the zero they were making before.
Posted by: Nick Holmes | July 22, 2020 at 02:26 PM