The Long Tail: Why the Future of Business Is Selling Less of More. Chris Anderson. New York: Hyperion, 2006.
First when I was asked to read “The Long Tail”, I had no clue in what I was going to read about, but I was so positive that something big was taking place. Then when I started to read the first few pages, I was totally blown away with a lot of facts that made sense to me. Starting with the title, Anderson encapsulated a revolutionary shift in the media industry in a perfect two-word sound. In the book, he provides us with all the details that we need to understand its subtitle, “Why the future of business is selling less of more.” I think this book is very insightful and smartly written in the sense of filling up all the gaps in our understanding regarding the new economy. As we are living in a different age, an age that is dominated by the internet, it is very clear to us that a new economy is emerging and the era of mass-market is shifting to the niche market indeed.
Anderson does a great job of explaining the concept of “The Long Tail” and implementing this concept on many industries to enhance our understanding. He shows how over the last couple hundred years the history of business was a history of hits. Businesses tried to carry what would sell the most. Bookstores carried the best sellers. Movie theaters showed the top selling movies. Music stores only carried records that they thought would sell. After the development of the internet, this has changed. Companies such as eBay, Google and Amazon contribute in this movement by allowing us to be more exploratory and specific about what we buy since we could get a wider variety of products. Amazon now can sell almost any book ever printed. Netflix can carry almost any professional movie ever made. iTunes sells a huge portion of the songs recorded, and the list will go on and on.
This is the long tail. It is the products that are not normally available in a physical store. Anderson specifies five types of goods: physical goods (Amazon, eBay), digital goods (iTunes), advertising/services (Google), information (Google, Wikipedia) and communities (MySpace). The main point is that pure digital businesses can go further down the Tail because their cost of “carrying” inventory is virtually zero. Selling millions of low volume products can be almost as much money as selling thousands of high volume products. Many of the online businesses are meeting the demand for the less popular, but still in demand, products. Because an online business doesn’t have to worry as much about shelve space, they are able to carry a much, much greater product line.
Anderson describes how the availability and the vast varieties of products can bring a profitable income to a certain industry. This concept of availability and diversity become the key-word of the new economy. Anderson (2006) has stated in his book, “This is not just a virtue of online booksellers; it is an example of an entirely new economic model for the media and entertainment industries, one that is just beginning to show its power. Unlimited selection is revealing truths about what consumers want and how they want to get it in service after service, from DVDs at Netflix to music videos on Yahoo! Launch to songs in the iTunes Music Store and Rhapsody. People are going deep into the catalog, down the long, long list of available titles, far past what’s available at Blockbuster Video, Tower Records, and Barnes & Noble. And the more they find, the more they like. As they wander further from the beaten path, they discover their taste is not as mainstream as they thought (or as they had been led to believe by marketing, a hit-centric culture, and simply a lack of alternatives).” (p.16).
Chris Anderson found that there are requirements for an online store selling products to be successful with the long tail concept, as he believes niche market has become more profitable than bestsellers. First, there has to be a way for more people to create the product. Namely, consumers are becoming producers of all kinds of content: blogs, music, video, pictures and films. In the Knowledge Economy, this means that there are more products available, which lengthens the Tail. Second, there has to be a way to get the product out to the consumers. This distribution will reduce the cost of consumption, largely through the Web. It acts to “fatten” the Tail because consumption increases, which moves the entire demand curve higher. The third condition is there has to be a way for customers to find what they want. It is connecting supply and demand”, and it is the most controversial in some ways because it serves to shift demand from the Head to the Tail. This force is comprised of “filters” which take the form of customer reviews, word of mouth, blogs and recommendations. These lower search costs and reduce consumers’ risk of going outside the tried and true. It enables people with very specific interests to find each other and exchange ideas. Advances in technology, the Internet in particular, have greatly enhanced our ability to access thousands more items than ever before.
The result has been, and will continue to be, according to Anderson, a shift in customer tastes from hits to choice and selection. We can’t say that the mass culture is going away, but it will share our attention with the niche markets and interests that are emerging. We are moving from a mass culture to a massively parallel culture in which people develop highly specific interests even if they share some common (“mass”) interests.
As you can see, Chris Anderson’s Long Tail is simply a well-documented and well-evidenced series of observations of the way our world is changing. We find the implications for business models, and how companies can take advantage of the change. This book is not just informational, it is mind changing. Once you read about the Long Tail concept, your views on the world economy and market will never be the same – you will have a deeper look and a wider reach on the nature of things.
Questions:
1) With a number of community websites such as MySpace and Facebook, how do you think this will affect the long tail? Does the social factor have an impact on the long tail or businesses in general?
2) How could the business owners’ in the music world still obtain a profitable income although the era of the hit and bestsellers is fading away?
3) People in the Middle East mostly rely on the physical stores in buying all kinds of goods, they just use the web to search for information, fill up job applications, and communicate with each other through community websites, they exchange information and other entertainment files with each other (peer-to-peer), or they use the free download (movies, songs and articles) rather than buying goods online, how do you think this will affect the long tail?
