Arguing About The Long Tail

Lee Gomes took a swipe at Chris Anderson’s The Long Tail in the WSJ (of course) yesterday. He said:

Wired Magazine editor Chris Anderson's hot, new best seller, "The Long Tail," is causing a sensation with its eye-opening claims about the way the Web is rewriting the rules of commerce. But I've looked at some of the same data, and some more of my own, and I don't think things are changing as much as he does.

Chris quickly reacted with this post where he said:

I'm actually quite an admirer of Gomes' work and he certainly did do a lot of research for this piece. But he started off with the wrong end of the stick (looking at the market in percentage terms, which doesn't work because the definition of "head" keeps changing) and sadly wouldn't let it go.

Unfortunately their debate is being held over math, specifically how to measure whether consumption is moving “down the tail”. And they are using data from places like Amazon and Netflix to bolster their arguments.

I have always felt The Long Tail discussion should be focused on goods where there is no manufacturing cost, ie digital goods. Because that’s where you are getting the explosion of available items to consume.

And in that world, it’s very clear to me that consumers are moving down down the tail, simply because they can. Take Rhapsody. Les Gomes writes:

March data for the 1.1 million songs of Rhapsody, another streamer, shows a 22% no-play rate; another 19% got just one or two plays.

But those 200 thousand songs that got played on Rhapsody wouldn’t have been bought at all on iTunes. Because they are free to play on Rhapsody. That’s where The Long Tail comes into play.

I wouldn’t even focus on Amazon and Netflix and iTunes. They are traditional businesses for the most part.  Sure Amazon, Netfix, and iTunes stock more than a traditional retail store, but they are still limited in terms of how much they stock and how much content is available for consumption.

I would focus the long tail discussion on blogs, YouTube, Flickr, Rhapsody, Google, and places where consumers are free to consume whatever they want. That’s where you’ll see The Long Tail flourish.

Les Gomes does mention some blog data in his WSJ piece.  He said:

Bloglines, the widely used blog-reading tool, lists 1.2 million blogs; real ones, not computer-generated "spam blogs." The top 10% of feeds grab 88% of all subscriptions. And 35% have no current subscribers at all.

Subscriptions are the wrong thing to measure in the blog world. I have 11,500 subscribers to this blog and about 50,000 unique visitors a month. My subscribers are my most loyal readers, but I have a much larger audience.

I would bet all of those 1.2 million blogs are read by someone each month. And I bet that the top 10% most popular blogs only grab about 50-60% of total page views of the 1.2 million blogs.

And because of ad networks like Adsense, YPN, FeedBurner, and others, every one of those page views can be monetized and the dollars will get distributed on a curve that has a long tail.

Compare that to the traditional media world. There is no tail, long or short, in that world.

So Lee Gomes can have his traditional media world. I prefer the one I live in. The one with The Long Tail.

Comments

[Derek Scruggs]

Even with hard goods, the long tail effect allows reaggregation. A friend of mine has built a business from zero to over $10 million in just a couple years selling wedding favors. Wedding favors!

Prior to the Internet wedding favors was mostly a small retail concept, with most stuff sold at party stores. But he's been able to aggregate all the possible variations of wedding favors because he combines the long tail (micro demand) with global reach. If he were just a retail store, he would never be able to offer the incredible variety he offers over the web. Thanks to smart optimization, he ranks #1 or 2 in google for dozens of the search phrases people use to find that one particular wedding favor they're looking for.

[Michael]

I find it ironic that Gomes' article is behind the WSJ's walled garden, where very few will ever see it.

[John Dodds]

As I have already blogged, I don't think the numbers destroy the underlying argument, but equally I do think they raise the point that (in sales-terms) there are more value-less items in the tail than was suggested. To me, that just emphasises the importance of the question of how long tail businesses connect the singular customers to those singular items.

P.S. On a point of my own technical ignorance, isn't it possible that I (a subscriber to your blog) account for a number of those 50,000 unique vistors due to operating under dynamic IP?

[David G]

Consumption does not move down the tail, Production moves up it! That is the beauty of the long tail, that given the right tactics, it becomes efficient to produce something with zero demand - and then see what happens - even Chris doesn't get it - IMO, he deserved the review he got.

In amazon's case, that tactic is drop shipping (I should know, I rolled it out). It's not interesting that 25% of stuff sold on amazon will never sell again. What is interesting is how they managed to (cost) efficiently make that stuff available for sale alongside all the items that didn't sell (but could have). There, the solution was to "crowdsource" inventroy and fulfillment a virtual network of hundreds of distrubutors who welcomed ANY incremental revenues - if spread over their existing cost base - which is what we gave them with the retail drop ship strategy.

Production is where the long tail shines.

[Deborah]

I am proof that measuring subscriptions is not an accurate measure. I do not subscribe to your blog (yet), but I visted due to a link on someone else's blog a few weeks ago regarding the "Freemium" business model. I referred a colleague this week to that posting and returned today to see what was new. Neither of us are subscribers.

I will add that I subscribe to 10-15 blogs and do not read every post. What's important to me, the reader, is relevance. Do you have something to share with me that will improve my knowledge in the domain I'm interested in? Traditional media is repetative. Everyone says the same thing. Blogs are unique, tapping into the collective wisdom on the global network. It's a wonderful world!

[Ian]

I agree that zero-manufacturing-cost digital products have the most potential as long-tail businesses. However, there are some very interesting long-tail businesses in the physical world -- one of my favorites is threadless.com.

At threadless, the community and content creators contribute hundreds of t-shirt designs (far beyond what any one bricks & mortar producer could stock), potential buyers decide which shirts they'd most like to buy, and then threadless produces the most popular. Is it any wonder their shirts always sell out? They've already established a market! It's not quite just-in-time production, but it's very close. And it's a model that I don't believe should be exclusive to t-shirts; it has a lot of potential application in other manufactured goods by increasing the sales volume per product produced and reducing the risk of each individual decision to manufacture a particular good.

[Curt]

A VC with 11,500 subscribers? Maybe you should do your own Innovation Jam...
http://snipurl.com/ibminnovationjam