Note: The review that follows is of the revised and updated edition of a book that was first published in 2006. It offers essentially the same information and insights except that Anderson has added a new chapter on marketing, one in which he explains "how to sell where `selling' doesn't work." More about this chapter later.
In the October 2004 issue of Wired magazine, Chris Anderson published an article in which he shared these observations: "(1) the tail of available variety is far longer than we realize; (2) it's now within reach economically; (3) all those niches, when aggregated, can make up a significant market - seemed indisputable, especially backed up with heretofore unseen data." That is even truer today than it was when The Long Tail was first published years ago. The era that Anderson characterizes as "a market of multitudes" continues to grow in terms of both its nature and extent. In this book, Anderson takes his reader on a guided tour of this market as he explains what the probable impact the new market will have and what will be required to prosper in it.
According to Anderson, those who read the article saw the Long Tail everywhere, from politics to public relations, and from sheet music to college sports. "What people intuitively grasped was that new efficiencies in distribution, manufacturing, and marketing were changing the definition of what was commercially viable across the board. The best way to describe these forces is that they are turning unprofitable customers, products, and markets into profitable ones." Therefore, the story of the Long Tail is really about the economics of abundance: "what happens when the bottlenecks that stand between supply and demand in our culture start to disappear and everything becomes available to everyone."
If I understand Anderson's most important points (and I may not), they include these:
1. Make as much as possible available to as many people as possible.
2. Help them to locate what they need, quickly and easily.
3. Offer maximum inventory only online.
4. Customize supply chain in terms of niche markets
5. Maximize its efficiencies and economies (especially inventory control, order processing, and distribution,)
5. Be customer-driven in terms of "crowdsourcing"
6. Have strategy that separates content into its component parts (i.e. "microchunking")
7. Have a pricing strategy that is "elastic" (i.e. based on the ROI of fulfillment per product per niche).
8. Have an open source business model for information sharing.
9. In markets where scarcity exists, "guesstimate" costs, margins, sales, profits, etc.
10.Where there is abundant competition, let those markets "sort it all out."
These and other points can guide and inform decision makers as they struggle to compete profitably during the era of "long-tailed distributions," when culture is unfiltered by economic scarcity and high technology is turning mass markets into millions of niches. Anderson provides invaluable advice with regard to how minimize the cost of reaching, penetrating, and then developing a multiple of niche markets. The paradigm has shifted from selling more in fewer markets to selling less in more markets but also, key point, selling as much as possible within as many segments as possible -- and prudent -- within those markets.
With regard to the new chapter, Anderson devotes much of his attention to online marketing and suggests that critical issues to address include these:
Who's influential "in our space (and how we know)"
Who/what influences them
How to get Digged
Using beta-test invite lists
The art of begging for links
"Link bait" (e.g. stunts, contests, gimmicks, memes)
How to view the Web? "Forget it as a marketplace of products, and instead think of it as a marketplace of opinion. It's the great leveler of marketing. It allows for niche products to get global attention. Most products will be sold offline, as they always were. But in years to come, more and more products will be marketed online, taking advantage of Web methods to fine-slice consumer groups and influence word of mouth more effectively than ever before in history. Not all industries lend themselves to an infinite variety of products, but all industries have an infinite variety of customers. Finally we can treat them like the individuals they are. It's the sunset of the thirty-second spot."
There are several reasons why Anderson believed there is a need for a revised and updated edition. Here are two. Because the earlier version became a bestseller, it attracted lots of attention, generating an abundance of discussion of his core concepts. Also, the process of adopting his ideas (many of which at first seemed counterintuitive, if not precious and naive) was complicated by the globalization of culture. Focus shifted to distributed audiences around the world. Anderson was asked for additional examples of Long Tail effects outside the digital realms of media and entertainment. He certainly could not cover all of the extensions in fashion, travel, organic and "artisanal" food, and even alcohol as indicated by -- to cite one example -- Anheuser-Busch's embrace of niche beers, the establishment of Long Tail Libations, and the increased number of beers from 26 brands in 1997 to 80 in 2007. Given the fact that change continues to be the only constant in the global business world, think of this revised and updated edition as only the latest update on some Long Tail developments thus far.
Presumably the tail will continue to lengthen in months and years to come.
on August 3, 2006
Well, timing is everything... and isn't always fair. Had I not just completed reading Jeffrey & Bryan Eisenberg's "Waiting For Your Cat to Bark?" before picking up "The Long Tail," I would probably have given this book 4 stars.
Chris Anderson has done a very good job of showing us the new "economics of abundance," or the connection of supply and demand thru technology and the Internet.
Question: What happens when everything in the world becomes available to everyone?
Answer: A market that never dies... markets for every niche, and vice-versa.
The Long Tail.
Using corporate examples like Google, eBay, iTunes and Netflix, Anderson lends an interesting perspective on how these companies have grabbed the Long Tail theory (consciously or unconsciously) and used it as the foundation for their staggering success. For customers of these companies, being online means unlimited "shelf space" - access to hundreds of thousands of bits of information, products and services they'd never been exposed to otherwise.
But how does the ordinary businessperson experience the success of the eBays of the world? Here, Anderson falls short. He states his "secret" to The Long Tail:
1. Make everything available
2. Help me find it
It's the "help me find it" part that Anderson ignores. In fact, it's the end of the book... you're left hanging, thinking, "So how in hell am I supposed to help people find me?"
Taken for what it is - a good presentation of a present-day theory (and one that was adequately covered in the original article in Wired magazine), the book is fine. But to really understand what it takes to make the Long Tail theory work for you, you must get a copy of "Waiting for Your Cat to Bark." It's in-depth coverage on not only how our economy works today, but understanding how people buy, how to understand what they're looking for and what you need to do to create persuasion magic not only on your website but in all your marketing materials.
This is not a time for "build it and they will come." Understanding an economy is only the first step. The real question is - what are you going to do about it to make yourself an integral part of the Long Tail?
It's too bad "The Long Tail" and "Waiting For Your Cat to Bark" can't be sold in a box set - they were made for each other.
The long tail is the colloquial name for a long-known feature of statistical distributions that is also known as "heavy tails", "power-law tails" or "Pareto tails". In these distributions a high-frequency or high-amplitude population is followed by a low-frequency or low-amplitude population which gradually "tails off". In many cases the infrequent or low-amplitude events--the long tail--can cumulatively outnumber or outweigh the initial portion of the graph, such that in aggregate they comprise the majority. In this book the author explains how due to changing technology it is now not only feasible but desirable in business to cater to the "long tail" of this curve.
The author explains how in traditional retail, you have the 80/20 rule, with 20 percent of the products accounting for 80 percent of the revenue. Online, instead, he sees the "98 percent rule." Where 98 percent of all the possible choices get chosen by someone, and where the 90 percent that is only available online accounts for half the revenue and two-thirds of the profits. He also explains how filters and recommender systems that help people find what they are really looking for are crucial ingredients. Thus, in a nutshell, Anderson's theory is that mass culture is fading, and being replaced by a series of niches. Thus the subtitle of his book, "Why The Future of Business Is Selling Less of More."
The author explains that the three forces of the long tail are:
1. Democratization of the tools of production such as GarageBand for musicians.
2. Minimization of the costs of distribution which in turn minimize the cost of consumption such as wideband internet connections.
3. The connection of consumers to one another to minimize the noise down the tail, such as this Amazon review system.
In this brave new world of niche markets, the author explains the new producers, markets, and tastemakers all of which are largely driven by the technological forces of cheap hardware and increasingly sophisticated recommender systems that tap the on-line purchasing habits of consumers and match individuals with the products that are likely to interest them the most. Anderson goes on to explain the power of Long Tail economics by citing sales and trend data in three media: books (Amazon), music (Rhapsody) and movies (NetFlix). He postulates the seemingly incredible claim that Walmart is in fact elitist, since they are constrained by physical space to offering only the most popular products. This is another basic premise of the book - that until the birth of the Internet physical space constrained retailers to offering only the most popular 20% of items because they represented 80% of the purchasing power.
The author's arguments hold up the best when he examines the entertainment industry. It is obvious that the recording industry is at a loss as to what to do about the fact that their sales are fading fast other than to blame piracy and sue consumers that dare decide that an overpriced vanilla-sounding boy-band CD is not worth the price. You can also see the desperation in the movie industry too, that has resorted to begging people to go to the theaters at the Academy Awards, but continues to mainly output recycled and formulaic products and reaps the expected mundane ticket receipts.
However, I think that the author overlooks two points. First, people crave some kind of common conversation with their fellow man. If we are all broken up into groups of a dozen each that all have the same politics, like the same music, and watch the same movies, then the community at large is duller for it. Take "American Idol" for example. It is obvious that this is not a hit show because America thinks that the winner is going to be the next Elvis Presley. In fact, the winners usually represent the plain vanilla output that has brought the recording industry to its knees in the first place. Can you see someone as gritty as Joe Cocker ever winning this contest? It is the audience participation and the feeling that you are part of the outcome that is the appeal. Also, people flocked to the very successful Harry Potter movies and the Lord of the Rings trilogy just as much because everyone else was going and taking their kids to see them and thus they were part of society's "common conversation" as they were because of the quality of the films. The second point that the author overlooks is that the monopolies whose death he cheers due to the "long tail" are simply being replaced by other monopolies. Who else but large businesses with the resources to mine the hugely diverse "long tail" shall prosper in the long term? A case in point is that the author himself keeps coming back to the same companies when he talks about "long tail" success stories.
In summary, although this book is a bit repetitive at times, it makes some good points. The author does a good job of tying the old familiar "long tail" statistical graph to the rapid change in purchasing habits over the last ten years, which is something that nobody else had succeeded in doing until he articulated the trend.
on August 30, 2006
Chris Anderson has written a thought-provoking book in The Long Tail. It's about the new economics of culture and commerce. While I enjoyed thinking about the main premise - that the Internet has dramatically changed the interplay between supply and demand - I once again concluded that the book could have been a lot shorter (possibly a result of my taking the book "Blink" to heart).
The title refers to the shape of a classic downward-sloping demand curve if you graphed popularity (x-axis) vs. demand (y-axis). Think about book industry where the demand for a few titles (bestsellers or even top 100) is very high, but demand for the 200,000th most popular book is sporadic at best. Consequently, Barnes & Noble stores can only carry books with a certain level of demand and will miss a lot of the niche topics that are out there.
But, because of the Internet, the demand captured in the 'long tail' of this curve, comprised of thousands of niche businesses, represents a vibrant business. For example, while the typical Barnes & Noble will carry 100,000 titles, Amazon offers 3.7 million and says that 25% of their sales come from books outside of the top 100,000 titles. They claim, and the premise of the book is, that as companies offer increased supply (because in the new Internet economy, they can), demand seems to follow supply and, in fact, increases.
Another related trend is the transition across business lines from 'hit' to 'niche', which is exemplified by the popularity of myspace.com, ebay, itunes and google (representing the long tail of advertising).
The six main themes of the book are:
1. In virtually all markets, there are far more niche goods than hits, as a result of improvements in the basic tools of production (i.e. Internet).
2. The costs of reaching these niches is now falling dramatically thanks to digital distribution, search and a critical mass of broadband technology.
3. There are a range of tools - from recommendations to rankings (think search) that help to shift demand down the long tail, and help people find useful/relevant niches.
4. The effect of all of this is that the demand curve will eventually flatten, with the hits becoming relatively less popular and the niches growing in popularity.
5. All of the niches add up to comprise a market that rivals the hits.
6. The internet can reveal a natural shape of demand, undistorted by distribution bottlenecks, scarcity of information and limited choice of shelf space.
I would recommend this book to all those interested in a well thought out premise on how the internet has radically altered many business models due to various supply and demand characteristics and the ability to exploit demand that would previously not have been profitable.
on July 11, 2008
Chris Anderson's groundbreaking examination of the new economics that comes with the internet age (the big revenue doesn't come from the handful of blockbusters so much as from the catalogue of little titles) ironically put The Long Tail near the head of the sales curve, up at the blockbuster end. Deservedly so. Anderson presents a compelling argument, and he illustrates it through imaginative examples and through tight, colourful language. He's a clear, persuasive writer.
In this updated edition, Anderson adds a new chapter on marketing, and in my view this plugs one of the gaps that emerged with the original work. Marketing executives and agency strategists have for two years now been dropping the "long tail" phrase into their dialogue, but the new chapter will help them put the thinking into practice.
A great book just got more timely, more useful.
PS. If you're looking to get a handle on today's marketing paradigm I'd recommend this book alongside Rob Walker's excellent Buying In: The Secret Dialogue Between What We Buy and Who We Are
on July 14, 2006
This is an important book, and its also an easy read. It's a must-read for anyone who works in media, retail (whether physiscal or e-commerce), or supply chain management, or who thinks they might do so some day. I would also recommend it to general audiences.
I cannot give it a higher rating because of the following quibbles with Anderson's writing and ideas:
1) Anderson's writing still reads like magazine journalism (it especially betrays his time at _The Economist_), and therefore doesn't "stretch" very well into book-length material. The repetion and upbeat, example-laden style do a disservice, in that they encourage skimming.
2) In the chapter on "The Short Head," Anderson is foolishly optimistic about the "abundance" of the long tail/e-comm world, going so far as to say that classical economics' central theorem -- that finite resources need to be allocated among infinite wants and needs -- is no longer valid. But resources are still scarce: if they weren't, Amazon would not charge you any money to deliver a copy of Anderson's book to your house!
3) Anderson offers a rose-colored description of e-comm "filters" and the way that they can bring customers from best-sellers into the long tail. I have had lots of frustrating experiences, for example, with Amazon's recommendations, which tend to push me further down into "niches" than I want to go, don't always recognize that once you've bought a Penguin Classic you won't be interested in the Everyman Library edition of the same book, and don't make lateral connections between niches that would be obvious to anyone browsing in a physical bookstore. Similarly, searching for the most current edition of a reference or textbook can be frustrating -- reviews are not carried over from the previous edition, editions that are 10 years out of date may be ranked ahead of the current edition, etc. (These are the frustrations of someone who has been on the 'Net for 15 years and works with e-commerce technology all the time; how my parents fare on Amazon, I dare not guess.) I say this not as a condemnation of Amazon's technology, which is constantly (and usefully) evolving, but merely to point out that e-commerce in general is not as user-friendly as Anderson depicts it.
4) I find the chapter on Wikipedia et. al. as "the long tail of content" to be the least persuasive; I would have preferred it if Anderson had stuck to his original scope (sales), and not taken a right turn into content creation/product development.
Overall, this is a fine book and it deserves the attention it has received.
on July 16, 2008
This is an important book for anyone who wants to understand internet commerce or innovation in services. In addition, "The Long Tail" must be a part of the vocabulary of anyone who wants to talk intelligenly about modern business practices.
The new emphasis on marketing in the new release is a valuable addition to the original.
A current article in HBR attacks the Long Tail on empirical grounds. However, Anderson's response on his website is compelling.
The one quibble with this book is that it is superfluous -- the original essay/article combined with the website covers the issues more fully. However, that said, this book will be more valuable than 90% of the volumes that you have in your business book collection.
on July 22, 2007
Different types of books serve different purposes, some books tell great stories that motivate and inspire us, other books give practical "how to" advice, others enable us to escape to a world miles away from reality, while others help us make sense of a world that we otherwise wouldn't understand. I love books that fall into the last category. Some of the recent "classics" in this category include The Tipping Point (Malcolm Gladwell), The Wisdom of Crowds (James Surowiecki) and The World is Flat (Tomas Friedman).
The Long Tail is a brilliant book written with similar wisdom and research as these "classics". In the Long Tail, Chris Andersen (Editor in chief of Wired magazine and author of the Long Tail) explains how the internet is creating distinct shifts in economics and culture. The internet provides consumers with more choice and better search capabilities across different products enabling them to make buying decisions that link closely to their specific interests and needs. This ultimately means that for certain niche products there is an increase in both supply and demand. The internet creates more consumer choice, therefore the demand curve for goods is flattening meaning there is less demand the traditionally popular items (e.g. Brittany Spears and Wilber Smith) and more demand for traditionally less popular items (e.g. Nikolaus Von Knorring, a Swedish soft rock artist and Saltwater Fly Tying, a book by Frank Wentink) creating a long tail on the demand curve. The author uses a number of different and interesting examples to illustrate this phenomenon. In the case of books, a traditional bookstore (e.g. Exclusive Books in South Africa) will typically stock up to 150000 titles in its largest store. This means that consumers must find what they want in amongst those 150000 titles if they are to buy a book. At the same time it is pretty difficult to search books in a bookstore because you physically need to browse through titles on the shelf. The result of this is that certain "blockbuster" books are pushed and less popular books with a niche focus are ignored. The internet changes this equation completely. Firstly, [...] offers the consumer access to 4.5 million book titles and enables them to search for very specific themes and topics in amongst those 4.5 million titles. This means that titles that were previously ignored are being purchased by individuals with very specific interests. In my own case I recently found a book on [...] entitled "Researching Entrepreneurship" written by a Professor from Brisbane. 15 years ago I would probably never have even known that this title existed whereas now I was able to purchase it and search other titles purchased by people with the same interest. This concept is exaggerated in the world of music because digital music is not only stored and marketed on the internet, but online music it is highly searchable and is downloadable meaning that you don't even need to rely on a courier service to deliver the end product.
As we look to the future the Long Tail concept has important implications for:
Movies and DVD's with a shift from the traditional DVD store and cinema to Netflix and online movie downloads;
Newspapers and magazines with a shift away from paper toward online publishing and blogs;
Travel with a shift away from travel agents towards self service via the internet.
The Long Tail phenomenon is happening and is becoming more and more important as bandwidth increases and more and more products and marketed and sold via the internet.
When you want to eat ice cream outside your home, do you go to a store that offers only chocolate and vanilla . . . or do you go where there are many more choices? Most people will do the latter. That's the basic point of this book. If you're satisfied with knowing that point, you don't need to read the book. Instead, you could settle for Mr. Anderson's article in the October 2004 issue of Wired.
But if you are like the growing legions of people who enjoy knowing more about the quirks of micro-economics (such as those who were intrigued by The Tipping Point, Freakonomics and Fooled by Randomness), The Long Tail will provide much entertainment.
Let me explain what a long tail is. If you plot the popularity of various products (say, books on Amazon) with the most popular products at the left, the left part of the curve will be very vertical (the head) and there will be a long list of items to the right that will have relatively few sales (the tail). Mr. Anderson's point is that as it becomes economically viable to produce and distribute more low-volume products (such as print-on-demand books and e-books), there will be more items available to purchase at any outlet . . . and the length the tail to the right will grow. As more outlets can afford to make these items available, the thickness of the tail will also grow.
A physical store will only distribute a small percentage of the items, stopping where the offering no longer adds to its targeted rate of profits. An on-line store will have far more items (such as Amazon), appeal to more customers and sell lots of its volume in relatively unpopular items. The author estimates that 25% of Amazon's book sales volume, for instance, comes from outside the 100,000 top selling books.
Here's where Mr. Anderson begins to lose his way: He tries to describe the sociological implications. He sees, for example, a loss of common cultural items of the sort that talking about the Beatles appearing on Ed Sullivan once provided. He imagines a world in which everyone drifts off into various different niches and the size of the head becomes less vertical. While that may be true, it doesn't correctly forecast the amount of commonality in the culture. The sales of any given item over time may well be in both the head and the tail. Or an item could be a sleeper and always be in the tail, but if enough people buy it, the item will become part of the common culture. In addition, some elements of common culture don't appear in sales curves. I'm sure that yesterday's arrests in the alleged plot to bomb a number of airplanes have already become part of the common culture.
I won't go on to point out his other errors. I'm sure you'll notice them for yourself.
The other disappointment was that he doesn't do a very good job of describing strategy choices for product producers. It seems to me that the long tail is simply another argument in favor of intense individual product and service customization of the sort that Dell has been giving us for years in computers and related equipment.
My grade of 3 stars for the book is 5 stars for long-tail trivia and 1 star for sociological and producer analysis.
If you haven't read any of the following books, The Tipping Point, Freakonomics and Fooled by Randomness, I recommend that you read those long before you get around this one. They are much better books about micro-economic implications.
on July 31, 2006
Like other reviewers, I found myself skimming towards the end, when the author starts to repeat himself. However, throughout most of the book, by attention was sufficiently captivated. If nothing else, it shows how people a decade younger than me are far surpassing my generation in terms of harnessing the internet.
When I was a teen, I was interested in non-mainstream music. The only way to discover this music was word-of-mouth from friends and peers, buying magazines like Alternative Press, and making the trip across town on the bus to shop at the independent music store. Nowadays, those interested in niche genres of music have MySpace, peer-to-peer filesharing, etc. You don't have to buy magazines, or travel for miles to find the music on the shelf. It's as close as your computer screen. Kinda makes the cassette dubs we made in my day seem like child's play.
The ramifications of sophisticated technology at next-to-nothing cost is a prevalent theme in Anderson's book. However, there are glaring omissions, and a problem in format. For example, he makes a big deal about how a quarter of Amazon's online book inventory sold cannot be found in even the largest book superstore. Before you strike the death knell for the bookseller industry, there's one name the author is remiss to leave out: Oprah Winfrey. For all Mr. Anderson champions consumers as the new tastemakers, she is the ultimate tastemaker, like it or not. And her recommendations are through her television show, not the cutting-edge technology channels mentioned in the book. Furthermore, those books can be found in any superstore, not just online.
Formatwise, a lot of the tedious repetition could have been weeded out, and replaced with more focused chapters. I would have liked to have seen chapters that only dealt with one form of media (one for music, one for books, one for television, etc). This would have been preferable to the how-many-ways-can-I-tie-a-scarf approach.