I've written before about the long-tail theory, and how some have questioned the validity of claims made in Chris Anderson's book, where he suggested that "the future of commerce and culture isn't in hits, the high-volume head of a traditional demand curve, but in what used to regarded as misses--the endlessly long tail of that same curve." (See, for example, my 2006 post Hard evidence keeps stepping on the long tail.)
Now Anita Elberse, in the new Harvard Business Review article Should You Invest in the Long Tail? provides more evidence calling this strategy into question: The subheading of her article reads "It was a compelling idea: In the digitized world, there’s more money to be made in niche offerings than in blockbusters. The data tell a different story." Elberse asked "When books, movies, and music are digitized and therefore cheap to replicate, the question arises: Is a blockbuster strategy still effective?" She believes so, concluding that "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."
- Anderson responded on his longtail.com blog: "Let me start by saying that the paper looks rock solid and I'm sure her analysis is accurate. But there is a subtle difference in the way we define the Long Tail, especially in the definitions of 'head' and 'tail', that leads to very different results. The best example of this is in what she describes as a growing "concentration" of sales around a relatively small number of blockbuster titles. ...This is a good moment to remind everyone of the normal definition of 'head' and 'tail' in entertainment markets such as music. 'Head' is the selection available in the largest bricks-and-mortar retailer in the market (that would be Wal-Mart in this case). 'Tail' is everything else, most of which is only available online, where there is unlimited shelf space."
- And here's how Elberse responded on the Conversation Starter blog: "Anderson devotes all his attention to the Rhapsody and Quickflix results, thereby ignoring the bigger-picture findings on the changing sales distributions in the [video and music] markets as a whole. As I note in my article, looking at snapshots is not enough—strategists need to understand how markets are changing."
This thing is older than the 2008 Presidential campaign. Now that we'll soon be entering our third year (!) of debate over the long tail theory, I think we need to be more specific when throwing terms around: For instance, it's not about a "long tail" -- it's about how flat (or fat) that tail is. And what is a "niche" ...and how do we define "successful" or "blockbuster"? I've been in the publishing business long enough to know that no one (except Simon Cowell) can pick a hit. So it's mostly a numbers game, where you try to develop a fairly decent, longish tail and hope like hell a blockbuster emerges so you can stay in the black.
It was Lee Gomes' 2006 Wall Street Journal column It May Be a Long Time Before the Long Tail Is Wagging the Web that got me thinking about the claims made in the Long Tail book, since up until then I hadn't read it. (Back then, when I wrote to him commending him for his analysis, he responded by saying it was the nicest thing he'd heard all week -- apparently he got lots of harsh feedback for questioning this particular sacred cow.) So I was pleased to see Gomes follow up in his latest Portals column, Study Refutes Niche Theory Spawned by Web (Wall Street Journal, subscription required). Looking back, he writes: "Since appearing two years ago, the book has been something of a sacred text in Silicon Valley. Business plans that foresaw only modest commercial prospects for their products cited the Long Tail to justify themselves, as it had apparently proved that the Web allows a market for items besides super-hits." He sums up the latest research this way: "Elberse looked at data for online video rentals and song purchases, and discovered that the patterns by which people shop online are essentially the same as the ones from offline. Not only do hits and blockbusters remain every bit as important online, but the evidence suggests that the Web is actually causing their role to grow, not shrink." Snap! Apparently Gomes remains critical of the long-tail phenomenon: "In retrospect, 'The Long Tail' seems to have followed the template of many Wired articles: take a partly true, modestly interesting, tech-friendly idea and puff it up to Second Coming proportions. Some of the reasons for the popularity of the Long Tail were as interesting as the idea itself. For one, it flattered its readers, many of whom were in the tech industry, by suggesting (yet again) that the Internet was changing everything."
Elberse's findings were also covered on BNET, where they described the takeaway like so: "Chris Anderson’s now famous 'long tail' theory urges media bosses to forget hit-making and instead to take advantage of the near zero cost of digital distribution to try and make money from selling small numbers of many titles to niche consumers. Sounds solid, but Elberse looked at some real world numbers and ends up less than convinced. ...The top hits will always get a disproportionate number of hits, but the tail is getting fatter, right? Not according to Elberse." WebGuild Silicon Valley is also talking about her research.
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