COMM 150: The 'Long Tail' and e-commerce

Friday we started talking about something called the "Long Tail." It's an important concept for understanding the Internet. Basically, as the online encyclopedia Wikipedia explains, it describes online businesses like Amazon.com that "can sell a greater volume of otherwise hard to find items at small volumes than of popular items at large volumes." Wikipedia also has a graph that shows what it looks like -- a mathematical distribution with a steeply descending curve along the Y axis and, well, a long tail along the X axis.

Here's how it applies to CDs, videos, books ... practically anything you can buy and sell on the World Wide Web.

Open another window and go to the Wikipedia article (linked above). Look at the graph. The number of sales on a hit go up the Y axis. For example, let's see where Britney Spears' new single would go on the graph. She's moving lots of product (I'm not going to call it music), so her sales go way up on the Y axis. But there are also little niche markets for all kinds of different specialty genres. For example, I'm ordering a CD of medieval ballads that Norwegian pilgrims sang when they made their annual pilgrimage to the shrine of St. Olav. Not many people in the market for that kind of stuff, so we'd better plot it way out along the X axis. But I can get it on the Internet. Direct from Norway. In fact, the Norwegian record company's website is even set up to convert from U.S. dollars to Norwegian kroner.

The same is true for all kinds of music. Bulgarian folk songs? Out on the X axis, but somewhere in the wide world there's a market for them. Vintage CDs of Stevie Ray Vaughan or 80s punk rock? X axis. Sister Rosetta Tharpe? Sound tracks from Bollywood movies shot in India? Very popular in India, but still out the X axis worldwide. Especially for an American distributor.

Here's what makes the Long Tail so powerful for marketing on the World Wide Web. There are more people out there buying niche products on the Long Tail along the X axis than there are buying the hits up the Y axis. Chris Anderson, editor of Wired magazine, came up with the concept in an article called -- what else? -- "The Long Tail." Anderson says:

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 lack of alternatives, and a hit-driven culture).

An analysis of the sales data and trends from these services and others like them shows that the emerging digital entertainment economy is going to be radically different from today's mass market. If the 20th- century entertainment industry was about hits, the 21st will be equally about misses.

What Anderson calls "misses" in the old economy he calls "sales" on the Internet.

With no shelf space to pay for and, in the case of purely digital services like iTunes, no manufacturing costs and hardly any distribution fees, a miss sold is just another sale, with the same margins as a hit. A hit and a miss are on equal economic footing, both just entries in a database called up on demand, both equally worthy of being carried. Suddenly, popularity no longer has a monopoly on profitability.

What makes it work, says Anderson, is the fact the World Wide Web is worldwide. It's huge, and you can find willing buyers out there somewhere that you couldn't reach if you had a record store, say, at 6th and Monroe in downtown Springfield. But you can reach them by electronic commerce. Anderson says:

You can find everything out there on the Long Tail. There's the back catalog, older albums still fondly remembered by longtime fans or rediscovered by new ones. There are live tracks, B-sides, remixes, even (gasp) covers. There are niches by the thousands, genre within genre within genre: Imagine an entire Tower Records devoted to '80s hair bands or ambient dub. There are foreign bands, once priced out of reach in the Import aisle, and obscure bands on even more obscure labels, many of which don't have the distribution clout to get into Tower at all.

Oh sure, there's also a lot of crap. But there's a lot of crap hiding between the radio tracks on hit albums, too. People have to skip over it on CDs, but they can more easily avoid it online, since the collaborative filters typically won't steer you to it. Unlike the CD, where each crap track costs perhaps one-twelfth of a $15 album price, online it just sits harmlessly on some server, ignored in a market that sells by the song and evaluates tracks on their own merit.

What's really amazing about the Long Tail is the sheer size of it. Combine enough nonhits on the Long Tail and you've got a market bigger than the hits. ...