Peter Kafka

Recent Posts by Peter Kafka

Another Critic Tries Stomping on the Long Tail

Wired Editor’s Chris Anderson’s “Long Tail” theory–in a nutshell, that the Internet would allow a huge market of niche products to survive and thrive–is one of the more influential memes of the past few years. Which means it is also subject to backlash.

Earlier this year, the Harvard Business Review tried to refute Anderson in a well-argued piece. Now comes a set of British researchers trying to do the same thing. From the U.K. Times:

The idea that niche markets were the key to the future for internet sellers was described as one of the most important economic models of the 21st century when it was spelt out by Chris Anderson in his book, ‘The Long Tail,’ in 2006. He used data from an American online music retailer to predict that the internet economy would shift from a relatively small number of ‘hits’–mainstream products–at the head of the demand curve toward a ‘huge number of niches in the tail’.

A new study by Will Page, chief economist of the MCPS-PRS Alliance, the not-for-profit royalty collection society, suggests that the niche market is not an untapped goldmine and that online sales success still relies on big hits. They found that, for the online singles market, 80 per cent of all revenue came from around 52,000 tracks. For albums, the figures were even more stark. Of the 1.23 million available, only 173,000 were ever bought, meaning 85 per cent did not sell a single copy all year.”

Anderson, who has been a good sport about jousting with his critics on his blog, tells the Times that he needs to see more data before weighing in on this newest salvo. But I don’t have that compunction. My two cents–or at least, my two sort-of related points:

  • The Long Tail is a useful way to think about back catalogs. The Web means you can extend the reach of a product once it has had an initial run, and it allows aggregators like Amazon (AMZN) to make money by assembling lots of niche products at one storefront. It’s less useful for people who are creating albums, books, movies, etc., and need to get compensated for their work in the present tense.
  • One area where the Long Tail holds up just fine: Web publishing. The awesome power of Google (GOOG) means that stuff you publish once on the Internet will continue to find new audiences in the future, more or less without any additional effort on your part. Any Web publisher invariably finds that a large chunk of its audience tends to come to its site to consume stuff they produced weeks, months or years ago. Of course, consumers don’t want to pay anything in order to consume that stuff, which means it’s only useful if you can sell Web advertising against it. But that’s a different post.

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