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Wednesday, July 26, 2006

More than chasing tail

Source: Slate

The Long Tail is a hot new book by Chris Anderson, the Wired editor-in-chief who first coined the term and the concept in 2004. Here’s the big idea:

The sales of niche products that are low in sales volume can over time collectively rival or exceed the market share of the relatively few hits, assuming the store or distribution channel is large enough (like the Internet). Examples: Amazon, Netflix, iTunes.

In the book, Anderson expands the theory broadly saying that "The Future of Business Is Selling Less of More." Let the backlash begin. The Wall Street Journal gave it a bashing today. But I prefer Tim Wu's analysis in Slate.

Wu says that Anderson perfectly visualized the long tail for cultural products like search, music, films, and books. Meaning that Amazon and Google, can make money not just on big hits, but they can also "live like a blue whale, growing fat by eating millions of tiny shrimp." But by broadening it to all business, Anderson overreaches. "As a business model, the Long Tail matters most 1) where the price of carrying additional inventory approaches zero and 2) where consumers have strong and heterogeneous preferences." But when it comes to goods that need to be manufactured and standardized, it doesn't work. There's no tail to chase in oil or telecommunications infrastructure.

I agree with Wu. The Long Tail is not a theory of everything. "There's more to this economy than chasing tail." But if you care about how our culture is changing, read the book.