on 31 July 2006
The book derives its name from the demand curve that is typical of many sales in the physical world of retailing. Online, the tail of the curve can be pretty long and Chris Anderson explores the significance of this as it relates to the rise of e-tailing (online retail). For anyone contemplating selling online or has an interest in the economics of ecommerce, then this is an important book.
Chris Anderson writes with great authority - as you would expect from the editor-in-chief of wired - and quickly engages the reader with his observations and analysis of online retailing and its comparisons with the physical world. He quickly explains the concepts of the 'long tail' economics before delving into some typical examples, many of which are drawn from the music and entertainment industries, although Amazon features prominately as one would expect.
We're treated to a short history of the The Long Tail, before moving on to the new markets being created by the online 'aggregators'. With so much choice online, Chris explains the growing importance of those products and services who help us select and filter - a new breed of digerati arising from the blogosphere!
Overall, an excellent read that will get you thinking. You'll probably find yourself going back over several chapters to put them into context, as some of the arguments are quite subtle. A great observation of online culture. Will iTunes really kill the radio star? The world is changing - find out why.
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.
I did not get to this book until recently and regret that because I then found it to be one of the most thought-provoking books I have read in recent years. As calvinnme "Texan refugee" explains in an excellent review posted on Amazon's US Web site, the title refers to "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."
Others have their own reasons for quite properly praising Chris Anderson's book. Here are a few of mine. First, when analyzing an especially complicated subject - what he characterizes as "a market of multitudes" - he expresses his insights with exceptional brevity and clarity. For example, consider this sequence: "Increasingly, the mass market is turning into a mass of niches...The new niche market is not replacing the traditional market of hits, just sharing the stage with it for the first time...Think of [falling distribution costs] as a dropping waterline or receding tide. As they fall, they reveal a new land that has been there all along, just underwater. These niches are a great uncharted expanse of products that were previously uneconomic to offer."
I also appreciate the meticulous care with which - throughout the narrative - he examines relationships between and among "the three forces of the Long Tail": democratizing the tools of production, cutting the costs of consumption by democratizing distribution, and connecting supply and demand "by introducing consumers to [new and newly available goods] in terms of new producers (Chapter 5), new markets (Chapter 6), and new tastemakers (Chapter 7). "Think of these three forces as representing a new set of opportunities in the emerging Long Tail marketplace."
As do many other authors of business books, Anderson also includes mini-case studies to illustrate his key points. In Chapter 13, he examines five examples (i.e. eBay, KitchenAid, LEGO, Salesforce.com, and Google) of the Long Tail wagging outside of media and entertainment. Anderson's mastery of concision is again evident in Chapter 14 when he reveals the "secret" to creating a "consumer paradise": make everything available and readily accessible, and, help people to find it with both speed and convenience. The three forces serve as the basis of nine "Rules" that, Anderson is convinced, should guide and inform the collection of a huge variety of goods and makes them available to find, typically in a single place (i.e. "the infinite aisle"). These "business aggregators, include Amazon, eBay, iTunes, iFilm, Google, Craigslist, Wikipedia, MySpace, and Bloglines.
Opinions vary as to what the "secret of success" in business will be in years to come. Credit Chris Anderson for a brilliant achievement as he explains why he believes the future of business is "selling less of more." Others advocate selling more of less (i.e. a limited selection of superior products) and for some companies, that model may be appropriate. At a time when change seems to be the only constant, I am reluctant to predict anything as I await developments. Those who share my high regard for this volume are urged to check out Richard Ogle's Smart World: Breakthrough Creativity and the New Science of Ideas, Seeing What's Next: Using Theories of Innovation to Predict Industry Change co-authored by Clayton M. Christensen, Scott D. Anthony, and Erik A. Roth, Scott A. Shane's Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures, Frans Johansson's Medici Effect: What Elephants and Epidemics Can Teach Us About Innovation, Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant co-authored by W. Chan Kim and Renée Mauborgne.
on 20 December 2006
Summary: Introduces the proposition that `mass popular' and `hits' do not dominate the internet. Thought-provoking, but a little repetitive.
The Long Tail describes how the on-set of seemingly endless produce choice available on-line characterises a long-tailed distribution plotted on a graph (hence the book title). The biggest insight the book offered me is the shift we are generally seeing from the stocking of `mass popular by off-line retailers to the notion of `specialist and niche', on-line. The core proposition is that `bricks and mortar' retailers have physical inventory limitations, whereas there is almost unlimited capacity on-line.
Anderson is the Editor of Wired magazine and the book actually begun as an article by Anderson in Wired. I laboured through the second half of the book once I understood his key idea. I also felt he focused to narrowly on explaining the phenomenon to the music, DVD and book industries. Perhaps, read the Wired article first and then turn to the book if you need more.
on 31 January 2009
This is an extremely simple yet important book about the effect of digital goods and their availability via the internet on the economics of product variety.
The basic premise, the author argues quite convincingly and correctly, is that digital goods (e.g.: music files) combined with virtually free storage allows businesses, and retailers in particular, to have a much larger variety of products to sell than regular businesses that depend on physical goods that need to be brought in, stored in a warehouse, and shipped out to customers. The internet does the rest: it guarantees a huge number of consumers whose combined needs make it easier to sell all kinds of products. This is why it's called the Long Tail: what used to be a large number of unsold products is now getting both larger (more products) and more profitable (higher sales of these 'niche' products).
Traditional businesses focus on getting as much value as possible from a small number of products, therefore restricting consumer choice. They focus on what's called the 'top' products. In fact, though they may be getting more sales from a small number of products, they are losing a lot of money because they're not carrying a large enough variety of products. The author also takes on Barry Schwartz's 'The Paradox of Choice' by arguing that more choice doesn't have to be detrimental to quality of life (as Schwartz argues) because Internet-based businesses allow consumers to easily filter and compare products in order to make a choice. I think here the jury's still out and only time will tell in the long run if a huge variety of available products is a good or a bad thing for modern life.
The concept of the Long Tail has revolutionised modern retail. If you go back to 10 or 15 years ago and compared retailers you'd find huge differences.
I quite enjoyed reading this book. Don't pay too much attention to what other reviewers might say about how simplistic this book is: it may be simple, but not simplistic, and regardless of how simple is the concept, it is important to understand the mechanics and consequences of the Long Tail.
on 25 May 2008
Overall I really liked The Long Tail, I found it very interesting, well written and easy to read. The only slight criticism I have, which is the reason for the 4 star rating, is that is does feel as though it could have been shortened a little without losing any of the content.
The overarching idea of the book is that if you can drive down the costs of producing, distributing and finding content, people will start to move away from "hit-driven" mass-market content and start to find a world filled with niches that fill their desires more completely. It's not a particularly complex idea but it has some interesting potential consequences, as highlighted throughout the book.
Whether or not you should completely buy into this, or how far you may see it changing the way people find and consume things such as music and entertainment, is open to debate. What I can say is that since reading the book I have begun to notice elements of the Long Tail in action in many different places.
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 11 June 2011
At the beginning it seemed to me like nobody could argue with the main idea behind the book. Even browsing through Amazon and looking for a product within any given category it feels obvious that with the internet entering every stage of production, distribution and consumption we are destined to be faced with ever growing choice of products. Instead of, as Anderson likes to put it "hit culture" we better get used to "niche culture".
The trouble is however that the theory is proved right within just a few areas of business and as growing product granulation seems natural for entertainment or media industry it gets much harder to find evidence in other areas, not in Anderson book at least. To name a few examples: consumer banking, automotive industry, telecommunications: these are all major contributors to GDPs of most of the developed countries yet I cant recall them being discussed in the book.
So as tempting it is to consider Long Tail theory groundbreaking or at least brilliantly synthesising and capturing important micro-trend it's limitations are not disputable and openly admitted by Anderson himself in the epilogue. So if you expect the book to re-write basic rules of economy, it's very far away from it. But if you hope for more understanding of dotcom business environment, it might be just the right choice for you.
There is one particular motive in the book that I found very disturbing though. In the chapter called "Paradise of choice" Anderson directly argues with some of the ideas put forward by Barry Schwartz in his book "The Paradox of choice". Schwartz warns against overwhelming choice as potentially dangerous for our everyday mental comfort putting too much of unnecessary pressure on simple choices like a pair of jeans (or at least it seems simple to me). If "paradox" is a subtle way to describe the phenomena of growing variety of products, calling it "paradise" seems way out or proportion. Are we really getting closer to divine state of mind with growing number of tomato sauces, raspberry jams and more importantly with ultimately everyone of us watching different movies, different news channel on the web, reading different books? To benefit from diversity, to exchange opinions in a fruitful way we need to nurture common ground of understanding. Otherwise, we are heading into ever more fragmented society and it has nothing to do neither with Soviet era economy as Anderson tries to impute, nor with "paradise".
on 5 July 2007
I started reading The Long Tail straight after reading "Why The World Is Full of Useless Things" by Steve McKevitt which was published last year. These are two great books to read together offering a much broader analysis than they do on their own.
I think we've got it in ourselves to move into a more ethical way of being - and the potentially limitless choice of the internet might paradoxically bring that about, as per Long Tail, we stop being passive consumers of mass produced crap, we develop ever more niched niches for our little individual selves to consume and create from, power really does pass back to consumers (sort of) etc. I urge you to read both.
Chris Anderson is an editor-in-chief of the Wired magazine, and the eponymous article 'The Long Tail' appeared in that magazine a couple of years ago. This has been one of the most influential and read articles about the 'new economy', and rightfully so. In a few succinct principles it describes and explains the essential aspect of the several new successful business models, including Google, Amazon, eBay, Netflix, to name just a few. The basic mechanisms behind the model, however, have been around for a long time, but the advent of the Internet has spurred it on to previously unimaginable successes. This book builds on the arguments from the original article, and adds the material from Chris's blog. It's highly informative, yet eminently accessible and readable. A warning is in order, however: after reading the book you might start seeing long tails in all sorts of places. Consider yourself warned.