Why the Future of Business Is Selling Less of More
by Chris Anderson
In a not-so-small-nutshell from the early pages: “In statistics, curves like that are called “long-tailed distributions,” because the tail of the curve is very long relative to the head. So all I did was focus on the tail itself, turn it into a proper noun, and “The Long Tail” was born. It started life as slide 20 of one of my “New Rules” presentations. I think it was Reed Hastings, the CEO of Netflix, who convinced me that I was burying my lead. By the summer of 2004 “The Long Tail” was not just the title of my speeches; I was nearly finished with an article of the same name for my own magazine.
When “The Long Tail” was published in Wired in October 2004, it quickly became the most cited article the magazine had ever run. The three main 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 when backed up with heretofore unseen data.”
(check out the original article here: http://www.wired.com/wired/archive/12.10/tail_pr.html)
pg 16 People are going deep into the catalog, down the long, long list of available titles, far past what’s available at Blockbuster Video and Tower Records. And the more they find, the more they like. As they wander farther 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 hit-centric culture, and simply a lack of alternatives).
pg 22 Not only is every one of Rhapsody’s top 60,000 tracks streamed at least once each month, but the same is true for its top 100,000, top 200,000, and top 400,000 – even its top 600,000, top 900,000, and beyond. As fast as Rhapsody add tracks to its library, those songs find an audience, even if it’s just a handful of people every month, somewhere in the world. This is the Long Tail.
pg 23 Venture capitalist and former music industry consultant Kevin Laws puts it this way: “The biggest money is in the smallest sales.”
pg 23 When you think about it, most successful Internet businesses are capitalizing on the Long Tail in one way or another. Google, for instance, makes most of its money not from huge corporate advertisers, but from small ones (the Long Tail of advertising). Ebay is mostly Tail as well – niche products from collector cars to tricked-out golf clubs. By overcoming the limitations of geography and scale, companies like these have not only expanded existing markets, but more important, they’ve also discovered new ones.
pg 24 But what we do know is that with the companies for which we have the most complete data – Netflix, Amazon, and Rhapsody – sales of products not offered by their bricks-and-mortar competitors amounted to between a quarter and nearly half of total revenues – and that percentage is rising each year. In other words, the fastest-growing part of their business is sales of products that aren’t available in traditional, physical retail stores at all.
pg 25 One way to think of the difference between yesterday’s limited choice and today’s abundance is as if our culture were an ocean and the only features about the surface were islands of hits. There’s a music island composed of hit albums, a movie island of blockbusters, an archipelago of popular TV shows, and so on.
Think of the waterline as being the economic threshold for that category, the amount of sales necessary to satisfy the distribution channels. The islands represent the products that are popular enough to be above that line, and thus profitable enough to be offered through distribution channels with scarce capacity, which is to say the shelf space demands of of most major retailers. Scan the cultural horizon and what stands out are these peaks of popularity rising above the waters.
However, islands are, of course, just the tip of the vast undersea mountains. When the cost of distribution falls, it’s like the water level falling in the ocean. All of a sudden things are revealed that were previously hidden. … (i.e.) More than 99 percent of music albums on the market today are not available in Wal-Mart.
pg 40 Instead of the office watercooler, which crosses cultural boundaries as only the random assortment of personalities found in the workplace can, we’re increasingly forming our own tribes, groups bound together more by affinity and shared interests than by default broadcast schedules. These days our watercoolers are increasingly virtual – there are many different ones, and the people who gather around them are self-selected. We are turning from a mass market back into a niche nation, defined now not by our geography but by our interests.
pg 99 For a generation used to doing their buying research via search engine, a company’s brand is not what the company says it is, but what Google says it is. The new tastemakers are us. Word of mouth is now a public conversation, carried in blog comments and customer reviews, exhaustively collated and measured. The ants have megaphones.
pg 109 In today’s Long Tail markets, the main effect of filters is to help people move from the world they know (“hits”) via a route that is both comfortable and tailored to their tastes. In a sense, good filters have the effect of driving demand down the tail by revealing goods and services that appeal more than the lowest-common-denominator fare that crowds the narrow channels of traditional mass-market distribution.
pg 119 If you’ve got help – smart search engines, recommendations, or other filters – your odds of finding something just right for you are actually greater in the tail. Best-sellers tend to appeal, at least superficially, to a broad range of taste. Niche products are meant to appeal strongly to a narrow set of tastes. That’s why the filter technologies are so important. They not only drive demand down the Tail, but they can also increase satisfaction by connecting people with products that are more right for them than the broad-appeal products at the Head.
pg 167 These are some of the other mental traps we fall into because of scarcity thinking:
– everyone wants to be a star
– everyone’s in it for the money
– if it isn’t a hit, it’s a miss
– the only success is mass success
– “direct to video” = bad
– “self-published” = bad
– “independent” = “they couldn’t get a deal”
– amateur = amateurish
– low-selling = low-quality
– if it were good, it would be popular
and finally, there’s the notion that “too much choice” is overwhelming, a belief so common and ill-founded that it deserves its own chapter.
pg 185 In 1958, Raymond Williams, the Marxist sociologist, wrote in Culture and Society: “There are no masses; there are only ways of seeing people as masses.” He was more right than he knew.
pg 191 Fundamentally, a society that asks questions and has the power to answer them is a healthier society than the one that simply accepts what it’s told from a narrow range of experts and institutions. If professional affiliation is no longer a proxy for authority, we need to develop our own gauges of quality. This encourages us to think for ourselves. Wikipedia is a starting point for exploring a topic, not the last word.
pg 196 Even for those who do own the content, releasing video in ways not anticipated at the original time of broadcast still can be remarkably difficult. Rights are a total hairball, made even more complicated by exclusive regional distribution deals (which conflict with the Internet’s global nature) and syndication options. And there there’s the music in the video, which is even worse. Want to know why you can’t watch old WKRP in Cincinnati episodes on DVD? Because the sitcom was based in a radio station, which had loads of classic rock playing in the background. It’s too expensive and difficult to license the music that was used in the show.
pg 217 The secret to creating a thriving Long Tail business can be summarized in two imperatives: 1) make everything available 2) help me find it.
pg 226 Like everything else, tomorrow’s Long Tail of Things will be aggregated, efficiently stored as bits, and then delivered to your home via optical fiber. Only then will it be materialized, coming full circle to atoms again at the point of consumption. It sounds like science fiction, but then again so did having an entire music library in your pocket just a decade ago.
Why the Future of Business Is Selling Less of More