The Long Tail

by Chris Anderson

  In the worlds of entertainment and information, we’ve already lost the capacity constraints of shelf space and channels, along with their one-size-fits-all demands. Soon we may lose the capacity constraints of mass production, too. The explosion of variety we’ve seen in our culture thanks to digital efficiencies will extend to every other part of our lives. The question tomorrow will not be whether more choice is better, but rather what do we really want? On the infinite aisle, everything is possible.

  EPILOGUE

  In the months since the original publication of The Long Tail, two remarkable things have happened. First (and ironically for a book about the power of niches) it became a best-seller, from the New York Times top ten in America to the number one nonfiction book in China. But more important, it was read, and it resonated in industries that I had never even considered as Long Tail markets. Hundreds of readers have written me to illustrate how the Long Tail is playing out in everything from church communities (Christian home schooling is the Long Tail of education!) to porn (perhaps the best example of the true diversity of taste in the human population, but I’ll leave it to others to, er, flesh that out).

  I was often asked for more examples of Long Tail effects outside of the digital realms of media and entertainment. In the book’s earlier chapters I gave examples from eBay to LEGO, but readers wanted to know whether the trend toward market fragmentation and consumer demand for niche products applied to traditional retail and packaged goods, too. The answer is that it does, although not quite as dramatically as in the pure digital realms where the economics of distribution have changed most rapidly.

  Fashion turns out to be a great example, ranging from the existing niche markets of boutique and couture (which launch the trends that will eventually make it to the Short Head of mass-market retail) to the emerging markets of vintage clothing (eBay is the largest retailer of that) and DIY T-shirt design on sites such as Threadless.com.

  Travel is another. The cut-price airline boom led by the likes of easyJet and Ryanair has essentially lowered the cost of distribution for millions of travelers who are now visiting cities and regions outside of the tourism mainstream, from Eastern Europe to smaller cities and towns in Western Europe.

  Then there’s the exploding market for organic and “artisanal” food, which started as a microniche in markets such as my native Berkeley and the Slow Food movement around small Italian farms and has now gone mainstream through Whole Foods. The sight of Wal-Mart scrambling to source enough organic milk to satisfy the demand from its millions of Middle American customers is a dramatic example of how quickly Long Tail forces can reach the Head.

  One of the coolest and most surprising (even refreshing!) extensions of the theory last year was to alcohol. Anheuser-Busch, America’s leading distiller, created a division called Long Tail Libations to market niche liquor products, from “craft beer” to regional brands.

  I got in touch with Anheuser-Busch to hear straight from the Clydesdale’s mouth why the shift from hits to niches was coming to drinks, too. I understand how the Internet lowers the costs of distribution in many markets to allow for more choice (infinite “shelf space”), but how does that apply to bottles on real shelves?

  Pat McGauley, vice president of Long Tail Libations, explained: Anheuser-Busch’s embrace of niche beers is not driven by a radical change in the economics of distribution, but rather reflects a broader trend toward niches across our culture. Anheuser-Busch happens to be unique among brewers in that it’s large enough to control its own distribution network (the others go through third-party distributors, who are hard to sell on the virtues of micromarkets) and is thus able to experiment with far more products aimed at niche consumers.

  Over the last ten years, the company has hugely expanded the number of beers. coolers, and other alcoholic drinks it offers, from twenty-six brands in 1997 to eighty brands in 2007. Today it makes organic beers, drinks for women, and a host of microbrews such as Bare Knuckle Stout and ZiegenBock (available only in Texas).

  But the thing that really blew me away was its latest beer. In its quest to find ever more finely grained brew niches, the company has now moved beyond the organic, beyond the artisanal, beyond even the local. It has now discovered the non-allergenic beer market. In late 2006 it announced a gluten-free beer called Redbridge, which is made from sorghum, not wheat or barley.

  In retrospect it makes perfect sense—there’s a market for gluten-free food of all sorts, so why not beer, too? Indeed, the market for non-allergenic products of all sorts is a classic Long Tail opportunity, something I discovered when I learned that the market for niche vacuum cleaners extends beyond robots (Roomba) and high-end Dysons to machines with special filters to cut down on pollen and animal dander.

  Another example is the application of the Long Tail to the globalization of culture. In sports, news, and entertainment we’re shifting away from thinking only about concentrated audiences in one geography to thinking about distributed audiences around the world.

  One country’s hits are another country’s niches. In Japan anime and manga are mainstream; here in the United States they’re niche. Telenovelas are mainstream in Latin America, but niche elsewhere. And then there’s that whole soccer thing, which is seemingly mainstream everywhere but the U.S., where outside of World Cup time it can hardly be found on TV at all.

  Take cricket. It’s huge in Commonwealth countries, as well as the Subcontinent and the rest of the former British Empire. In India, Pakistan, Australia, South Africa, New Zealand, and the UK, all the big cricket matches are broadcast live on TV. Elsewhere they’re virtually impossible to find. According to the economics of broadcast TV, this makes sense: You can only devote your scarce airwaves to content of mass appeal. But there are millions of cricket fans outside of those few concentrated markets. And they’re as eager to watch live (or even recorded) cricket matches as their home-bound countrymen. Now, thanks to streaming Web video, they can.

  There are about 25 million people in the Indian Diaspora, most of whom are in countries that don’t broadcast cricket on TV. Think of them as the Cricket Diaspora, a distributed audience of potentially immense scale. The same for the Rugby Diaspora, the Soccer Diaspora, the Sumo Diaspora, and so on. Then turn the tables and do the same for the potential global audience for U.S. sports: the Football Diaspora, the Baseball Diaspora, the Basketball Diaspora. Then extend that to news, TV shows, music, and more. See what I mean?

  Today, as more and more TV migrates from the scheduled world of live broadcast to the on-demand world of streaming Web video, we’re about to enter an era where distributed markets are as good as concentrated ones. Long Tail video will reunite diasporas through their common culture, even if they are seen as a niche culture in the world around them. We already see this in the rise of Latino radio in the U.S.; soon that will extend to every other immigrant culture, here and abroad. We often think of the Long Tail as a force of fragmentation, but it can be a force for unification for the already fragmented, too.

  There’s probably another book to be written that collects best practice from all these diverse and surprising applications. But that will have to wait for another day and perhaps another writer. What I’d like to do with these final lines is to briefly discuss some of the most common misunderstandings of the theory, which came up again and again in my speaking after the book’s initial release.

  By far the most common misperception is that the Long Tail predicts the end of hits. Not so. Hits are as much a part of a powerlaw distribution as are niches. What’s dead is the monopoly of the hit.

  For too long hits or products intended to be hits have had the stage to themselves, because only hit-centric companies had access to the retail channel, and the retail channel only had room for best-sellers. But now blockbusters must share the stage with a million niche products, and this will lead to a very different marketplace. Let me explain.

  There are essentially three kinds of hits, which we can call Type 1, 2, and 3. The f
irst two are “top-down” hits from the traditional hit-making machines of major labels, studios, publishers, and the like. The third is a new kind of “bottom-up” hit from the grassroots, a marketplace of vast variety and increasing power.

  Type 1: Authentic top-down hits; products that are excellent and resonate with a broad audience (think anything from Coldplay to the World Cup). These start big and stay big.

  Type 2: Synthetic top-down hits; lame products that are marketed within an inch of their life, successfully getting lots of people to try them even though they’re probably sorry they did (think Garfield: A Tail of Two Kitties). These start big but quickly plummet.

  Type 3: Bottom-up hits that rise on word of mouth and grassroots support (think Clap Your Hands Say Yeah or March of the Penguins). These start small and get big.

  I think Type 1 hits will continue to do well. Type 3 hits will do even better, since the Web is the greatest word-of-mouth amplifier ever created. But Type 2 hits will suffer, as the consumers spread the word of their suckitude faster than ever.

  Bottom line: In a Long Tail world many top-down hits get smaller, but even more bottom-up hits get bigger. It’s not the end of the hit—it’s the rise of a new kind of hit.

  Another common question was whether the theory meant that obscure producers could now expect to get rich. Sadly it’s not as simple as that.

  First, let’s review what the theory actually says. The nutshell version of it is this two-parter: (A) if you can dramatically lower the cost of production and distribution, you can offer far more variety; (B) given more variety and the tools to easily organize it for individual taste, people will increasingly revel in their differences rather than settling for their commonalities as in traditional blockbuster culture.

  There are three basic types of participants in Long Tail markets: consumers, aggregators, and producers (note that it’s possible to be all three; these aren’t mutually incompatible). The main effects on each are:

  Consumers. Effect: largely cultural. People have more choice, so individual taste is increasingly satisfied even if the effect is an increasingly fragmented culture.

  Aggregators. Effect: largely economic. It’s never been easier to assemble vast variety and create tools for organizing it, from search to recommendations. Increased variety plus increased demand for variety equals opportunity. Also note that just as one size doesn’t fit all for products, it doesn’t fit for aggregators, either. I think the winner-take-all examples of eBay, Amazon, iTunes, and Google are a first-inning phenomenon. Specialized niche aggregators (think: vertical search, such as the real estate service Zillow) are on the rise.

  Producers. Effect: largely non-economic. For producers, Long Tail benefits are not primarily about direct revenues. Google Adsense on the average blog will generate risible returns, and the average band on MySpace probably won’t sell enough CDs to pay back their recording costs, much less quit their day jobs. But the ability to unitize such microcelebrity can be significant elsewhere. A blog is a great personal branding vehicle, leading to anything from job offers to consulting gigs. And most bands’ MySpace pages are intended to bring fans to live shows, which are the market most bands care most about. From the perspective of the non-monetary economy of reputation, the Long Tail looks a lot more inviting for its inhabitants.

  For the average blogger or micro-publisher, the Long Tail doesn’t promise riches. If what you’re doing has value, it does promise you more attention, reputation, and readership. But converting that non-monetary currency to actual money is up to you, and there are as many ways to do that as there are people who wish to try. For many, being appreciated is often reward enough. But it’s important to set expectations appropriately. The Long Tail doesn’t cure obscurity, it just diminishes it. But for the vast majority of us who live, work, or just play in the Tail, the cultural shift toward minority taste is already bringing a richer, more vibrant culture. How and when the money will follow is something that the next few decades will reveal.

  NOTES ON SOURCES AND FURTHER READING

  This book is the result of nearly two years of research and interviews, from business executives to academic economists. It’s also the result of a good deal of original data analysis of proprietary sales and usage data from companies that are building Long Tail markets, from Netflix to eBay. (My eternal thanks to the executives who supported this project and made the data available.) And finally, it builds on the work of many other researchers, thinkers, and writers whose ideas and conclusions influenced my own thinking, many of whom I’ve quoted in the text.

  The notes below indicate primary sources, along with additional information, explanations, and suggestions for further reading. In many cases the primary material is on the Web, in which case I give a simplified URL. But URLs can change, so in most cases I aim to also give enough unique identifying in formation so that it can be found with a search engine.

  INTRODUCTION

  Most of the top fifty: Hit album data comes from the Recording Industry Association of America (www.riaa.org), which has an excellent searchable database of albums that have sold Gold (500,000 units), Platinum (1 million), Multiplatinum, and Diamond (10 million or more). Hollywood box office data is from www.boxofficemojo.com.

  Every year network TV: Television data, both current and historic, is from Nielsen Media Research.

  Which is what I was doing: Vann-Adibé left Ecast in 2005.

  1. THE LONG TAIL

  On Rhapsody, the top 4,500: This conversion requires some explanation. The offline (Wal-Mart) market is a CD market, which is to say that almost all music is sold as part of an album. Online, at services such as iTunes and Rhapsody, songs can be downloaded individually, and most are. To convert from an album market to a singles market is not as simple as multiplying by 14, which is the average number of tracks per album, since some tracks on an album are more popular than others. So to derive a better conversion rate, we analyzed the top 100,000 tracks on Rhapsody. We found that they were drawn from about 22,000 albums, for an average of about 4.5 tracks per album. To account for the less popular tracks that were beyond the top 100,000, we gave the average album an equivalency score of 5.5 tracks. Therefore, Wal-Mart’s 4,500 unique albums are equivalent to 25,000 Rhapsody tracks.

  What’s truly amazing: Comparing book superstores and Amazon is equally fraught. Amazon has not released its title-level sales data, so we were forced to reverse-engineer it from what was available. That consists mostly of Amazon’s listed sales rank figures for each title, and third-party data on absolute sales figures for various sets of books. The earliest work on this was by MIT’s Erik Brynjolfsson, along with Carnegie Mellon’s Michael Smith and Purdue’s Jeffrey Hu. In “Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers” (2003), they estimated Amazon’s sales curve based on a large-scale analysis of its sales rank data. They concluded that sales of titles beyond the top 100,000 (the typical inventory of a traditional book superstore) amounted to 40 percent of Amazon’s sales.

  In subsequent discussion with Amazon and others in the book industry, we concluded that this was an overstatement, most likely due to problems with Amazon’s sales rank algorithms and a tendency for this sort of full-curve analysis to undercount the top 100 titles. We have subsequently refined the analysis by calibrating the relative rank numbers with known sales figures that we obtained directly from publishers. We then checked that with analyst estimates of Amazon’s overall book sales revenues. We now estimate that sales of titles beyond the top 100,000 account for somewhere between 20 percent and 30 percent of Amazon’s total book sales, and have used 25 percent as a median figure.

  2. THE RISE AND FALL OF THE HIT

  The rise of such powerful: Benjamin’s essay is “The Work of Art in the Age of Mechanical Reproduction,” 1936.

  3. A SHORT HISTORY OF THE LONG TAIL

  “I was sorting through”: Bezos was speaking at the Churchill Club in February 2005.
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br />   Finally, to give an idea: Robb’s Web site is at globalguerrillas.typepad.com. The post is dated March 18, 2005.

  5. THE NEW PRODUCERS

  In January 2001: For the Wikipedia background, I relied heavily on “The Book Stops Here” by Daniel Pink, which we published in Wired in March 2005.

  Author Paul Graham: www.paulgraham.com/web20.html.

  South Korea’s: The source is the World Economic Forum’s Global Agenda magazine, 2006.

  Soon more videos: I am indebted to Xeni Jardin’s excellent article in Wired magazine, December 2005, for the details in this passage.

  A team at the University: Ryan Shaw and his colleagues at the Media

  Streams Metadata Exchange at the School of Information Science and Management.

  6. THE NEW MARKETS

  Publishers ensure: Source: www.nacs.org.

  It made that database: Source: www.bisg.org.

  7. THE NEW TASTEMAKERS

  “Historically Blockbuster”: Hastings was speaking at the Lehman Brothers Small Cap Conference in November 2005.

  8. LONG TAIL ECONOMICS

  In other words: I’ve used the term “powerlaw” loosely here to refer to distributions in the form of y = axk. In the empirical data used in this book, y is typically absolute sales or popularity and x is the corresponding sales or popularity rank of unique products. The a term is a constant for a large x, and k is the power to which x is raised, called the “powerlaw exponent.” In fact, there are many variations of these kinds of exponentials, and different markets that at first glance look like powerlaws may actually be “log-normal” distributions or other statistical cousins. It’s not within the scope of this book to explore these differences, but I am indebted to Hal Varian of the University of California, Berkeley (and Google), for pointing out this subtlety.