Title: The Long Tail: Why the Future of Business Is Selling Less of More

Author: Chris Anderson

Backstory:
Chris Anderson, the editor in chief of Wired, was astounded in January 2004 when he learned that an online jukebox company had sold at least one music track per quarter on 98 percent of the 10,000 albums it had available. Each album wasn’t supplying a whopping blockbuster of sales, but the steady, gradual stream struck Anderson this way: Faced with a vast number of choices, there was still at least one consumer for nearly every song, leading to Anderson’s hypothesis that the internet was—through improved search, inventory, and distribution methods—creating a culture increasingly focused more on niche interests and products, and less on “hits” and “blockbusters.” The theory, laid out in an October 2004 Wired article, attracted popular attention, picked up steam, and eventually turned into The Long Tail, which seeks to provide an overarching theory for the way that economic models and “common culture” are being radically transformed by the internet.

Total reading time: 260 minutes

First published: 2006

Key passages:
“There’s still demand for big cultural buckets, but they’re no longer the only market. The hits now compete with an infinite number of niche markets, of any size. And consumers are increasingly favoring the one with the most choice. The era of one-size-fits-all is ending, and in its place is something new, a market of multitudes.”

“Our growing affluence has allowed us to shift from being bargain shoppers buying branded (or even unbranded) commodities to becoming mini-connoisseurs, flexing our taste with a thousand little indulgences that set us apart from others. We now engage in a host of new consumer behaviors that are described with intentionally oxymoronic terms: ‘massclusivity,’ ‘slivercasting,’ ‘mass customization.’ They all point in the same direction: more Long Tails.”

“Yahoo music ratings, Google PageRank, MySpace friends, Netflix user reviews—these are all manifestations of the wisdom of the crowd. Millions of regular people are the new tastemakers. Some of them act as individuals, others are parts of groups organized around shared interests, and still others are simply herds of consumers automatically tracked by software watching their every behavior. For the first time in history, we’re able to measure the consumption patterns, inclinations, and tastes of an entire market of consumers in real time, and just as quickly adjust the market to reflect them. These new tastemakers aren’t a superelite group of people cooler than us; they are us.”

Synopsis:
The Long Tail is the culmination of Anderson’s observations and discussions about how the economics of the online world are changing the way that people choose both cultural and manufactured products. Using major online companies like Netflix, eBay, iTunes, Wikipedia, and Amazon as examples, he shows how consumers have an increasing abundance of choices in everything they purchase, simply because there is no longer a prohibitive cost for retailers to provide that choice. At the same time, tools have made it easier for consumers to customize, create, and sell their own media and products, and, given the ability to share information online, more and more people now recommend to one another previously unknown genres and subgenres of products and media. The result is an increasing demand for, limitless inventory of, and increased supply of items that were previously considered too niche to be economically viable for brick-and-mortar sellers.

Anderson uses a diagram to illustrate his point: a small percentage of products account for a large majority of sales. In the past, a retailer would look at that diagram and try to carry only the top-selling items, so as to maximize return on shelf space. With internet-based distribution, however, shelf-space limitations disappeared, and the economics of carrying obscure and specialized products suddenly made more sense. While the 50 top-selling products are still guaranteed to result in major returns, the combined value of all the smaller products (when made available to everyone equally) is significant—and growing.

The systems of entertainment and commercial distribution that have traditionally focused so heavily on blockbusters, big hits, and megasellers are seeing their audiences sapped by the growth of an infinite variety of smaller products that were previously far less available. As more and more people select these niche products and self-identify with nonmainstream media and products, Anderson argues, “common culture” fades.