February 19, 2005

LONG TAIL

The Long Tail: Forget squeezing millions from a few megahits at the top of the charts. The future of entertainment is in the millions of niche markets at the shallow end of the bitstream. (Chris Anderson, December 2004, Wired)

In 1988, a British mountain climber named Joe Simpson wrote a book called Touching the Void, a harrowing account of near death in the Peruvian Andes. It got good reviews but, only a modest success, it was soon forgotten. Then, a decade later, a strange thing happened. Jon Krakauer wrote Into Thin Air, another book about a mountain-climbing tragedy, which became a publishing sensation. Suddenly Touching the Void started to sell again.

Random House rushed out a new edition to keep up with demand. Booksellers began to promote it next to their Into Thin Air displays, and sales rose further. A revised paperback edition, which came out in January, spent 14 weeks on the New York Times bestseller list. That same month, IFC Films released a docudrama of the story to critical acclaim. Now Touching the Void outsells Into Thin Air more than two to one.

What happened? In short, Amazon.com recommendations. The online bookseller's software noted patterns in buying behavior and suggested that readers who liked Into Thin Air would also like Touching the Void. People took the suggestion, agreed wholeheartedly, wrote rhapsodic reviews. More sales, more algorithm-fueled recommendations, and the positive feedback loop kicked in.

Particularly notable is that when Krakauer's book hit shelves, Simpson's was nearly out of print. A few years ago, readers of Krakauer would never even have learned about Simpson's book - and if they had, they wouldn't have been able to find it. Amazon changed that. It created the Touching the Void phenomenon by combining infinite shelf space with real-time information about buying trends and public opinion. The result: rising demand for an obscure book.

This is not just a virtue of online booksellers; it is an example of an entirely new economic model for the media and entertainment industries, one that is just beginning to show its power. Unlimited selection is revealing truths about what consumers want and how they want to get it in service after service, from DVDs at Netflix to music videos on Yahoo! Launch to songs in the iTunes Music Store and Rhapsody. People are going deep into the catalog, down the long, long list of available titles, far past what's available at Blockbuster Video, Tower Records, and Barnes & Noble. And the more they find, the more they like. As they wander further 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 lack of alternatives, and a hit-driven culture).

An analysis of the sales data and trends from these services and others like them shows that the emerging digital entertainment economy is going to be radically different from today's mass market. If the 20th- century entertainment industry was about hits, the 21st will be equally about misses. [...]

To get a sense of our true taste, unfiltered by the economics of scarcity, look at Rhapsody, a subscription-based streaming music service (owned by RealNetworks) that currently offers more than 735,000 tracks.

Chart Rhapsody's monthly statistics and you get a "power law" demand curve that looks much like any record store's, with huge appeal for the top tracks, tailing off quickly for less popular ones. But a really interesting thing happens once you dig below the top 40,000 tracks, which is about the amount of the fluid inventory (the albums carried that will eventually be sold) of the average real-world record store. Here, the Wal-Marts of the world go to zero - either they don't carry any more CDs, or the few potential local takers for such fringy fare never find it or never even enter the store.

The Rhapsody demand, however, keeps going. Not only is every one of Rhapsody's top 100,000 tracks streamed at least once each month, the same is true for its top 200,000, top 300,000, and top 400,000. As fast as Rhapsody adds tracks to its library, those songs find an audience, even if it's just a few people a month, somewhere in the country.

This is the Long Tail.

You can find everything out there on the Long Tail. There's the back catalog, older albums still fondly remembered by longtime fans or rediscovered by new ones. There are live tracks, B-sides, remixes, even (gasp) covers. There are niches by the thousands, genre within genre within genre: Imagine an entire Tower Records devoted to '80s hair bands or ambient dub. There are foreign bands, once priced out of reach in the Import aisle, and obscure bands on even more obscure labels, many of which don't have the distribution clout to get into Tower at all.

Oh sure, there's also a lot of crap. But there's a lot of crap hiding between the radio tracks on hit albums, too. People have to skip over it on CDs, but they can more easily avoid it online, since the collaborative filters typically won't steer you to it. Unlike the CD, where each crap track costs perhaps one-twelfth of a $15 album price, online it just sits harmlessly on some server, ignored in a market that sells by the song and evaluates tracks on their own merit.

What's really amazing about the Long Tail is the sheer size of it. Combine enough nonhits on the Long Tail and you've got a market bigger than the hits. Take books: The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon's book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are (see "Anatomy of the Long Tail"). In other words, the potential book market may be twice as big as it appears to be, if only we can get over the economics of scarcity. Venture capitalist and former music industry consultant Kevin Laws puts it this way: "The biggest money is in the smallest sales."

The same is true for all other aspects of the entertainment business, to one degree or another. Just compare online and offline businesses: The average Blockbuster carries fewer than 3,000 DVDs. Yet a fifth of Netflix rentals are outside its top 3,000 titles. Rhapsody streams more songs each month beyond its top 10,000 than it does its top 10,000. In each case, the market that lies outside the reach of the physical retailer is big and getting bigger.

When you think about it, most successful businesses on the Internet are about aggregating the Long Tail in one way or another. Google, for instance, makes most of its money off small advertisers (the long tail of advertising), and eBay is mostly tail as well - niche and one-off products. By overcoming the limitations of geography and scale, just as Rhapsody and Amazon have, Google and eBay have discovered new markets and expanded existing ones.

This is the power of the Long Tail. The companies at the vanguard of it are showing the way with three big lessons. Call them the new rules for the new entertainment economy.

Rule 1: Make everything available [...]

Rule 2: Cut the price in half. Now lower it. [...]

Rule 3: Help me find it


By the way, the "Long Tail" concept is neat enough, but, in addition, Touching the Void is an excellent film, not least because of Mr. Simpson's accidental spiritualism.


MORE:
Lawrence and Alex's Great Publishing Adventure (LAWRENCE DOUGLAS (with ALEXANDER GEORGE), 1/12/05, Chronicle Review)

Our sentimental education in the ways of publishing began two months before our book of humor, Sense and Nonsensibility, was to be issued by Simon & Schuster. Over lunch at the publishing giant's corporate headquarters in Manhattan, our publicist revealed a highly confidential fact: "Advertisements don't sell books." When we registered our surprise, he assured us that this was the typical reaction of first-time trade authors. "Ads are totally passé," he said. We were therefore immensely relieved when, over dessert, he revealed that Simon & Schuster was not planning on running any ads for our book whatsoever. "Let the publisher of Eats, Shoots & Leaves waste its money on full-page color spreads in The New York Times," we snickered. We knew better!

Our spirits remained high when our summer publication date quietly passed. Patiently we waited for reviews to appear. Two early and enthusiastic notices in Publishers Weekly and Library Journal prepared us for the coming flood, and we openly wondered whether David Levine's caricature in The New York Review of Books would flatter or ridicule us. But weeks went by, and nothing further appeared. No Booklist, no Kirkus; not even our own campus newspaper reviewed our book. This prompted our ever-helpful publicist to share another trade secret: "Reviews don't sell books."

Frankly, we were flabbergasted. "Really?" we exclaimed. "Not even good reviews?"

"Oh ... good reviews." he sniffed. "Yes, I suppose they can help, but even then. ... "

The process was starting to appear mysterious. "How do books sell?" we asked.

"When people buy them," our publicist confided.

We had occasion to muse over the significance of this lapidary insight as we monitored our Amazon ranking. It remained stubbornly at 1.5 million. That figure was far higher than the total number of volumes housed in Amherst's venerable Robert Frost Library. How could that be? Our Amazon site already had more than its share of glowing five-star reviews written by our respective siblings, partners, former lovers, children, and close or indebted friends, not to mention ourselves. Suddenly we saw the flaw in our strategy -- it assumed that people were aware of our book's existence, and did nothing to steer the would-be buyer to our bargain-priced volume. Promptly we hired work-study students to insert exuberant plugs for our book into otherwise-lackluster reviews of our competitors' works. Amazon's listing for David Sedaris's latest was soon flooded with comments like, "Entertaining. Great for the bathroom. But if you want something life-alteringly hilarious, you're better off with Douglas & George's Sense and Nonsensibility." Or, for The 9/11 Commission Report: "After reading this sobering and important document, I was glad to unwind with Douglas & George's gem, Sense and Nonsensibility."

Within days, our Amazon ranking had broken through the glass ceiling of 100,000. A week later we were under 10,000. And for one glorious, improbable day, we were at 485.

Emboldened, we turned next to bookstores.

Posted by Orrin Judd at February 19, 2005 10:37 AM
Comments

A book about being trapped and freezing in the mountains isn't complete without cannibalism.

Posted by: Raoul Ortega at February 19, 2005 6:21 PM

Aren't these guys admitting that they hired comment spammers? This is why there is so much spam around - it works.

Posted by: Annoying Old Guy at February 19, 2005 6:53 PM
« THE REBELLION: | Main | A SERIOUS MISUNDERESTIMATION: »