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July 31, 2006

The Long Tail, now in book form
plus the Wall Street Journal bites back

I'd mentioned it before its release, but Chris Anderson's new book, the Long Tail, is out now. Its a good read - though perhaps a little long on hyperbole and projection, and a little short on connecting to business.

There's an somewhat not unfairly
critical article of Chris Anderson's book from Lee Gomes, of the Wall Street Journal. He contends that the long tail is, perhaps, a bit of an industry myth, much like "Internet Time" and other Bubble economy fun.

For example (from the
article):

  • In the category of online music, services like Ecast, Rhapsody, are finding that 12% to 22% of songs never get played, and another 19% (or so) only get one or two plays.
  • Bloglines., which has 1.2M “real” blogs (i.e. not machine generated) in its catalog finds that 10% of blogs are 88% of its subscriptions, while 35% have no subscriptions at all.
  • Most condemningly, for Amazon (the quintissential "long tail" company) 2.7% of purchases account for 75% of its revenue.
  • And we see even with search that 75% of user click-thrus resolve to just the top 100,000 domains (of about 50M or so).

Boy, that all sounds like the Pareto priniciple in action to me (AKA the 80/20 rule).

So what's up with that?

As
Lee Gomes points out, monetization, if anything, seems to be even MORE crystalized along the 80/20 rule axis; only a few companies are really deriving financial benefit as "pure" plays.

Nevertheless, creating engagement, I'll argue, requires serving fragmentation (even if its only percieved) - and ultimately,
the money follows that.

5 comments:

0 said...

IMHO, I imagine the effort to identify and monetize the misses (the tail) will be too great in most industries that the Pareto principle will apply and extracting sales from that 80% is sometimes just not worth all that effort(Amazon and books which are unavailable in conventional stores is one such exception).

But he is "Mr.Anderson" - he maybe on to something if we can identify where it can be leveraged in each industry vertical.

Sree Kotay said...

But don't you think that long tail aggregation is still key to monetization (because it creates an "authoritative" destination? I'm thinking IMDB, Google, Amazon - I usually only care about the top XX% stuff, but I go because they have all the other stuff...

Anonymous said...

Lee Gomes' article today is also very interesting, in which he wrote:

The outside estimates of what percent of Amazon's book sales are from beyond its "hits," commonly defined as everything but the company's top 100,000 sellers, range from 20% to 40%. But none of these studies had access to internal Amazon data, and Amazon itself is tight-lipped about the issue.

While Amazon is famous for listing millions of books, several ex-Amazon insiders cautioned against assuming that the back catalog necessarily contributed a big percentage to overall sales. Its real function, they say, is to draw in customers, even if they end up just buying "hits."

"You could look at it like running buses late at night," said one. "It's not as though it's profitable at the margin, but it probably boosts ridership in general."

Sree Kotay said...

yeeeep - I think that's right; "authoritative" is key...

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