Arnold Kling  

The Long Tail

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Taxes and Market Time... Information and Incentives...

Chris Anderson writes,


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...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...

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.


There's always been a lot of blather to the effect that the Net is going to encourage niche markets. But this is interesting analysis that says that it has already happened.

Great pointer from Virginia Postrel. Read her post and also the entire article.

For Discussion. What sort of distribution fits this sort of data?


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COMMENTS (9 to date)
Bruce Cleaver writes:

The exponential distribution?

David Thomson writes:

It has gotten to the point that virtually all my book purchases are from Amazon.com. Also, many DVDs, VHS tapes, CDs---and even some kitchen products. I can often, for instance, buy a used VHS tape for a a few dollars, pay a mere $2.50 for delivery, and get it in the mail in about a week. How can Blockbuster possibly compete having to charge almost the same amount of money for a three day rental? Just yesterday I wasted a trip to a brick and mortar bookstore. It was the first visit in months. I’ve decided that it’s normally best to visit Amazon.com and be done with it. Some people still worry about delivery problems. Let me put your mind at ease. I have personally spent thousands of dollars on Amazon.com and 99.50% of the time everything goes extremely well.

I will make a prediction which should be true within the next four years: many more consumers will be ordering their clothing via the Internet. Clothes, like today’s Dell computers, will be manufactured only after the buyer has paid for them! Presently, we worry that the clothes may not fit exactly right and appear different when delivered than they did on our computer screen. I expect that very soon our body measurements will be taken by precise and unobtrusive scanners. Vastly improving computer monitors will resolve the second concern.

Dave Sheridan writes:

Anderson sort of gives it away in his article, about the power of the long tail -- it's a power function. Amazon and Rhaphsody would have the data to estimate parameters for their markets, and it would be interesting to see how the tails' shape changes through time. As informal networks of like-minded (or like-tasted) consumers get better, one could imagine the tails actually getting a bit fatter. This, by the way, is the mass marketer's nightmare, or so goes the current wisdom.

On a personal note, I've been able to track down some obscure albums from college days--one of which I'd been told years ago was physically unobtainable.

Mathias writes:

Better yet for those living in Manhattan. I can order a book or dvd at 9am from Barnes and Nobles and it will be delivered to me the same day.

Lawrance George Lux writes:

Human taste is always broader than the artistry which serves that taste. The Internet simply allows the Fan to sculpt his desires, while the Artist can use the World as his market; neither need the restriction of physical locale. The spread of Product sale is inevitable. lgl

David Thomson writes:

“On a personal note, I've been able to track down some obscure albums from college days--one of which I'd been told years ago was physically unobtainable.”

You haven’t seen anything yet. I consider the Internet to have outgrown its diapers---but it is still no more than an adolescent child of around ten years old. Just wait until superb monitors are invented that can be sold for a few dollars. And it remains a pain in the rear end to turn on today’s computers. Broadband speed is the exception and not the norm. I can easily foresee the day when many, if not most of our decent size purchases, will directly involve the Internet. Even at this very moment, it is only our high illiteracy rate (estimated at 1/3 of the adult population) which prevents some businesses from taken further advantage of the WWW.

Ravi writes:

I think the Amazon data is actually somewhat misleading. I'm sure plenty of people go to Amazon to get books they can't find anywhere else and, conversely, buy at the local Barnes and Noble when they want something in the 130,000 titles it carries. I'm sure the sales volume of the 130,000 title B&N carries dwarfs the sales volume of the rest of the tail... The more interesting question is how good a measurement of the size of the tail do we have now? Are Amazon's (and other online bookstores') "tail" sales a good proxy or is there undiscovered territory out there?

David Thomson writes:

“I'm sure plenty of people go to Amazon to get books they can't find anywhere else”

That’s only half of it. Amazon.com also helps me to learn about books I’ve never heard about previously. Its recommendations have proven to be quite useful. I find it much more rewarding searching for books and other items on this web site than shopping at a conventional store (Glenn Reynolds (Instapundit) agrees with me and I’m sure we are not alone). I’m actually flabbergasted that folks still waste time visiting a brick and mortar, book retailer. This is, at best, a second rate option. There are even rumors that some publishers may entirely ignore the physical stores and sell their major blockbusters only on the Internet.

"Re-Thinking the Network Economy: The True Forces That Drive the Digital Marketplace" by Stan Liebowitz explains what will and will not be saleable online.

He wrote this paper on the music industry in 2003:

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