Dr. Media says read this, and listen, Gomes counters the post 90’s web fantasy of Anderson, (hate to step on anyones toes) , but his data makes sense. Keep your hands on your wallet. Counterpoint 2, the 80- 20 rule always works in media, online gaming has not grown to the vast proportions hoped, things get old faster on the web, take porn, an endless stream is needed, tell me, what can possbly be new, afterall, you always know the end of that movie.
Gomes’ point is well taken.
It May Be a Long Time
Before the Long Tail
Is Wagging the Web
July 26, 2006; Page B1
Wired Magazine editor Chris Anderson’s hot, new best seller, “The Long Tail,” is causing a sensation with its eye-opening claims about the way the Web is rewriting the rules of commerce. But I’ve looked at some of the same data, and some more of my own, and I don’t think things are changing as much as he does.
The book argues that while traditional companies are limited by shelf space to offering only a relatively small number of “hits,” on the Web, they can carry a vastly bigger number of slower-selling items. These “misses,” which make up the “tail” of the title, can, he says, add up to a big number — maybe even bigger than sales of the hits.
That would be very different from the business world we know today; no wonder the book’s cover promises “The New Economics of Culture and Commerce.”
Let’s start this discussion where Mr. Anderson starts his book, with his discovery of what he calls a paradigm-changing statistic. In the introduction, he tells how he learns from Ecast, a music-streaming company, that 98% of its catalog gets played at least once a quarter — much more than most would predict.
This “98 Percent Rule,” as Mr. Anderson names it, suggests the remarkable prospect that no matter how much inventory you put online, someone, somewhere will show up to buy it. He writes, “Everywhere I looked the story was the same. … The 98 Percent Rule turned out to be nearly universal.”
Except it’s not. Ecast told me that now, with a much bigger inventory than when Mr. Anderson spoke to them two years ago, the quarterly no-play rate has risen from 2% to 12%. March data for the 1.1 million songs of Rhapsody, another streamer, shows a 22% no-play rate; another 19% got just one or two plays.
Mr. Anderson told me in an email that he only mentioned the 98 Percent Rule to show how he first got interested in the book’s overall subject, adding, “I have no idea how broadly it applies today.”
In the book’s main sections, Mr. Anderson writes that as things move online, sales of misses will increase — so much so that they can equal or exceed the sales of hits. The latter is the book’s showstopper proposition; it’s mentioned twice on the book’s jacket.
I was thus a little surprised when Mr. Anderson told me that he didn’t have any examples of this actually occurring. At Netflix and Amazon, two of his biggest case studies, misses won’t outsell hits for at least another decade, he said. None of these qualifications are in the book.
Mr. Anderson told me the lack of an example of misses outselling hits doesn’t diminish his basic point, which he said is simply that the role of the tail “is big and getting bigger.”
By Mr. Anderson’s calculation, 25% of Amazon’s sales are from its tail, as they involve books you can’t find at a traditional retailer. But using another analysis of those numbers — an analysis that Mr. Anderson argues isn’t meaningful — you can show that 2.7% of Amazon’s titles produce a whopping 75% of its revenues. Not quite as impressive.
Another theme of the book is that “hits are starting to rule less.” But when I looked online, I was surprised to see what seemed like the opposite. Ecast says 10% of its songs account for roughly 90% of its streams; monthly data from Rhapsody showed the top 10% songs getting 86% of streams.
Bloglines, the widely used blog-reading tool, lists 1.2 million blogs; real ones, not computer-generated “spam blogs.” The top 10% of feeds grab 88% of all subscriptions. And 35% have no current subscribers at all — there’s clearly no 98 Percent Rule in the blogosphere.
At Apple’s iTunes, one person who has seen the data — which Apple doesn’t disclose — said sales “closely track Billboard. It’s a hits business. The data tend to refute ‘The Long Tail.’ “
Other economists, of course, are looking into these same questions, though some seem to be reaching far more restrained conclusions. Harvard’s Anita Elberse, whom Mr. Anderson said was a consultant during his two-year research project, studies the video sales market, both online and off.
She said in an email that her work to date shows a “slight shift” toward the tail. But she also noted “a rapidly increasing number of titles that never, or very rarely, sell,” which suggests “it is difficult for content providers to profit from the ‘tail.’ “
It would be wonderful if the world as Mr. Anderson describes it were true: one where “healthy niche products” and even “outright misses” collectively could stand their ground with the culture’s increasingly soulless “hits.”
But while every singer-songwriter dreams from his bedroom of making a living off iTunes, few actually do, mostly because so many others have the very same idea. And to the extent that Apple is making money off iTunes, thanks go to Nelly Furtado and other hitmakers. Indeed, you can make the case that the Internet is amplifying the role of hits, even in relation to misses, not diminishing them.
So maybe Mr. Anderson really has unlocked the sort of new business rules the cover promises. I say we wait before ripping up any business plans. Let’s see how the tail shakes out.