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The Long Tail - Book Review

1 May 2008
Dr. Moria Levy
book cover

“The Long Tail”, a concept borrowed from statistical mathematics and renowned as a cornerstone of WEB2.0, is explored primarily in terms of economics and business in the book. Originating as an extension of an article by the author Chris Anderson on the Internet, the book has gained recognition as one of the most downloaded articles online.

The book has received numerous congratulations and compliments, featuring endorsements on the cover from notable figures such as the CEOs of Yahoo! and Google (yes, the man himself), the author of the renowned book on the wisdom of crowds (Shorney), along with other industry executives and academics from Stanford. Providing a comprehensive exploration, the book elucidates the essence of the new economy in accessible terms, offering numerous examples from our surroundings, especially within the realm of the Internet.

The book covers the following topics:

  • Introduction: What is the long-tail principle?

  • Increase supply

  • Increase distribution

  • The link between supply and demand

  • Rules and regulations of long-tail operations

This summary is merely an overview, addressing general aspects without delving into specifics such as the effects of the time dimension, the creation of new markets without intermediaries (as exemplified by LEGO), and more. Recommended for anyone keen on comprehending the ongoing phenomena on the Internet, I would classify it as a must-read for those seeking to grasp this model.

Happy reading!

Introduction: What is the long-tail principle?

The long-tail principle, as its name implies, originated in probabilism. In contrast to the renowned Pareto principle, which directs attention to the top 20%, constituting 80% of purchasers, and the top 20% of products, contributing to 80% of purchases, the long-tail principle advocates focusing on the other 80%. This expansive long tail, depicted in the diagram below, can yield impressive results and significantly enhance the overall market under the specific conditions outlined below.

The long-tail phenomenon involves a shift from focusing on hits to embracing niches. Individual tastes encompass various areas; some align with the majority, while others are uniquely specific. The book's subtitle, "Selling Less of More," highlights the concept of selling to niches. While occasionally, something from the tail may rise to prominence, like a local Cinderella, taking a place among the hits, in most cases, it involves selling a bit of content that wasn't sold before due to the absence of hits.

The long-tail phenomenon is evident across multiple industries, including film, music, books, radio, television, news, software, product sales (e.g., eBay), internet advertising, and the blogging world.

Advocating for a culture of "and" (head and tail) instead of a culture of "or" (choosing hits), the long-tail principle ultimately benefits consumers. While the long tail does contain subpar content, it also features quality material in substantial quantities. An intriguing economic question is whether it's a zero-sum game, where sales shift from head to tail, or if the market expands. The author explains how these phenomena coincide, leading to market growth.

The existence of a long tail is not constant (mathematical examples excluded), and three essential components contribute to its presence:

  1. Increasing supply (approaching infinity).

  2. Expanding distribution (significant reduction).

  3. Establishing links between supply and demand (ensuring users can access relevant supply efficiently).

Detailed explanations of these components follow in the subsequent paragraphs.

Increase supply

Increasing supply and making it (almost) infinite creates abundance. Anderson labels this heightened supply phenomenon as the democratization of production tools. It allows every enthusiast (perhaps the key term here) to consume and generate content, challenging the traditional dominance of established entities. Two primary methods contribute to cost-effective production:

  1. Movies, music, and various magnetic media (software, etc.) are manufactured at significantly reduced costs. The expense of production experiences a steep decline, facilitated by powerful computers, inexpensive and widely available electronic products enabling amateurs to create music and films, and cost-effective labor in Eastern countries participating in software development.

  2. Blogging tools also serve as a potent means to augment information and news production, extending to platforms like Wikipedia.

The consequence of these developments is a transition of consumers from passive recipients to active contributors. The once distinct realms of consumers and producers intertwine, erasing conventional boundaries. This shift carries profound sociological and cultural implications beyond considerations of long or short tails.

Increase distribution

Distribution costs are as crucial as production costs. Without a substantial reduction in distribution expenses, selling to niche markets and incredibly unique niches conducive to a long tail becomes impractical.

Reducing distribution costs operates on various fronts:

  1. Storage efficiency: Leveraging the Internet for sales and consolidating distribution in large warehouses at select locations.

  2. Cost savings through innovative distribution models like eBay, Google (consider Google Ads – ads on sites used by individuals and organizations as distribution channels, often yielding profits), and Amazon (functioning as a distribution gateway for numerous businesses, big and small, beyond its platform).

  3. Economizing on packaging costs and materials: In scenarios where items such as songs, DVDs, or software can be transmitted as files, eliminating the need for physical packaging. This approach extends to reducing paper usage, mainly when customers access news online rather than through printed media.

The link between supply and demand

Savings in production and distribution costs alone would not have given rise to a long tail of consumption without the role of intermediaries. In a world of limitless possibilities, making choices as consumers becomes challenging. I find myself leaning towards several focused options. How, then, does the long tail persist? It thrives thanks to intermediaries who streamline the connection between sellers and buyers, and this shortcut can manifest in various forms:

  1. Primary Linker: Google's Search Engine: Despite the criticisms it faces for making decisions on our behalf, Google's algorithms enable precise targeting, allowing access to specific niches and quality products.

  2. Specialized Tools for Product Categories: Tools tailored for specific products, such as music, DVDs, blogs, and more, have introduced features that facilitate swift orientation and quick access to the tail. This holds, especially when users know what they seek, even through guided questions within the tool's environment.

  3. Recommendation Features in Various Tools: Many platforms incorporate recommendation systems where users share insights about books, movies, and more. Beyond the recommendation score, the accompanying text adds value. While it's possible to fake recommendations, doing so consistently across diverse interests is challenging.

  4. Influential Role of Blogs and Bloggers: Blogs and their authors have emerged as pivotal mediators. A positive review on a blog can carry more weight in certain circles than recommendations from traditional critics. All these shortcuts effectively function as filters, guiding service seekers to their desired destinations, a principle well-known in knowledge management. The book encapsulates this concept succinctly: In a world of boundless options, it's the context, not just the content, that reigns supreme.

Rules and regulations of long-tail operations

The principles governing the long tail can be encapsulated in a single sentence: Make everything available and assist me in finding it. Nonetheless, a set of laws and operational principles delve deeper into the topic:

Cost Reduction:

  1. Streamlining costs through physical, digital, or hybrid approaches.

  2. Enlist customers as partners. An illustration is the realm of recommendations, among numerous other instances.

Embrace "Niches":

  1. Acknowledge that one distribution channel cannot cater to all needs. Stores, websites, and centralized distribution methods are all essential for broader sales.

  2. Recognize that one product cannot fulfill all desires. Diversify your product offerings.

  3. Realize that a single price only suits some customers. Some are willing to pay more for novelty, while others value rarity. Cater to varying preferences.

Grant a Level of Control:

  1. Share information liberally. Provide customers with comprehensive product details and the ability to sort items by various parameters.

  2. Cultivate a mindset of "and" rather than "or," fostering a culture of abundance rather than scarcity.

  3. Trust the market to contribute to marketing and sales efforts.

  4. Appreciate the importance of freedom – freedom for customers to choose individual clips over entire discs, freedom to choose based on personal preferences, and freedom to decide.

The author explores potential developments as the long tail evolves, such as detailed product componentization (e.g., individual clips), measures to expedite physical shipping processes, and more. According to the author, the central question isn't whether more choice is beneficial (which he deems evident) but rather, what do we truly desire? The author contends that everything else will naturally fall into place, thanks to the long tail.

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