August 29, 2006

Staff Picks: Review of The Long Tail by Steve Sherlock

By: 800-CEO-READ @ 3:13 PM – Filed under: Management & Workplace Culture

Chris Anderson, editor in chief of Wired magazine, first published the essay that became the blog that is now the book, The Long Tail, in October 2004. The basic premise of the Long Tail was the result of three observations:
  1. the tail of available variety is far longer than we realized
  2. it's now within reach economically
  3. all those niches, when aggregated, can make up a significant market (1)
His analysis and research into these observations fleshes out the length of the article, through the blog postings (and feedback), to the current book length. Chris builds this proposal carefully. He backs it up with statistics from good sources. The discussion revolves around hits versus niche. The major mass marketing efforts were all to generate hits. Mass media could position the message and deliver it effectively. The internet and technology in general has helped to make the delivery to the niche markets more affordable. The bricks and mortar stores can only stock so many copies of books. An online retailer (like Amazon) can have an unlimited warehouse to provide far more book titles than the corner bookstore. 
Chris identifies three forces and then market opportunities for the Long Tail. The first force democratizes the tools of production. Newspapers were the only source of info as they had the press and wherewithal to distribute the papers. Almost anyone can set up a blog to provide news for their community that can rival the nearest local paper. The second force is to cut the costs of consumption by democratizing the distribution. To continue my newspaper example, the paper was printed and then distributed via truck and carriers to business and households for a delivery price. The local blog can come to your internet doorstep for less. It still costs something as you need access and a system, but overtime the cost for a single newspaper vs. the blog news posting is more.
The third force is to connect the supply and demand for the news. The paper prints what the editorial desk chooses. The blogger focuses on its readership community. Some one outside that community has to go to great expense, if it is possible to obtain the paper. Where the local blog can reach anyone around the world originally via search or word of mouth and subsequently via RSS subscription.
The market opportunities run parallel to the three forces. The first covers the tool makers or producers of the product (content). The second covers the aggregators (Amazon, eBay, et al). The third covers the filters (Google, blogs, et al). Chris summarizes this point well:
Amplified word of mouth is the mnifestation of the third force of the Long Tail: tapping consumer sentiment to connect supply to demand. The first force, democratizing production, populates the Tail. The second force, democratizing the distribution, makes it all available. But those two are not enough. It is not until the third force, which helps people find what they want in this new superabundance of variety, kicks in that the potential of the Long Tail marketplace is truly unleashed. (2)
The Long Tail idea that Chris has created provides an outlook for the marketplace going forward. This is the blueprint by which one can succeed. Note that Mass media will not disappear overnight. The Long Tail will work by creating niches around the mass market. Other brick and mortar businesses will continue to succeed but it will depend upon the nature of the product and consumer relationship. For those products in the information or knowledge space, the Long Tail principles should be followed.
My humble review will not be the end to the conversation. The discussion around the Long Tail will continue. Chris holds an active conversation around points made in the book and in other reviews of the book on his Long Tail blog. If you have not visited the blog or would like to curl up with a good business book, then this is one I would heartily recommend. You won't go to sleep reading it.
Additional quotes to take away:
When you can dramatically lower the cost of connecting the supply and demand, it changes not just the numbers, but the entire nature of the market. This is not just a quantitative change, but a qualitative one too. Bringing niches within reach reveals latent demand for non-commercial content. Then as demand shifts toward the niches, the economics of providing them improve further, and so on, creating a positive feedback loop that will transform entire industries -- and the culture -- for decades to come. (3)
Instead of the office watercooler, which crosses cultural boundaries as only the random assortment of personalities found in the workplace can, we're increasingly forming our own tribes, groups bound together more by affinity and shared interests than by default broadcast schedules. These days our watercoolers are increasingly virtual -- there are many different ones, and the people who cather aound them are self selected. We are turning from a mass market back into a niche nation, defined now not by our geography but by our interests. (4)
One of the big differences between the head and the tail of the producers is that the further down you are in the tail, the more likely you are to have to keep your day job. And that's okay. The distinction between "professional" producers and "amateurs" is blurring and may, in fact, ultimately become irrelevent. We make not just what we're paid to make, but also what we want to make. And both can have value. (5)
(1) - The Long Tail, page 10
(2) - ibid, page 107
(3) - ibid, page 26
4) - ibid, page 40
(5) - ibid, page 78
Steve Sherlock writes primarily at Steve's 2 Cents
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