Why the Future of Business
Is Selling Less of More
By Chris Anderson
Hyperion -- 238pp -- $24.95
The Good A compelling analysis of how the mass market is giving way to a "mass of niches."
The Bad Some of the book's advice on how to tap into this dynamic is rather obvious.
The Bottom Line An insightful look into today's surprising retail and cultural landscape.
Megahits sure aren't what they used to be. Television's top-rated show, CSI: Crime Scene Investigation, commands only 15% of TV households, compared with the 74% who were glued to I Love Lucy in the 1950s. The number of CDs reaching at least gold sales status has fallen by half since 2001 -- double the decline of overall music sales. And on the online DVD rental site Netflix (NFLX), only 30% of movie rentals are new releases. What's up (or down) with the hits?
They're rapidly losing ground to what used to be called misses, contends Wired Editor-in-Chief Chris Anderson. In his book The Long Tail: Why the Future of Business Is Selling Less of More, Anderson makes a strong case that the mass market is giving way to a "mass of niches."
The book's title refers to the long, tailing-off part of the demand curve for most products, following the high-selling hits at the curve's head. Anderson's key contention: As the Internet relentlessly cuts the cost of finding and distributing products, it's accelerating the arrival of entirely new markets for obscure books, movies, and even Lego kits that never made it to local stores and theaters.
The Long Tail has some shortcomings, including rather obvious advice on how businesses can tap into this dynamic. But it provides insights into the surprising new retail and cultural landscape. Using deeply researched examples, Anderson neatly knits together many of the Internet's seemingly disparate successes. Amazon.com's (AMZN) online store that boasts "Earth's biggest selection," the rise of millions of blogs on everything from politics to overheard conversations in New York, and Google's (GOOG) highly targeted search ads all are built on exploiting the long tail of products, services, and customers. "Those new markets that lie outside the reach of the physical retailer have proven to be far bigger than anyone expected -- and they're only getting bigger," he writes.
Anderson shows how the outsize importance of hit products was actually a result of distribution bottlenecks that discouraged retailers from stocking anything but hot-selling products. Now niche products can be stocked efficiently in warehouses or superstores (or, in the case of digital goods such as downloadable music, on computer servers), ordered by anyone with a computer and a credit card and shipped cheaply anywhere in the world. Explains Anderson: "The economics of such distribution are changing radically as the Internet absorbs each industry it touches, becoming store, theater, and broadcaster at a fraction of the traditional cost."
That's clearly disruptive for some established players, such as bricks-and-mortar retailers. But even if people seem to be buying fewer hits, they may end up buying more products overall. That's because, thanks to the likes of Google, Amazon, and eBay (EBAY), they can find books, music, and other items more targeted to their particular tastes -- products they didn't know existed or couldn't find before. For instance, some 40% of sales at online music service Rhapsody are songs that aren't available in retail stores. And sales of those niche products can prove to be more profitable than hits since they require no marketing and essentially cost nothing to store on a hard drive.
That's true for digital media, at least -- and that points up one limitation of Anderson's argument. He rightly notes that Google and eBay can be considered long tail businesses since they give thousands of tiny merchants affordable marketing venues for the first time. Perhaps open-source software, which has independent programmers helping to refine code over the Net, and the volunteer-written online reference work Wikipedia constitute a long tail of talent. But Anderson also claims that flour and beer are ong Tail businesses. No matter how many varieties of each are now widely available, that seems a stretch. Both face formidable distribution constraints that the Internet seems unlikely to reduce much.
The book also comes up short on practical advice for anyone who wants to build a business catering to the long tail. In one eight-page chapter, Anderson reveals this "secret": "1. Make everything available," and "2. Help me find it." You probably don't need to read this book to figure that out. And the nine specific rules he offers, such as "Move inventory way in...or way out" and "One price doesn't fit all," seem either cryptic or obvious.
Quibbles aside, The Long Tail illuminates hidden subtleties of modern Western culture, so often portrayed as depressingly uniform. Writes Anderson: "What we thought was the rising tide of common culture actually turned out to be less about the triumph of Hollywood talent and more to do with the sheepherding effect of broadcast distribution." It's reassuring to learn that popular taste is more diverse than we thought.
By Robert D. Hof