Anita Elberse recently published an article in the Harvard Business Review that has been widely reported to prove that the Long Tail theory of Chris Anderson is wrong. That’s generated quite a bit of activity in the blogosphere, as the Long Tail idea is cherished as one of the key tenets of the latest vision of how the Internet changes the economy and business thinking. I’ve a list of the more interesting contributions on this topic under “Related Articles” below, but I want to spend most of my ink here unravelling some subtleties that make real analysis hard.
First, let’s describe WIred editor Chris Anderson’s theory, which he espouses in both an article and a book. It is basically a theory of selling that suggests that in the Internet era, selling fewer copies to more people is a new strategy that can be successfully pursued. In the past, all the interesting business was around a few hits, and many businesses focused entirely on producing the next hit. The group of persons that buy the hard-to-find or “non-hit” items is the customer demographic called the Long Tail. Given a large enough availability of choice, a large population of customers, efficient search engines, and negligible stocking and distribution costs, it becomes possible to profitably target the long tail in Chris Anderson’s view.
Elberse did some research around these ideas by studying data from Rhapsody, Australian Netflix equivalent Quickflix, and Nielsen. The study was all about music and film offerings, and so was heavily media influenced. Essentially she says that all the good news remains concentrated in the “head” and not the “tail”. Specifically, 32% of all plays were for the top 1% of goods, and 78% were for the top 10%. In addition, consumers were much more likely to rate the blockbusters in the head as good. Lastly, she presents evidence that the Long Tail is largely the domain of heavy consumers, and so big new audiences are not being created there.
It seems that Elberse is saying that consumers are not finding “hidden gems” out in the long tail, and in fact that they’re not even venturing into the tail that much. She gives compelling evidence that the activity in the head is even more frenetic.
What’s really happening here? Is the Long Tail dead? Did it ever have a chance?
Here’s my problem: we’re measuring somethng that affects the measurement.
Suppose there is a Long Tail. It certainly is much easier to find and purchase obscure products. Now let’s suppose that some of those products are actually pretty good. It’s also much easier to get that word out as we blog and post to our social networks. The Internet is, after all, an Influence Multiplier. Of course when we find something obscure, we probably will only write about it if we like it. It isn’t the product, but the maker or reseller we write about if we’re unhappy most of the time. Unhappiness is evidently a much more personal thing that somebody must be held accountable for. Lastly the folks that are the early adopters, in other words, the heavy consumers of new Long Tailish things, are also hugely amplified by the Internet and the rule of 10’s.
What does all that do for Elberse’s results? Well, it means that anything good out on the Long Tail will quickly be elevated to the head if it has any broad appeal at all because of the way the Internet works. It will only be those products of an extremely limited appeal that don’t make that jump. Suddenly, a perfectly legitimate Long Tail buying process has resulted in the “discovery” of a blockbuster and in the process has obfuscated the fact that it started out in the Long Tail.
There is, in fact, quite a lot of evidence that this is exactly what’s happening in Elberse’s results.
First, consider what sort of material Elberse has studied: music and films. These are pretty broad appeal items with the exception of some fringe categories. It’s well understood that Indie artists make some good stuff, but also that they just can’t get the air time to be noticed. In fact, as Chris Anderson notes in his rebuttal:
But there is a subtle difference in the way we define the Long Tail, especially in the definitions of “head” and “tail”, that leads to very different results.
The best example of this is in what she describes as a growing “concentration” of sales around a relatively small number of blockbuster titles. In the Rhapsody data, she finds, the top 10% of titles (out of more than a million in that data sample) accounted for 78% of all plays, and the top 1% account for 32% of all plays. That sounds pretty concentrated around the head, until you reflect, as she notes, that “one percent of a million is still 10,000–[…]equal to the entire music inventory of a typical Wal-Mart store.”
This is a good moment to remind everyone of the normal definition of “head” and “tail” in entertainment markets such as music. “Head” is the selection available in the largest bricks-and-mortar retailer in the market (that would be Wal-Mart in this case). “Tail” is everything else, most of which is only available online, where there is unlimited shelf space.
So in the data she cites, the head of the online music market represents 32% of the all plays, and the tail represents 68%. That’s certainly no challenge to the Long Tail theory; indeed, it’s even more tail-heavy than the data I cited in my book (probably because I used a more generous estimate of 50,000 tracks for Wal-Mart’s inventory).
She then looks at Quickflix data. Here the top 10% of DVDs accounts for 48% of all rentals, and the top 1% accounts for 18%. “The concentration [of sales around the blockbusters] is not as strong as Rhapsody, but it’s still substantial,” she writes.
But here, too, the use of percentages misleads. Quickflix had 18,000 titles at the time of the research, compared to the average Blockbuster’s 3,000 titles–there’s only a factor of six between their inventories, as opposed to a factor of 100 in the Wal-Mart/Rhapsody comparison. If you look at her chart, you’ll see that the top 3,000 titles (ie, the amount equal to Blockbuster’s inventory, or the “head”) accounts for 70% of rentals and the “tail” accounts for just 30%, making it more concentrated on the head than Rhapsody, not less. (BTW, I calculated almost exactly the same split for Netflix in the book.)
My point is not to suggest that Elberse is wrong and that I’m right, it’s only to point out that different definitions of what the Long Tail is, from “head” to “tail”, will generate wildly different results.
The money quote for me is when Anderson invokes the bricks and mortar definition of “head” versus “tail”. He’s pointing out in black and white that there is an obvious part of Elberse’s “head” that consists strictly of items only available by the Internet. These (and probably others because bricks and mortar will pick up the title too if the item appears on their radar) are precisely the items I’m suggested could be dredged out of the Long Tail.
Elberse’s rebuttal to Anderson’s rebuttal is weak. She spends a lot of time basically arguing she doesn’t want to talk about the notion what “head” and “tail” are, and just wants to stick to abstract proportions. But in so doing, she completely misses Anderson’s and my point:
It isn’t that the Long Tail is dead at all, but rather that it is so powerful that the “head” can be wagged by the “tail.”
Related Articles
TechCrunch’s Erick Schonfeld writes that Elberse has “poked holes in the long tail theory”, but that to say there is no money in the Long Tail is nonsense. He raises the interesting notion that it may take a special kind of business to fully take advantage of the long tail, and cites Google AdSense as one such. My takeaway is that this is another flavor of suggesting the Long Tail players have to cast an exceptionally broad net to filter enough gold out of the Long Tail river.
Lee Gomes comes out strongly in favor of Elberse’s view that the Long Tail is not a viable strategy.