July 25, 2006
The tail isn't that long
Slate has a review of The Long Tail: Why the Future of Business Is Selling Less of More. The reviewer points out, correctly in my opinion, that the concept of the "long tail" is valid as far as it goes: an inventory and content management model largely applicable to information economics. It works because the cost between hosting 10,000 songs and 1 million songs on iTunes is negligible, so even if you sell the less popular songs at a fraction the rate of the most popular ones, you still make more money.
He criticizes the author, Anderson, for attempting to expand a useful tool for e-businesses into a theory of life, the universe, and everything. It simply doesn't work, for reasons that you can read for yourself in the review.
I would suggest a reason why Anderson reaches beyond his grasp. It's the same reason the Democrats thought they were going to win in 2004: the Internet may be a bully echo-chamber, but it's not all that good of a pulpit. A small group of connected individuals can seem like a massive, popular movement, but in reality, its ability to penetrate the popular consciousness is rather limited, at least in ways that matter.
As evidence for this, let's look at the big movers an shakers in Internet businesses, those that seem to benefit most from the "long tail" idea. Google, Amazon, eBay, Netflix, Yahoo, and heck, let's throw in Microsoft for good measure. Together they represented a total of $69.32 billion dollars in revenue last year. That might seem like a hefty chunk of change until you consider the really big players in the economic game. ExxonMobil posted $370.6 billion in revenue. Wal-Mart $315.7 billion. Heck, even IBM, which deals in hardware far more than software, sold $91 billion worth of actual stuff.
The businesses profiting off of the "long tail" concept may be making good money, but it's small potatoes compared to the big dogs, boring as they may be. There's nothing sexy about selling billions and billions of items at $2.99 a pop, but you do wind up making a hell of a lot of money. Economies of scale and whatnot. So while media darlings like Google, Yahoo, Amazon etc. may receive a lot more attention than their staid, quiet counterparts in more traditional businesses, they are also a lot less influential. They count for less. If you tried to tell the CEO of ExxonMobil that his business model was outdated in our modern, information-based, 21st-century economy, I think he'd feel pretty justified in telling you to go stuff yourself.
