The Long Tail Wags the Dog

Dave Stephens, author of Procurement Central, isn’t the only blogger who likes to muse about Procurement’s “Long Tail”. As you may recall, Doug Hudgeon of Vendor Management prognosticated on the issue in Are your vendors the Spice Girls or Arcadia? and I wrote about some of my own musings last month in my post Build To Order.

However, for those of you who want some in depth discussion of the “long tail”, a new book about entertainment, technology and statistics that predicts that popular culture-and the business associated with it-will be transformed by the internet entitled “The Long Tail: Why the Future of Business is Selling Less of more” by Chris Anderson is now available.

Now I’ll admit that I haven’t had a chance to read the whole book yet, although I have read the original article that the author wrote back in 2004 a number of times, but I have read a number of reviews, including a great article in a recent edition of The Economist entitled What the long tail will do (subscription required). The article points out that one of the main points of Mr. Anderson with respect to entertainment is that the niche, the obscure and the specialist, will gain ground at the expense of the hit. As evidence, he points to a drop in the number of companies that traditionally calculate their revenue/sales ratio according to the 80/20 rule—where the top fifth of products contribute four-fifths of revenues. Ecast, a San Francisco digital jukebox company, found that 98% of its 10,000 albums sold at least one track every three months. Expressed in the language of statistics, the experiences of Ecast and other companies such as Amazon, suggest that products down in the long tail of a statistical distribution, added together, can be highly profitable.

Long-tail enthusiasts argue that the whole of culture will benefit, not just commercial enterprises. Although many people appear to be quite happy to watch and listen to what the mainstream provides, if individuals have the opportunity to pick better, more ideally suited entertainment from a far wider selection, they will take it, according to the theory of the long tail. For example, YouTube is now serving up 100 million videos a day.   (And I personally buy more music in mp3 form from AudioLunchBox, Mperia, and related sites then I do traditional CDs these days.)

Interestingly enough, Mr. Anderson, who developed the long tail theory in the aptly named Wired article The Long Tail back in 2004, has backed away somewhat from his original take in which he suggested that the long tail would be a bigger market than the hits. His book says, more cautiously, that “all those niches can potentially add up to a market that is as big as (if not bigger than) the hits.”

The article in the Economist indicates that one weakness of this otherwise excellent book is that it tries to apply the theory of the long tail to fields far beyond entertainment and e-commerce. The article notes that Mr. Anderson sees long-tails in labour (offshoring) and national security. Although I am inclined to agree in that the application of the long-tail theory to national security is too much of a stretch, I disagree with the author of the Economist article and believe that the long-tail theory does apply to labour. However, even though outsourcing is part of the distribution, I would classify Crowdsourcing as the long-tail of labour.

Even though I do not think that any one author, reviewer, critic, analyst, researcher, or futurist really understands long-tail in its entirety, and that no one can fully predict what the long-tail future will deliver, I believe that as time goes on, we will see it taking a greater hold of many marketplaces, not just entertainment and e-commerce. Furthermore, I think the open-source movement will continue to significantly contribute to the long-tail in the technology sector and redefine the sector as a whole as it contributes to the emerging “non-monetary economy” that seems destined to emerge at the end of the long-tail.

For more insight, you can check out CNet’s interview with the author in this article. I found the most interesting parts to be the following questions and answers:

What was the most surprising thing you came across in your research?

The most surprising thing was industries that understood the long tail that I hadn’t anticipated. When you think of the long tail, it’s basically a large number of niches that compete with one-size-fits-all mass-market products. There are so many precursors. You know, fashion has always had boutique and couture. And you can think of that of as a long tail of clothing.

In food, we’ve seen the rise of organic and artisanal food as the long tail of agriculture in a sense. It used to be difficult to have that in the supermarkets. But what I learned is that even in the supermarkets because of efficiencies and supply chains and stock management technology, there’s been more than a doubling in products on the shelf. Even Wal-Mart is now offering organic, which is a day many thought would never come.

Who are the most important people in the long tail?

The producers. I mean the long tail is made up of millions and millions of people who are creating content and finding an audience for it. Look at all the bloggers out there. They have essentially extended the tail of media a millionfold because it’s so easy to do so and they have something to say.

So I think that the real lesson of “The Long Tail” is that that notion that professionals produce and amateurs consume is really being blurred and we’re realizing that amateurs often have as much as to contribute as the professionals do and there are so many more of them. Wikipedia, I think, is perhaps the best example of that.

In other words, the long tail is just about everywhere and each and every one of us is carrying it forward. Now that’s food for thought.