News: Online media and the "Long Tail"

The Long Tail, by Wired author Chris Anderson, discusses the special dynamics at work with demand for online media content.

His Long Tail thesis goes something like this: physical businesses (think Blockbuster) would be wasting space and money trying to hold a complete catalog of all the indie films and documentaries, which most people in the store's locale rarely rent or buy. Therefore, they concentrate on selling and marketing the hits.

But in the online world, media sellers can afford to stock the obscurities because someone, somewhere will want to rent or buy, just as someone will want to rent or buy a hit movie. If you look at sales of hits and obscure titles, and chart them on an x axis, the hits will form a hump at the beginning, and then trail off to the niche items -- the "Long Tail." Regardless of whether it is a hit or not, a sale is a sale, and companies like Amazon and Netflix are making a lot of money (in aggregate) selling items in the Long Tail.

Furthermore, technologies that recommend other titles based on past hit or Long Tail choices help increase the sale of items in these niche categories -- Anderson uses the example of the success of the mountain climbing nonfiction title "Into Thin Air" boosting the sales of a similar British book released in the late 80s. The initial release of the British book was a flop, and was almost impossible to find in physical bookstores, but once it was associated with "Into Thin Air," it sold very well on Amazon.

Anderson writes:

"When you think about it, most successful businesses on the Internet are about aggregating the Long Tail in one way or another. Google, for instance, makes most of its money off small advertisers (the long tail of advertising), and eBay is mostly tail as well - niche and one-off products. By overcoming the limitations of geography and scale, just as Rhapsody and Amazon have, Google and eBay have discovered new markets and expanded existing ones."

Of course, Anderson also notes that for every Long Tail success story, there are more than a few business failures. Think mp3.com, which didn't realize until it was too late that few people would be inspired by songs from obscure home-grown artists and bands, without any recognized talent to draw people to the site.

What does the Long Tail trend mean for 3D media? The article doesn't get into this specifically, but I believe it means that 3D game or movie titles will potentially have a much longer life and larger sales potential online than in Walmart and Blockbuster, where old stock has to be discounted and moved out to make way for new releases. In addition, most physical stores have to concentrate on the hits -- the Pixar blockbusters and Id Software FPSs -- whereas online, obscure titles, foreign releases, alternate versions or modded levels can establish a niche market and potentially turn a profit over the long run.

The complete article is available at http://www.wired.com/wired/archive/12.10/tail.html