Stepping on the long tail

There is an interesting kerfuffle brewing about the Long Tail phenomenon, and whether it’s all lies, damn lies, or just statistics. Thanks to Lance Knobel (Davos Newbies) to turning me on to more of the reactions to Chris Anderson’s new (and clearly provocative) book, The Long Tail.

Reading the online debate about whether 20% of the glass is 80% full or 80% of the glass is 20% empty will soon make dancing on the head of a pin sound like fun.

In any case, the Long Tail idea has the ring of truthiness about it. So let’s accept it for the sake of discussion as there seems to be an important question smack in the middle of the idea: Is the long tail good news or bad (or no news) for established businesses? The answer, of course, is it depends.

It seems to depend, mainly, on whose side of the supply chain you’re on. At its simplest, the Long Tail is good news if you’re selling what others are making and bad news if you’re making what others are selling.

If you’re an aggregator (i.e., retailer), the long tail can help you (presuming you can fit within the constraints of low-cost inventorying, customer acquisition, marketing, etc…) because it means you are able to offer a greater variety of products, catering to many small niches where there is less competition and better margins.

If, on the other hand, you’re making products, it means there’s plenty of room in the long tail for selling one of something. For established companies, selling one thing is bad business. For the guy producing an album in his bedroom, selling one thing is good business. And soon, according to the Long Tail, big companies will be competing with millions of these smaller producers, who would each be quite happy with an extremely infinitesimal piece of the pie.

But all is not lost. Most big companies, however, are some combination of aggregator and producer. Even manufacturing firms have established capabilities at the downstream end of the supply chain (like how they aggregate, distribute, and sell their back catalog products). So companies will have to think hard about the implications of the Long Tail trend for the different parts of their business–or, in other words, what long tails do they have, and what long tails are they competing against?

The long tail seems to be bad for companies who invest a lot in product development and manufacturing commitments, but great for those who can develop and produce a variety of products cheaply (where they can experiment with emerging niches). It’s bad for companies that rely on others for distribution and sales (where they may wind up in someone else’s long tail), but good for those with established networks whose long tails they can harvest.

Like most good books with great ideas, the theory behind the Long Tail has already leapt the bounds of its original context–retail–and been applied to everyone everywhere. I’m working on my long tail now. Aren’t you?

         

One thought on “Stepping on the long tail

  1. […] Not to belabor the point, but WSJ had an interesting story about life in the “long tail” (Famous, Online) in describing several small bands and their use of the Internet to generate and tap a following without the traditional scaffolding provided by the established record labels. In my last post on this, I mentioned the risk to established producers of low-cost and lower-expectation competitors: For established companies, selling one thing is bad business. For the guy producing an album in his bedroom, selling one thing is good business. And soon, according to the Long Tail, big companies will be competing with millions of these smaller producers, who would each be quite happy with an extremely infinitesimal piece of the pie. […]

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