Tag Archives: long tail

beware the crap tail

Chris Anderson says “almost anything is worth offering on the off chance it will find a buyer.” I think it is important to know that even though the long tail model has exciting implications, we cannot forget the “almost” in this statement.

Don’t get me wrong. I agree that there exists a long tail. I also think, though, that there is an even longer tail that nobody will buy from. If I may, I will call this body the “crap tail.” Consider the example of “crap tracks.” Anderson says, sure, there are a lot of crap tracks out there, and he is not worried because they “just sit harmlessly on some server.” I believe we must take this assertion with a grain of salt. Sure, the aggregate sales of obscure music has large implications for how we should organize the industry, and clearly there are worthwhile profits to be made. However, there are real costs associated with producing and making available these crap tracks. Suppose a population of really crappy teenage singers decide to sell their stuff on iTunes, and suppose that nobody wishes to buy their music. Perhaps the the server space necessary to store the crap songs costs more than revenue from the crap songs. I think the aggregate effects of scenarios like this should not be forgotten in the quest to milk the long tail for all of its revenue. The crap tail, if it is sufficiently large, could at the very least erode the long trail. I firmly believe that there is some music out there that has no musical merit or camp value, and will never be bought. If the volume of this music is sufficient enough, it can be an invisible hole in the profits bucket. Thus, I believe it is most beneficial NOT to commit fully to the long tail model. I think that to truly optimize the online music industry, there needs to be some sort of filter so that the online retailers know that the costs of providing a track will be covered by sales.

I think that Rhapsody illustrates the effects of the crap tail. At the time of printing, the library consisted of 735,000 tracks. Of those, the author states that only its top 400,000 tracks are streamed at least once a month. That’s cool and all…but you still have 335,000 (45%) of your tracks that presumably don’t get streamed at least once a month. It must cost RealNetworks some sum of money to keep these tracks that nobody listens to. I suppose the danger is in overestimating the length of the long tail, and being stuck to pay server fees for music literally nobody wants to listen to. For industry optimization to work completely, I think providers need to calculate the length of the long tail and cut down on server space taken up by truly crap tracks, because they cost money too.

Again, I believe that we should NOT commit fully to the long tail model. Like many models, it is useful for explaining certain phenomenons. I like the long tail model because it truly gives a new insight on how the music, book, and film rental industries should operate. However, it is mildly problematic because the model says that we should make available every single piece of media we can in the hopes that there will be a buyer. On the whole, the approach may be profitable, but I think a little consideration and caution must be exercised so that the costs of maintaining truly crap tracks that nobody will buy do not erode into profits.

Long Tail

Chris Anderson points out that this digital age has presented “an entirely new economic model for the media and entertainment industries”, which should promt the fields to reform away from old models based on economic scarcity.

He cites that the physical world puts two dramatic limitations on our entertainment. Firstly being the need to find local audiences, and secondly the constraints of physics itself. In the physical world of scarcity, a store has only so much space and funds to hold a limited stock of products. “Retailers will carry only content that can generate sufficient demand to earn its keep.” While there may not be high demands for certain items in a given area, this is not to say that the demand for them does not exist.

Anderson refers to these restrained market models with “hit-driven economics”. This has created “an age without enough room to carry everything for everybody”. The world on online distribution and retail is “a world of abundance.”

A model based on scarcity cause us to assume that “only hits deserve to exist”, in an effort to increase revenue and lower opportunity cost. However executives at iTunes, Amazon, and Netflix, have discovered that “misses usually make money” as well. The digital world has reduced the difference between a “hit” and a “miss” to simply different entries in a database. Both are equally worthy of being carried.

According the Amazon statistics “the market for books that are not even sold in the average bookstore is larger than the market for those that are.” These large, previously ignored markets, are something that industries should start investing in.

Andersons lays out two rules for companies willing to “get over the economics of scarcity” and profit off the Long Tail market. Rule one is to make everything available. The industries need to embrace niches because there will always be an audience for them. Documentaries and foreign films are two things Anderson mentions that have a large demand, but little availability. He wants us to throw away our “estimates of demand” and just “thoughtlessly” make all products available for purchase.

Jumping back to the notion of the digital world not being constrained as heavily as the physical world, he introduces rule two: “Cut the price in half. Now lower it.” In regards to the music business he states “If it clearly costs less for a record label to deliver a song online, with no packaging, manufacturing, distribution, or shelf space overheads, why shouldn’t the price be less, too?” Songs on iTunes should be 79 cents, not 99. We should be basing “price according to digital costs, not physical ones” for digitally run markets.

The last of his rules is for the industries to help people find what they want. In an effort to harness the Long Tail market, he shows how industries are using recommendation sytems to cater to a users needs.