Long Tail Lessons

April 13, 2007

Tom Slee has completed his critique of Chris Anderson’s book “The Long Tail”. I loved reading this series… thank you Tom for writing it. I really liked Chris Anderson’s “Long Tail” concept, especially the original Wired Magazine article while Tom strongly dislikes it.

So how can I like both the original concept and the no-holds-barred critique? I think it is because the apparent contradiction helps me understand how the mind works… both Tom’s mind and my own. So in this post I think I will focus on why I continue to like “The Long Tail” concept or “how my brain works”.

In my mind, “The Long Tail” is a business book and it targets the type of individual that reads Jim Collins’ “Good to Great”. As such, the lack of strong economic analysis does not bother me. Flimsy yes, but no worse than the vast majority of business books. With that context in mind, I like “The Long Tail” concept for two core reasons:

  1. “The Long Tail” is a very sticky idea and the term will be widely used and understood for many years.
  2.  “The Long Tail” is a strong argument against the 80/20 rule prevalent in business thought.

Sticky and sound economic analysis do not go hand-in-hand. As an example I would use “The Skeptical Environmentalist” by Bjorn Lomborg which I think is an important book that is mostly unreadable because of the emphasis on economic analysis. You have to make conscious compromises to achieve stickiness.

The 80/20 rule states that 80% of your profit comes from 20% of your customers (or apply the 80/20 rule to your favorite business metric). Imagine Jack Welch consulting for Amazon and laying out a plan to relentlessly focus on the most profitable book customers. I can now envision someone using a long tail argument to counter Mr. Welch and explain that there is virtually zero marginal cost to service the long tail and it makes perfect business sense to continue or even put more effort into doing so. This, in my mind, is a good thing.

Just to throw another seemingly contradictory idea at you… I think Jack Welch is right about the 80/20 rule and ultimately his approach will increase profit, however, I also believe there is an intangible benefit in servicing the less profitable 80% of your customer base. The Long Tail helps strengthen the entire ecosystem (my apologies to the CyberSelfish lady).

That is the power of The Long Tail for me. A sticky idea that hints at a deeper truth.


2 Responses to “Long Tail Lessons”

  1. tom s. Says:

    I absolutely agree it is a “sticky” idea. I think that’s why it bothers me so much – it’s a tantalizing and appealing idea. But that doesn’t make it true.

    Anderson pulls back from saying the 80/20 rule no longer applies. He even admits that measured in percentage terms some online businesses are more concentrated (20% of the items count for a higher percentage of sales) than ye olde bricke shoppes.

    So it may hint at a deeper truth, but if you’re publishing a book about it I think you need to do more than hint.

  2. RAD Says:

    “Hints at a deeper truth” for me means that what Anderson believes is a real pattern (“law” is too strong a word) is actually just a side effect of a more fundamental pattern. Newton’s theory of gravitation is important even if it is superceded by Einstein’s general theory of relativity. That is the best analogy I have off the top of my head… I’m not trying to imply “The Long Tail” is anything as concrete as gravity :-)

    Like any hypothesis, I think it important to express it. Perhaps more so if it is incorrect.

    I think Noam Chomsky’s idea of “Manufactured Consent” is wrong but I find the hypothesis and the sticky terminology very useful when thinking or discussing the role of media in our lives.

    What I see as the deeper truth is continued specialization and/or niche penetration as the underlying mechanism for “The Invisible Hand”.

    You are correct, Anderson fails to show even in anecdotal evidence that The Long Tail is numerically real. What I do believe is real is that in aggregate, the area under the curve does grow and it is new niches being filled that causes this. Niche exploitation does not have to come from existing niche players like independent bookstores, it can come from unanticipated sources. That is my theory anyway :-)

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