Print

Email story

Comment

Email editor

Features

Taking business into the age of space

By JOSH KORR
Published July 15, 2006

I love living in 2006.

It's nice, of course, to be free of Jim Crow laws, polio and Pol Pot. But being able to get Hardy Boys 7: The Secret of the Caves, Weezer B-sides and Copacabana - Groucho Marx's first movie without his brothers - with the click of a mouse? Now that's paradise.

This world of virtually infinite entertainment is the subject of Chris Anderson's important new book, The Long Tail: Why the Future of Business is Selling Less of More.

To Anderson, Wired magazine's editor in chief, my appreciation for Amazon and iTunes isn't just about the ease of buying gifts and scratching a nostalgia itch. It represents a profound change in the ways we consume media and how businesses sell it: a shift from an era of blockbusters to one of endless variety and niches.

For decades, our entertainment menu has been shaped by scarcity. Music stores have limited shelf space; movie theaters have to attract a certain audience to each screen to make a film worthwhile. The easiest way to deal with this is by focusing on hits.

But when entertainment moves online and shelf space becomes unlimited, two things happen. First, our options broaden tremendously. Whereas a typical Wal-Mart stocks about 55,000 songs' worth of CDs, for example, the online music service Rhapsody carries about 1.5-million songs. Second, our tastes broaden: Just about every Rhapsody song is played at least once a month by at least one listener.

Anderson sees the future in that mass of music beyond the biggest hits, which he calls the long tail.

Rhapsody can make a lot of money if only a handful of people a month listen to the million least popular songs. As Anderson puts it, "A very, very big number the products in the 'Tail' multiplied by a relatively small number (the sales of each) is still equal to a very, very big number."

How big? For Rhapsody, 40 percent of its sales come from the million-plus songs not available in a typical Wal-Mart. A quarter of Amazon's book sales come from the 3.6-million titles beyond the 100,000 that Barnes & Noble carries. The long tail really adds up.

*   *   *

Grounded in numbers like that, Anderson's idea is as irrefutable as it is compelling. He identifies many long tails at work: blogs (the long tail of news), Amazon and eBay (consumer products), the online encyclopedia Wikipedia (knowledge).

The implications are staggering. Want an issue of an obscure 1960 sci-fi magazine? You can find it. Want the latest on your favorite Australian cricket team? Someone will be blogging about it.

This is the much-maligned audience fragmentation we've been hearing about for a decade. But Anderson argues that a fragmented audience is at least as valuable as a unified one; it just creates a different business model. And as powerful filters that help us sort through millions of options combine with growing online communities, successful long tails are neither confusing nor alienating.

"Today we're not so much fragmenting as we are re-forming along different dimensions," he writes. "These days our watercoolers are increasingly virtual; there are many different ones; and the people who gather around them are self-selected. . . . Mass culture may fade, but common culture will not."

*   *   *

Anderson does a good job of teasing out the implications of this new "massively parallel culture." But he leaves the most important question about the digital future unanswered: How much is entertainment as pure information - rather than as physical object - worth?

The invention of the compact disc allowed record labels to put off the discussion. As James Surowiecki writes in the New Yorker, "although CDs are, if anything, cheaper to make than LPs, record companies have been able to charge twice as much for them."

Meanwhile, CD prices keep rising - up 16 percent from 1997 to 2003, according to Wired - and a pricing system for music downloads has taken hold that's equally arbitrary.

The Long Tail makes clear that this discussion is more pressing than ever. But Anderson barely addresses it.

He took a stab in his original long tail article in Wired, estimating that online music should be priced at 79 cents a track to reflect the savings of digital delivery. He assumed that "the costs of finding, making and marketing music" will stay the same, "to ensure that the people on the creative and label side of the business make as much as they currently do."

But a lot has changed since October 2004, when the article appeared. Cheap recording software and video equipment and easy distribution methods like YouTube have allowed millions to contribute to the entertainment long tail. MySpace and new tastemakers like Pitchforkmedia.com and myriad blogs have upended traditional marketing and talent searching. Playlists and recommendations have replaced the function of radio for many people.

The Long Tail thus shows that much of the cost of the industry's "creative and label side" is merely money wasted on casting about for the next blockbuster.

That's why the entertainment companies have resisted the pricing question: Addressing it means completely changing the way they do business.

So I suspect Anderson largely ignored the subject simply because it's too big. Anyway, he has done more than enough in writing this book. Now others need to fill in the blanks.

I hope we get it right. Because as much as I love 2006, 2010 should be even better.

Josh Korr can be reached at jkorr@sptimes.com.

[Last modified July 14, 2006, 11:05:59]