The Long Tail

by Chris Anderson

  Amazon started by placing industrial printers in its own warehouses. Then, in mid-2005, the company massively expanded its capacity by acquiring BookSurge, a leading print-on-demand business. A few months later, it did the same for movies, buying CustomFlix, a DVD-on-demand company. Now Amazon can retain an inventory that takes up no space and has no cost at all: These books and movies remain files in a database somewhere until they’re ordered.

  Of course, Amazon didn’t invent the notion of print-on-demand. It has long been a dream of the book industry, but until recently, print-on-demand was hobbled by technical and economic constraints. Printing a paperback that looks good is not, surprisingly, the problem. Unless you know what to look for (mostly the reproduction of images on inside pages), you probably can’t tell if that paperback that just arrived from Amazon was printed in a batch of 50,000 by the publisher or in a lot of one by a laser printer in one of Amazon’s warehouses.

  Despite the compelling economics, the publishing industry is still far from a widespread shift to print-on-demand. Traditional printing is considerably cheaper for large batches. It is still costly to turn a book manuscript into a file that’s formatted correctly for print-on-demand. As I write, print-on-demand is also limited to a few set paper sizes, meaning that books whose pages are larger or smaller than certain dimensions absolutely must be redesigned and reformatted. Then, there is the gnarly question of rights. For older books, the author’s permission is required to make a book available as a print-on-demand edition. Yet many authors are afraid that the price premium now required of on-demand printing (a few dollars to cover the slightly higher production costs compared to bulk printing) will suppress sales; so they resist.

  But the potential of print-on-demand is extraordinary, and not just for the onesies and twosies. The biggest cost to publishers is the cost of returns from booksellers, which the publishers freely accept as a matter of industry practice. The reason booksellers over-order is that they want to make sure they don’t run out between print runs, and since the cost of any excess is borne by the publisher, there’s little risk in ordering a bit more than they might need. But if the booksellers knew that demand could be filled via small print-on-demand batches between big print runs, they might be willing to order no more than they actually need, potentially reducing returns radically.

  Thus the economic efficiencies of print-on-demand wouldn’t just be extending the Long Tail, but also improving the economics of the head, where there are far more dollars at stake. This is, needless to say, a powerful attraction and will only accelerate the adoption of the technology.

  THE END OF INVENTORY ALTOGETHER

  The ultimate cost reduction is eliminating atoms entirely and dealing only in bits. Pure digital aggregators store their inventory on hard drives and deliver it via broadband pipes. The marginal cost of manufacturing, shelving, and distribution is close to zero, and royalties are paid only when the goods are sold. It’s the ultimate on-demand market: Because the goods are digital, they can be cloned and delivered as many times as needed, from zero to billions. A best-seller and a never-seller are just two entries in a database; equal in the eyes of technology and the economics of storage.

  Today this is the model that iTunes, Rhapsody, and the other digital music services are so dramatically demonstrating. But the opportunity goes much farther than just music. The overwhelming trend of our age is to take products that were once delivered as physical goods, find ways to turn them into data, and stream them into your home.

  For video, pure digital markets range from commercial video-on-demand services provided by cable companies to Web-based video aggregators such as Google Video. Peer-to-peer file trading technologies such as BitTorrent are the underpinnings of hundreds of noncommercial digital video markets, while iTunes is building a thriving pay-per-download video business for its video iPod. Some of this is television content, making these network-based digital video markets a sort of TiVo in the sky. Other aggregators offer movies, a market that will someday take Netflix’s massive selection and make it all instantaneously available (a move that will presumably be led by Netflix itself).

  Video games, once delivered on cartridges and then on DVDs, are now increasingly streamed as bits to game consoles in the living room. This creates a new market in everything from older titles and niche titles to supplemental content such as new characters and levels. Nintendo is putting this at the core of its next console, code-named Revolution, which will be backward compatible with its previous consoles, making most of its back catalog available as Long Tail content—fun or nostalgia downloadable and playable for a small fee.

  And so, too, for ebooks and audio books, online newspapers and magazines, and software. All were once delivered on paper or plastic, necessitating all the complexities of physical inventory and delivery. All are now joined by digital versions, with corresponding digital economics. The experience is not always the same, which is why paper books and magazines are still the preferred version for many. But the functional gap is shrinking. And the distribution advantages of the digital versions are irresistible.

  7

  THE NEW TASTEMAKERS

  THE ANTS HAVE MEGAPHONES. WHAT ARE THEY SAYING?

  Once upon a time, there was really only one way to launch a hit album: radio. Nothing else reached as many people, as often. Getting on a radio playlist was tricky (especially after payola was outlawed), but once a song was in heavy rotation it had a high probability of selling. Then, in the 1980s, came MTV, which became the second way to create a hit. It had even more limited capacity for new music, but its influence over a generation was unparalleled. For the music labels, those were good times. It was a brutally competitive business, but it was a business they knew. They understood the rules, and they could earn their keep by working them.

  But now rock radio is in seemingly terminal decline and MTV doesn’t show many music videos anymore. So how to market music? Labels know the answer lies online, tapping the word-of-mouth forces that are replacing traditional marketing in creating demand, but they’re still trying to figure out exactly how best to do it.

  We’re entering an era of radical change for marketers. Faith in advertising and the institutions that pay for it is waning, while faith in individuals is on the rise. Peers trust peers. Top-down messaging is losing traction, while bottom-up buzz is gaining power. Dell spends hundreds of millions each year on promoting its quality and customer service, but if you Google “dell hell” you’ll get 42,000 pages of results. Even the word “dell” returns customer complaints by the second page of results. The same inversion of power is now changing the marketing game for everything from individual products to people. The collective now controls the message.

  For a generation of customers used to doing their buying research via search engine, a company’s brand is not what the company says it is, but what Google says it is. The new tastemakers are us. Word of mouth is now a public conversation, carried in blog comments and customer reviews, exhaustively collated and measured. The ants have megaphones.

  The question of how to drive demand in such a world is a key one, and in this chapter I’ll describe many of the techniques that work best. But first, I’ll start with the music industry, ground zero of the Long Tail explosion. Three bands tell the story of an era where the power has shifted from music executives to fans, to the consternation of suits everywhere. The results are mixed—one is a disappointment, another a success, and the third a sobering lesson in how bands may soon not need labels at all—but together they illuminate the challenges of selling in a new era of empowered consumers.

  BONNIE MCKEE

  In September 2004, the record label Reprise (a subsidiary of Warner) released the debut album by a then-nineteen-year-old singer named Bonnie McKee. It was a rocky start. The record had been recorded twice and delayed a year while the label tried to figure out what to do with it—and her. Although young, McKee had a mature, throaty voice, wrote her own songs, and had had a troubled adol
escence that involved drugs and sexual experimentation. She had married at eighteen but openly dated other men, sometimes those twice her age. Her hero was the delightfully unhinged Fiona Apple, another artist whom record labels have had trouble categorizing.

  Based on her hard-luck story and rough edges, Reprise eventually decided McKee fit into the singer-songwriter rock category that included the likes of Sheryl Crow. They titled her album Trouble and began a marketing plan that would pitch her to so-called adult contemporary radio stations, which appeal mostly to women in their late twenties and early thirties.

  Such guesswork is risky—even the labels can’t predict whether and where an artist will resonate—yet for new acts without a touring history there have been few alternatives. But today radio is no longer the only way to launch new artists. So while it was preparing its radio rollout, Reprise prereleased several tracks to online music sites, including Yahoo!, which has a free Internet radio service called LAUNCHcast. One of the most popular features of LAUNCHcast is its customized radio station, which allows its millions of users to select bands and genres they like and then listen to those bands and others like them for free. Reprise decided to see if this audience could help them find out where McKee fit in.

  LAUNCHcast is built around an “adaptive” recommendation system that decides based on your preferences what else you might like. While each song is played, a little window display encourages you to rate the song, artist, and album on a scale of one to five stars, from “Never play again” to “Can’t get enough.” As you listen to music and rate it, Yahoo!’s software is getting to know you and changing the playlist of upcoming songs accordingly.

  But it’s not just software. LAUNCHcast is also learning from other listeners and using their opinions to guide its recommendations. Because this is an online service with millions of users, Yahoo! is able to record hundreds of millions of likes and dislikes each year, measuring the taste of its listeners with remarkable precision. This tells it something not only about each of its users, and how to provide them with more music that they’ll like, but also about the music itself. LAUNCHcast, along with being a free music service, is a polling machine of remarkable size and fine-grained resolution. It is, in a sense, constantly taking the pulse of the culture, learning how artists fit into it through the clicks of millions of music fans.

  If enough people say they like Groove Armada as well as The Crystal Method, there may well be a stylistic connection between them, despite the fact that one’s categorized as “downtempo” and the other “beats and breaks.” Such strong associations tell Yahoo! to put the two on the same playlists more often, and if the positive ratings continue to come in, that connection is reinforced.

  As Yahoo!’s software makes custom playlists for each listener, it occasionally sprinkles in a few new artists and tracks to see if they resonate. Radio stations do this, too, but typically only with artists who have a good track record, and even then only after much pretesting and record-label marketing. The difference is that Yahoo! has literally millions of radio stations, each one of them a stream customized for a user. It effectively has infinite broadcast capacity, and thus, just as with infinite shelf space, it can afford to be a lot less discriminating. So it can try to break more new artists and albums—thousands of new songs each year, almost all of which will get no airplay on traditional radio.

  If a new song gets high ratings from the few listeners who first hear it, Yahoo! will add it to more playlists. Unlike a traditional radio station, Yahoo! knows quite a bit about those listeners who liked the song. It knows their gender, age, zip code, and a lot about their musical taste from having tracked their listening behavior and ratings. These data streams, used cleverly, can unlock a powerful new way of marketing music—word of mouth amplified by the feedback effect of adaptive recommendations.

  This is what drew Reprise to the service. Unsure of where to find an audience for the talented McKee, Reprise decided to use Yahoo!’s ability to test new artists by pushing her first single, “Somebody,” to adult contemporary playlists, which were similar to the listenership of the radio stations they intended to market her to. The label paid for extra placement and promotion to push McKee out to more listeners, hoping that the ratings feedback would support their instincts about her natural audience. And after a few weeks, Yahoo! did indeed have its answer. “Somebody” was very popular, but not equally with all demographic groups—and not, surprisingly, with the 25–35 female group the label had aimed it at.

  The report from LAUNCHcast showed the following demographic information about McKee’s listeners:

  AUDIENCE COMPOSITION

  Females 13–17

  29.9%

  Females under 13

  17.2%

  Females 18–24

  15.9%

  Males 13–17

  8.0%

  Males 18–24

  6.4%

  Males under 13

  4.4%

  Females 25+

  11%

  Males 25+

  7.2%

  The lesson was clear. Reprise had guessed wrong. Instead of appealing to women in their twenties and thirties, Bonnie actually appealed to a far younger audience, with nearly half of her listener base under the age of seventeen. Instead of showing an affinity to artists like Sheryl Crow, this listener constituency most commonly searched for artists like Avril Lavigne, Britney Spears, and Gwen Stefani. It turned out that many teenage girls could relate to the troubled adolescence and bruised romance story in McKee’s lyrics.

  By the middle of November 2004, “Somebody” had become the tenth most played song on LAUNCHcast. Finally, as a result of the promotional campaign, Bonnie McKee became a Top 50 search term on the service.

  This data prompted label executives to make a major change in how they marketed Bonnie McKee. They gave her a makeover, emphasizing her edgier side, a sort of bubblegum Lolita-gone-wrong look. She was neither a Sheryl Crow nor a Britney Spears, they decided; she was the rebel anti-poptart, appealing to an angsty subset of the teen girl audience.

  It was a smart move, but it didn’t work. Her album sold fewer than 17,000 copies. Despite demographic and geographic data of where McKee’s most receptive audience could be found, she still got virtually no airplay. “What we’ve learned is that if a band builds an online fan base first, they have a better chance of selling CDs when the song gets on the radio or MTV,” says Robin Bechtel, who ran the marketing campaign. “Many artists who don’t do that either fail at radio or get on the radio and only the hit song gets downloaded, rather than people buying the whole album. It seems the fans aren’t invested in the artist, just the song.”

  She speculates that demand for McKee’s single was pretty much satisfied by all the free online access. Her appeal was apparently not deep enough to get people to go beyond the single they’d already heard online. The problem wasn’t positioning or marketing, it was a lack of authentic grassroots support. Getting online consumers to pay for music today takes more than a catchy single; it requires a real fan base, ideally one spreading the word online.

  MY CHEMICAL ROMANCE

  Reprise found a perfect example of just that kind of fan base with a punk-pop fivesome from New Jersey called My Chemical Romance. Although the band’s album Three Cheers for Sweet Revenge came out around the same time as McKee’s, it was their second album. The first, on an independent label, had sold 10,000 copies, which suggested a small but strong core following. So five months before the second album’s launch in May 2004, Reprise started giving tracks to Web sites focused on that core, such as Shoutweb.com and AbsolutePunk.net, to get the buzz going among the faithful in hopes that it would spread.

  The label also pushed the band on PureVolume.com and MySpace.com, two relatively new (at the time) music-heavy social-networking sites with an exploding user base. It gave exclusive live tracks to PureVolume for promotions and premiered an Internet-only video for the band’s first single, “I’m Not Okay (I Promise).”

/>   Once the tracks were out there, Reprise could watch how they did. Using BigChampagne file-trading data, the label could see growing interest in “Not Okay,” but also heavy trading and searching on the track “Helena.” On the basis of that, it made “Helena” the next single, and, helped by requests from the band’s core fans, the song got airplay. By the end of the summer, “Helena” had become the band’s biggest radio single by far.

  As the band went on tour in September, Reprise extended the promotions to Yahoo! Music and AOL, including audio, video, and a heavily promoted live performance from Yahoo!’s studios. Meanwhile, fans flocked to the band’s Web site and MySpace page. My Chemical Romance now has Warner’s largest email list.

  The album went on to sell 1.4 million units, making it one of the biggest hits of the year. Most of that came after radio and MTV embraced the band and brought it to a larger audience, but it all started online, where the band’s core audience had cemented its credibility.

  What was the difference between My Chemical Romance and Bonnie McKee? Talent differences aside, My Chemical Romance had the advantage of an existing base of fans, both of its first album and its live shows. There were thousands of people already hungry for more from the band, and when the label gave them what they wanted, in the form of early online content, they returned the favor with strong word of mouth, including radio requests. And that, in turn, got the band the airplay that took it to the next level of popularity, acquiring a new, larger, set of fans.

  McKee, by contrast, was a relatively unknown artist, who had rarely played live. Although people liked what they heard on Yahoo!, it wasn’t enough to trigger real fan behavior. They didn’t buy the album, and they didn’t clamor for more. On MySpace today, My Chemical Romance has more than 1 million “friends”; McKee has 12,000. Word of mouth makes all the difference.