The Long Tail

by Chris Anderson

  Minus

  The percentage that never comes in

  Minus

  The percentage that won’t see the item on the shelf

  And so on…

  It doesn’t have to be that way. In a sense, you can think of there being a Long Tail of customers, just like that of products. Imagine that the horizontal axis of the curve is towns, and the vertical is the number of potential customers for a product in each of those towns. A traditional retailer would have to focus on the head of the curve, where the customers are most concentrated. Yet as we’ve already learned, most of the customers are in the tail, distributed over many towns. That’s the dirty secret of traditional retail. Stores leave business on the table simply because their economics doesn’t allow them to pursue it.

  In a nutshell, that is the business case for online retailers. Because they can reach all of those many low-density towns as efficiently as the high-density ones, they can tap the Long Tail of distributed demand. That’s exactly what the Sears, Roebuck catalog did a century ago: tap the distributed demand for variety in the American heartland. Today, we just do it faster, cheaper, and with even greater variety.

  SCARCE AIR

  The introduction of radio—and then television—was meant to have exactly that kind of egalitarian effect. For mass-market fare, the economics of broadcast are hard to beat: They allow you to reach a million people as cheaply as one. Yet while the costs of the transmitter and license are fixed, the advertising revenues are variable. The more people you reach, the more money you make. In the Short Tail of hits, it’s as simple as that.

  After the arrival of broadcast in the middle of the twentieth century, there was suddenly a way to bring a show to every home and a newsreel to everyone every night. Compared to going to live theater or the movies, radio and television were an incredibly democratizing force, extending the audience for audio and video news and entertainment farther down the tail of demand than anything before or since.

  Still, don’t forget that broadcast technologies have limitations of their own. It’s the physics: Airwaves can carry only so many stations, and coaxial cables only so many TV channels. And, most obviously, there are only twenty-four hours in a day that can be programmed.

  If you’re a television or radio executive, these constraints have a very real effect. Each slot on the dial, each channel on a cable lineup has a cost. Sometimes it’s the cost of broadcasting licenses and cable carriage fees; other times it’s the expectations of an advertiser. In either case, there’s only one way to turn a profit (or at least break even): get a big enough audience to make the most of that valuable broadcast slot.

  The traditional solution is to focus on hits. Aside from using scarce distribution resources efficiently by aggregating and concentrating audiences, hits also benefit from network effects in marketing, otherwise known as buzz. Once advertising gets them to a certain level of popularity, word of mouth can kick in and organically break them through to the next levels, all the way up to blockbuster status if they’ve really struck a chord.

  But how do you make a hit? Well, there are two basic options: (1) search far and wide for rare, unpredictable genius, or (2) use lowest-common-denominator formulas to manufacture something optimized to sell. You can guess which one is most common.

  The result is the hit-driven media and entertainment culture that has come to define the second half of the twentieth century. It’s defined by:

  A desperate search for one-size-fits-all products

  Trying to predict demand

  Pulling “misses” off the market

  Limited choice

  Umair Haque, who writes about digital media economics, phrases it in terms of “consumer attention.” A formulaic TV show designed for broad, if shallow, appeal may get watched (along with commercials that go along with it). But it will get watched more if there’s little else on, which was pretty much the case for most of television’s history. So, too, for movies and radio:

  The general principle of the last hundred years of entertainment economics was that content and distribution were scarce and consumer attention was abundant. Not everyone could make a movie, broadcast on the airwaves or owned a press. Those who could and did had control of the means of production. It was a sellers’ market, and they could afford to waste attention.

  One statistic—ad clutter on television—is telling. Following deregulation in the mid-1980s, network TV ad time per hour increased from six minutes and forty-eight seconds in 1982 to twelve minutes and four seconds in 2001 (that’s an increase of roughly 100 percent!). Why? Because Americans continued to watch more and more television, even as the ad load went up. Since they continued to give their attention despite getting less and less content, why not exploit that? As Haque puts it, from a network perspective, “increased ad time was a cost borne by the players on the other side of a two-sided market.” No wonder the ads were taking over.

  THE DANGERS OF “HITISM”

  It takes a long time to unlearn the last century’s lessons in distribution scarcity. But we’re starting to do so, starting with the first generation to grow up online.

  In 2001, the first wave of “digital natives” came of age. Kids who started using the Internet as twelve-year-olds in 1995 turned eighteen (the beginning of Nielsen’s 18–34 demographic that is highly coveted by advertisers). The males of the species, in particular, were watching less television. Given a choice between the infinite variety and easy addodging online versus network TV, they were choosing the former—the 18–34 viewership figures started to drop for the first time in a half century.

  Although the shift is still small, it’s real: The audience is migrating away from broadcast to the Internet, where niche economics rule. Given greater choice, they are also shifting their attention to what they value most—and that turns out not to be formulaic fare with lots of commercials. They are, to use Haque’s term, starting to take back their attention, or at least value it more highly.

  The lesson for the entertainment industry should be clear: Give people what they want. If that’s niche content, then give them niche content. Just as we’re starting to rethink the premium we pay for hits and stars, we’re also starting to realize that the nature of the goods and participants, and their incentives, in this new market are also different.

  It’s human nature to see things in absolutes and extremes, black or white, all one thing or all another—hits or misses. But of course the world is messy, gradated, and statistical. We forget that most products aren’t big sellers, because most of the ones we see on the shelves do indeed sell in huge numbers, at least compared to those that didn’t make it to the store in the first place. Yet the vast majority of virtually everything, from music to clothing, is at best only modestly popular. Most things fail the hit test, yet somehow they continue to exist. Why? Because the economics of blockbusters is not the only economics that works. Blockbusters are the exception, not the rule, and yet we see an entire industry through their rarefied air.

  For instance, Hollywood economics is not the same as Web video economics, and Madonna’s financial expectations are not the same as Clap Your Hands Say Yeah’s. But when Congress extends copyright terms for another decade at the request of the Disney lobby, they’re playing just to the top of the curve. What’s good for Disney is not necessarily what’s good for America. Likewise for legislation restricting technologies that allow digital file copying or video transmission. The problem is that the Long Tail doesn’t have a lobby, so all too often only the Short Head is heard.

  These are some of the other mental traps we fall into because of scarcity thinking:

  Everyone wants to be a star

  Everyone’s in it for the money

  If it isn’t a hit, it’s a miss

  The only success is mass success

  “Direct to video” = bad

  “Self-published” = bad

  “Independent” = “they couldn’t get a deal”

  Amateur = amateurish />
  Low-selling = low-quality

  If it were good, it would be popular

  And finally, there’s the notion that “too much choice” is overwhelming, a belief so common and ill-founded that it deserves its own chapter.

  10

  THE PARADISE OF CHOICE

  WE ARE ENTERING AN ERA OF UNPRECEDENTED CHOICE. AND THAT’S A GOOD THING.

  In 1978, Saturday Night Live featured a skit about the “Scotch Boutique,” a store in a trendy mall that sells nothing but Scotch tape in many varieties. Its proprietors puzzle over the absence of customers—they offer so many kinds of tape that surely one should appeal to nearly everyone. And yet no traffic. The skit reveled in the cluelessness of the tape-obsessed store owners. Could anything be more absurd than a Scotch Tape store?

  Yet in 2004, a store called “Rice to Riches” actually opened in Manhattan. It sells rice pudding in more than twenty flavors and nothing else. It is reportedly doing well and expanding into a mail-order business. Meanwhile, the White House chain just sells home furnishing in white. It has proven so successful that it’s been joined by the Black House. Yesterday’s joke is today’s reality.

  We are in the midst of the biggest explosion of variety in history. You can see it all around you, but sometimes a few numbers make the point even better. There are precisely 19,000 variations of Starbucks coffee, according to the advertising firm OMD. In 2003 alone, 26,893 new food and household products were introduced, including 115 deodorants, 187 breakfast cereals, and 303 women’s fragrances, according to Mintel International’s Global New Products database.

  Back in the 1960s, Chevrolet’s Impala sedan accounted for more than 1 million of the 8 million cars sold each year, close to 13 percent of a market that had no more than forty different kinds of cars. Today, in a car market nearly ten times that size, there are more than two hundred and fifty models available (more than one thousand if you count all the variants). Fewer than ten of those sell more than 400,000 units, or one-half percent of the market.

  Why has there been such an explosion of variety? Part of the answer is globalization and the hyperefficient supply chains it brings. Merchants in one country can now pull from a truly global range of products. Indeed, the National Bureau of Economic Research estimates that the variety of goods imported to the United States grew more than threefold between 1972 and 2001.

  Another part of the answer is demographics. As Business Week recently put it:

  In the 1950s and 1960s the country was far more uniform in terms not only of ethnicity—the great Hispanic influx had not yet begun—but also of aspiration. The governing ideal was not merely to keep up with the Joneses, but to be the Joneses—to own the same model of car or dishwasher or lawn mower. As levels of affluence rose markedly in the 1970s and 1980s, status was redefined. We’ve had a change from “I want to be normal” to “I want to be special.” As companies competed to indulge this yearning, they began to elaborate mass production into mass customization.

  Finally, there is the Long Tail itself. ITunes offers nearly forty times as much selection as Wal-Mart. Netflix has eighteen times as many DVDs as Blockbuster and would have even more if there were more DVDs to be had. Amazon has almost forty times as many books as a Borders superstore. For the likes of eBay and the average department store, the multiples are impossible to calculate, but no doubt go into the thousands.

  TOO MUCH CHOICE?

  The overwhelming reality of our online age is that everything can be available. Online retailers offer variety on a scale unimaginable even a decade ago—millions of products in every possible variant and combination. But does anyone need this much choice? Can we handle it?

  This is the question that is being raised more and more these days as the online cornucopia expands. The conventional view is that more choice is better, because it acknowledges that people are different and allows them to find what’s right for them. But in The Paradox of Choice, an influential book published in 2004, Barry Schwartz argued that too much choice is not just confusing but is downright oppressive.

  He cited a now-famous study of consumer behavior in a supermarket. The details from the paper, “When Choice Is Demotivating,” are as follows.

  Researchers from Columbia and Stanford universities set up a table at a specialty food store and offered customers a taste of a range of jams and a $1.00 coupon to use against the purchase of any single jar of jam. Half the time the table held six flavors; half the time it offered twenty-four. The researchers were careful not to include the most common flavors, such as strawberry (so that consumers didn’t just pick the usual), and they also avoided weird jams such as lemon curd.

  The results were clear: 30 percent of the customers who tasted from the small selection went on to buy a jar, while just 3 percent of those who sampled from the larger selection did. Interestingly, the larger selection attracted more tasters—60 percent compared to 40 percent for the smaller selection. They just didn’t buy. The more choice the researchers offered, the less customers bought, and the less satisfied they were with any purchase they did make.

  The customers appear to have been confused, even oppressed, by the abundance—why should they have to become an expert on jam varieties to make a selection with confidence? The extra options put them outside their jam-selection comfort zone—strawberry, blueberry, raspberry—and into the more exotic territory of boysenberry and rhubarb. Indecision and buyer’s remorse began to cloud the picture. It suddenly felt like too much trouble.

  Schwartz describes the conclusion this way:

  As the number of choices keeps growing, negative aspects of having a multitude of options begin to appear. As the number of choices grows further, the negatives escalate until we become overloaded. At this point, choice no longer liberates, but debilitates. It might even be said to tyrannize.

  As an antidote to this poison of our modern age, Schwartz recommended that consumers “satisfice,” in the jargon of social science, not “maximize.” In other words, they’d be happier if they just settled for what was in front of them rather than obsessing over whether something else might be even better. (One wag commented in an Amazon review of The Paradox of Choice that he came across twenty books on the same topic and couldn’t make up his mind, so he didn’t buy any of them.)

  I’m skeptical. The alternative to letting people choose is choosing for them. The lessons of a century of retail science (along with the history of Soviet department stores) are that this is not what most consumers want.

  Vast choice is not always an unalloyed good, of course. It too often forces us to ask, “Well, what do I want?” and introspection doesn’t come naturally to all. But the solution is not to limit choice, but to order it so it isn’t oppressive. As Schwartz himself notes, “A small-town resident who visits Manhattan is overwhelmed by all that is going on. A New Yorker, thoroughly adapted to the city’s hyperstimulation, is oblivious to it.”

  My suspicions about the jam research that Schwartz cites were first raised when I happened to be in the jam section of my local supermarket. The selection covered more than twenty feet. It started with the usual strawberry and raspberry and then kept going. Here’s just a sample: Lemon Curd, Golden Mint, Tomato Cinnamon Clove, Cinnamon Pear, Pear Fig, Pepper Jelly, Huckleberry Raspberry, Peach Apricot, Plum Cherry, Strawberry Rhubarb, Sour Cherry, Fig, Mixed Berry, Black Cherry, Passion Fruit, Pineapple, Pineapple Papaya, Guam Strawberry, Black Currant, Jalapeno Pepper (both Red and Green varieties), Rhubarb, Rosehip, Mint-Flavored Apple…and so on, including Light variants of many of the above.

  There were not six varieties or twenty-four; there were more than three hundred. All in all, the store carried forty-two brands, with an average of eight kinds of jam each. I spoke to the manager. In the five years since the original jam study came out, the supermarket had roughly doubled the variety of jams it offers. “There are a lot more available and people seem to like to try the more exotic ones,” he told me.

  VARIETY IS NOT ENOUGH
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  This was confusing. Either there was something wrong with the original study or the nation’s supermarket owners were remarkably oblivious to what consumers really want. I emailed the authors of the original study to ask them if they had an insight into why the people who should actually know the most about consumer choice in a supermarket were ignoring their conclusions.

  As it happens, they did have an answer, which they were about to publish in a new study. In “Knowing What You Like versus Discovering What You Want: The Influence of Choice Making Goals on Decision Satisfaction,” Columbia professor Sheena Iyengar and her colleagues conclude:

  Despite the detriments associated with choice overload, consumers want choice and they want a lot of it. The benefits that stem from choice, however, come not from the options themselves, but rather from the process of choosing. By allowing choosers to perceive themselves as volitional agents having successfully constructed their preference and ultimate selection outcomes during the choosing task, the importance of choice is reinstated. Consider the request in Forbes’ recent “I’m Pro-Choice” article: “Offer customers abundant choices, but also help them search.” We now know how.

  The solution, they found, is to order the choice in ways that actually help the consumers. Let’s turn to an online retailer to see how that might work.

  As it happens, Amazon, too, sells jam. Not six kinds, or twenty-four kinds, but more than twelve hundred kinds, thanks to its Marketplace partnerships with a host of small specialty food merchants. Yet there is a huge difference between the presentation of variety in the physical world and online.

  In a bricks-and-mortar store, products sit on the shelf where they have been placed. If a consumer doesn’t know what he or she wants, the only guide is whatever marketing material may be printed on the package, and the rough assumption that the product offered in the greatest volume is probably the most popular.