In an article published in the Harvard Business Review, Anita Elberse takes aim at Wired editor Chris Anderson’s “long tail” theory - the theory Anderson wrote about in his 2006 book The Long Tail: Why the Future of Business Is Selling Less of More.
Long tail theory essentially holds that as the cost of producing and, perhaps more importantly, delivering goods becomes cheaper… and as consumers become better able to identify and access goods and services that meet their particular needs… more consumers will buy more niche products and services and fewer will opt for products and services designed for mass appeal.
So, while (corporate) marketers have traditionally taken a “blockbuster” approach -aiming products and services at the broadest possible market - in a long tail world, they are better off focusing on niches and meeting the needs of smaller, but arguably more rabid, markets.
But are we really heading towards a long tail world?
To see whether or not long tail theory rang true, Ms Elberse studied sales data from Quickflix, an Australian DVD-by-mail rental service, and Rhapsody, an online music service that allows subscribers to download songs for a fixed monthly fee. She specifically chose to study a DVD-by-mail provider and an online music seller as online retailers ideally placed to exemplify the long-tail trend… if it existed. And if, indeed, the theory did ring true, she expected to see the majority of sales dispersed across a large number of titles, rather than concentrated in a few “best-sellers”.
So what did Elberse and her Harvard research team find? In both cases, Elberse and her colleagues found that sales were concentrated in ever fewer best-selling titles at the head of the distribution curve. There was NO evidence of a trend towards a long tail dominated marketplace. In fact, Elberse’s findings led her to conclude that the importance of individual best sellers is not diminishing over time, but actually growing.
Based on her research, Elberse advises companies NOT to abandon a mass-market strategy and that if they wish to appeal to long-tail (niche) markets they need to keep costs as low as possible. According to Elberse:
“Although no one disputes the lengthening of the tail (clearly, more obscure products are being made available for purchase every day), the tail is likely to be extremely flat and populated by titles that are mostly a diversion for consumers whose appetite for true blockbusters continues to grow. It is therefore highly disputable that much money can be made in the tail. In sales of both videos and recorded music—in many ways the perfect products to test the long-tail theory — we see that hits are and probably will remain dominant.”
Okay, here’s my take: the market place is becoming more and more characterized by a fat head and an ever-lengthening tail. While it may not make sense for big companies to go after the long tail… it makes perfect sense for small businesses like those run by you and I. And that’s because long tail economics work in OUR favor.
In other words, while large companies with huge overheads probably can’t afford to go after the long tail, you and I can! We can keep our costs low and, largely via the Internet, reach global niches that make the exercise extremely lucrative for us.
That’s not to say we won’t face competition - there will be, and likely already are, plenty of other niche marketers vigorously competing in our various markets. It’s just that, providing we stick to the long tail, we probably won’t have Goliath breathing down our necks.
Source: Anita Elberse, “Should You Invest in the Long Tail?” Harvard Business Review, July-August 2008
