Short Thoughts on the Long Tail

The discussion continues over the Long Tail. Simply put, the Long Tail refers to the selling of a large number of niche products in small quantities. So, in the past, record stores would only carry a few thousand of the top-selling albums in their stores. If you wanted more obscure works, you had to go to more obscure record stores. But now with the internet, all of these obscure songs can be stored inexpensively and made available to all sorts of consumer demand.

The big point is that by offering this choice, you make a better consumer experience. So companies like Amazon and Netflix really took advantage of this idea. A few days ago, Eric Schmidt, CEO of Google, said the following:

“I would like to tell you that the internet has made such a level playing field that the Long Tail is absolutely the place to be, that there’s so much differentiation, so much diversity, so many new voices. I’d love to tell you that that’s in fact how it really works. What really happens is that we follow what’s called a powerlaw. A powerlaw has the property that a small number of things are very highly concentrated and most things have relatively little volume.”

So, there is some rethinking going on for the long tail. The question being asked is if the Long Tail is really a good place to be and a good strategy for a company. Because most sales still occur in the blockbusters. Chris Anderson, original coiner of the theory ‘The Long Tail’ said “It’s hard to make money in the Tail.” However, Schmidt went on to say that “it’s also hard to make money if you don’t have a Tail (to satisfy minority taste, which improves the consumer experience), but the revenues are disproportionately in the Head.”

I think these discussions have poignant relevancy to new music website startups. Some strategies are to have a large number of Indie Artists (tail) and to stay away from the big name artists (head). Other websites have an enormous catalog of popular artists, but shy from the long tail. So what is the correct strategy? It’s probably somewhere close to what Schmidt said above about making money in the head but having the tail for the consumer experience.

I will continue to follow the current discussions on this topic. It is fascinating.

Stay tuned,
Erik
erikrostad.com