Friday, June 27, 2008

Stepping on the Long Tail (again)

For any of my disagreements with Andrew Keen, I continue to read him because I continue to support the basic precepts of his Cult of the Amateur book, particularly those relating to his subtitle about "how the Internet is killing our culture." About a year ago, thanks to Book TV, I got to see Keen participate in a "debate" over this book, which was held at the Strand Bookstore in New York. I visited this topic a couple of times in blog posts, partly because, while I did not say it explicitly at the time, it had to be one of the most bizarre broadcasts I had ever seen on Book TV. (I have to say "one of," since the recent broadcast of David Horowitz haranguing the National Press Club, ostensibly on the topic of his book, Party of Defeat: How Democrats and Radicals Undermined America's War on Terror Before and After 9-11, is, without a doubt, the most bizarre event I have seen on Book TV!) One of the more important themes at the Strand had to do with the conviction of Internet evangelists that everyone could get rich through the virtues of the "long tail effect." Reduced to its simplest terms, the principle behind the effect is that whatever you have to supply, given a large enough population of buyers, there will be enough demand within that population for you to make a living from supplying it. Therefore, since the Internet gives you access to the largest population of buyers conceivable, you are sure to make money by satisfying that demand with your supply. Here is how I summarized Keen's refutation in an earlier blog post:

Keen's basic response was that, indeed, anyone (including all of the "amateurs" that occupy his book) out on the long tail could be "discovered" to the benefit of others; but he was skeptical that anyone could make money by being discoverable.

When I reported this refutation, I followed it up with some more analytic results that had been reported on CNET

Keen's skepticism has now been confirmed with more specific data and analysis posted by Gordon Haff on his Pervasive Datacenter blog for CNET. The bottom line of his argument is that money is made on the long tail, rather than in it. Put another way, Amazon can (and probably does) make a healthy share of their revenue by aggregating a vast number of books, each of which is known to have very little appeal, and handling the sale of all of them. Any author of any of those books, however, is not going to earn enough for a loaf of bread off of the increased sales (s)he gets by virtue of being in the Amazon catalog.

This morning Matt Asay has come up with further fuel for the fire on his Open Road blog for CNET

As new research highlighted in Harvard Business Review suggests, the answer may well be that the real money is in the blockbuster, not the long tail, after all:

Meanwhile, our research also showed that success is concentrated in ever fewer best-selling titles at the head of the distribution curve. From 2000 to 2005 the number of titles in the top 10% of weekly sales dropped by more than 50%--an increase in concentration that is common in winner-take-all markets. The importance of individual best sellers is not diminishing over time. It is growing....

Is most of the business in the long tail being generated by a bunch of iconoclasts determined to march to different drummers? The answer is a definite no. My results show that a large number of customers occasionally select obscure offerings that, given their consumption rank and the average assortment size of off-line retailers, are probably not available in brick-and-mortar stores. Meanwhile, consumers of the most obscure content are also buying the hits. Although they choose products of widely varying popularity, top titles generally form the largest share of their choices. (The wide appeal of these top titles is, of course, what makes them popular in the first place.)

Not only this, but the researchers find that "No matter how I slice and dice the customer base, customers give lower ratings to obscure titles." So, not only is the long tail less profitable, it's also less enjoyable. Chris Anderson, the man who made long-tail theory de rigueur, tries to defend his theory, but it doesn't measure up to HBR's analysis.

Will this put all of that long tail claptrap to rest? Of course not. One reason I so delight in calling Internet promoters "evangelists" is that their reasoning is as faith-based as most of the political logic exercised over the last eight years that has now left us in a morass of consequences far ghastlier than we could ever have imagined. Indeed, in the grand scheme of history, the faith behind Internet evangelism may be relatively minor compared with faith-based decisions that have impacted the prospects for world peace, the growing problem of world hunger, and the potential ruination of our planet's basic ecosystem. Furthermore, I basically agree with George Lakoff that "You Can't Understand 21st-Century American Politics with an 18th-Century Brain;" and, on the basis of my own studies of "wet brains," I can both follow and appreciate his explanations for why our brains are hooked on precepts of the Eighteenth Century Enlightenment that run the gamut from outdated to flat-out wrong. However, just as I recently argued "that Google is one of the primary technologies through which the Web feeds our addiction to consumerism," I would further argue that the entire Internet is such a monument to Enlightenment ideals that it inhibits the development of our brains to accommodate 21st-century insights. I thus feel it is necessary to bring my own resources to bear against those Internet evangelists for the fundamental reason that what they are promoting is almost certainly going to have an inhibitory effect on our ability to confront and deal with all those crises that are far more serious than whether or not the Internet economy rises or falls.

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