1. SAINT JOSEPH UNIVERSITY BEIRUT – LEBANON THE LONG TAIL BOOK FOR CHRIS ANDERSON PROJECT PRESENTED BY: GERARD NAKAD MASTERS IN MANAGEMENT
2. The Long Tail Chris Anderson started this with an article in Wired about two years ago. He claimed that half the books sold at Amazon were obscure books not offered in any conventional bookstore. (He’s backed off to perhaps 25%) Thus, he argues, the Internet is encouraging an enormous amount of specialized creativity for specialized interests.
3. Mass Media or Specialized? Some kinds of media don’t lend themselves to mass production. Poetry reading and lectures, for example, are pretty restricted in the number of people who can attend a performance. On the other extreme is short-wave radio, which can reach large parts of the planet. Enormous numbers of people could listen at once.
4. Why mass or specialized? If there are large economies of scale – if making many copies isn’t as expensive (per copy) as making a few, then economics encourages a few “blockbusters”. For example, radio is an example of economy of scale; the radio station incurs no additional cost when more people listen to it. And if there are high startup costs – if it is difficult for somebody to get into the business – that also encourages a few mass-market producers. You can’t easily start a new radio station because you need an FCC license.
5. Consider book publishing In the 18th century, with type held in wooden forms and printed on wooden presses by hand, it was hard to make more than 300-500 copies in a single press run. So books and newspapers appeared in great variety and were often distributed only locally. In the 19th century, steam presses, iron presses, and machine-made paper meant that you could have press runs of tens of thousands of copies. Nowadays, you can hardly afford to turn on a real binding machine unless you have 2,000 copies to put through it, and every airport bookstall has the same John Grisham and Danielle Steel novels.
6. But there are different models Even if you ought to print many copies, you can choose whether to focus on books that will sell them quickly or over the long term. According to Jason Epstein (founder of Anchor Books, and thus inventor of trade paperbacks), until the 1970s book publishers focussed on the backlist potential of a new book: would it sell for many years? That meant returns were not a problem: the copies would eventually sell. But in the 1970s, perhaps as a function of rising interest rates, income tax law changes, and buyouts of publishers, the book business changed to emphasize best-sellers that would sell quickly.
7. So what about the Internet? Well, there are enormous economies of scale. It’s almost free to have more people access your web page (not quite true, since if the volume gets high enough you need more servers and your ISP charges you more, but it’s pretty cheap). But there are no startup costs. Anybody can get a website and start serving up pages. So the Internet could go either way, and some years ago I would ask this question and say I didn’t know the answer.
8. Consider Amazon Amazon, as part of its competition with Barnes & Noble, tries to advertise how many books it has for sale. It scrounges through every publisher it can find, plus every out of print book it can find, and claims to sell more than 5,000,000 books. No physical bookstore, realistically, can sell more than about 100,000 books. The whole town of Hay-on-Wye has something like 1,000,000 books for sale. Chris’ discovery: perhaps ¼ of the books sold by Amazon are not in the top 100,000; and would thus not be sold by any “brick-and-mortar” bookstore.
9. Anderson’s answer The Internet is going for many diverse sources, rather than a few “blockbusters” (a somewhat unfortunate term; it derives from a bomb used by the RAF in World War II, which literally destroyed an entire block of houses). It thus represents a chance for obscure voices, whether people who have interests in the railway history of Alberta or your local teenagers starting a rock band, to find the few people who want to listen to them and distribute their work.
10. Video In the 1950s, at its peak, 70% of American households would be tuned into an episode of “I Love Lucy”. Today the top show (CSI: somewhere or other) has an audience share of about 18%. As recently as 15 years ago, that wouldn’t have made the top ten. Instead, people watch selections from the 500 cable channels we now have, or from YouTube.
11. Music The biggest music retailer in the United States is Wal-Mart, and they sell some 2,400 CDs, with perhaps 40,000 tracks on them. iTunes has 2 M tracks – P2P has perhaps 9M - there are probably 25M tracks in total. 40% of Rhapsody sales are beyond the first 40,000. People are, in aggregate, listening to a lot more than top-40; even though top-40 is all you can find on the radio or in Wal-Mart.
12. Movies Blockbuster Video gets some 90% of its rentals from the new theatrical releases. Netflix offers 40,000 DVDs; and its sales are 30% new releases and 70% others. They claim that recommendations, searching, and other techniques encourage people to expand their choices in movies.
13. TV YouTube is now seeing 100M downloads a day. Its viewership is comparable to a network. Counterargument: if each download is watched for a minute or so, that’s 2 M hours of watching; ordinary TV gets 500 times that much attention. Personally I find it hard to see the difference between YouTube and “Amazing Home Videos”. But YouTube is growing, and network TV is dropping.
14. Books again Competition between Amazon and Barnes and Noble has greatly increased the number of books you can readily purchased; Amazon now has 5M books for sale and Abebooks has 45M. There are now over 80,000 publishers in the US and they publish more than 200,000 books per year. Both numbers are rising rapidly as the low-grade books can find an audience.
15. The other side According to the Wall Street Journal, there may be a lot of things sold, but all the profit is in the top 100. In fact, satellite radio, which started off like cable with the goal of having many specialized channels, is now sending out more and more top-40 style services. Similarly, cable networks are becoming more and more homogenous; there was a time when Bravo and A&E were channels devoted to things like classical music, and now they do reruns of cop shows.
16. The 98% rule? Anderson wrote that almost everything sells at least one copy; specifically that Ecast, an online jukebox, says that 98% of its songs is played at least once a quarter. According to Anderson, again, every song on iTunes has sold at least once. Gomes disagrees: in one month, Rhapsody reports that 22% of its 1.1 million songs did not sell at all. Note that there is no contradiction: if songs are selling at random, and 22% don’t sell each month, 1% won’t sell each quarter and all but one in a million will sell each year.
17. The tail gets longer Amazon and others now do print on demand. This minimizes the demand needed to keep the book available, and it lets each purchaser choose the typefont or the paper stock. This is similar to having many more different books for sale. Similarly we now have vast numbers of personal videos being made that would never have found a broadcast outlet.
18. What is the impact? More choice; you can read, watch, or listen to the specific things you want. More junk out there. (although whether the TV networks are better or worse than home-made cat videos is arguable). More stuff is free. The Web lets you easily choose to read a free book or listen to free music.
19. Again, there are naysayers Publishers subsidize good books with the trashy best-sellers; if every book is being sold separately, these subsidies go away, and the good books may not be published. Except that most publishers don’t deliberately publish books that they think will lose money. Although they do subsidize books, it’s not intentional. So whatever the investment needed to publish, it would still be provided (assuming publishers continued to guess that the book would sell).
20. Advertising? 96% of web advertising goes to 50 sites, mostly Google, AOL, MSN and Yahoo (Richard Eldeman). So is advertising not a long tail example? Half of the ad revenues get redistributed to other sites under programs like “AdSense”. So in fact, lots of sites get a tiny amount of ad revenue. (AdSense is a program by which Google puts ads on other sites and shares the revenue; imagine that the search-targeting ads appear not just on the search results page, but also on the pages pointed to. By the way, each dollar of advertising that newspapers are losing is turning into 33 cents of revenue online; i.e. online advertising is perceived to be more efficient.
21. Culture and society So would the Civil War have been avoided if all 19th century Americans had watched the same TV shows? Seems doubtful. There was no Internet in either the 1950s or 1960s, and one was conformist and the other fragmented. If one looks at some measures of social disorder such as crime, strikes, or votes for 3rd parties, it would seem that in the last ten years they have declined.
