Tall tale of the internet sale

The Long Tail

August 4, 2006

Winston Fletcher calls for a reality check on web-based marketing

The Long Tail is a short hymn of praise to the lavish cornucopia of niche products now available online in certain markets. In these markets, author Chris Anderson shows, while there are still many big sellers there are also long tails of small sellers - minority products purchased by handfuls of people. Although the sales of each minority product in the long tail will be tiny, for the online retailer the total sales generated by all of them tot up to a tidy sum. Therefore, by pinning the long tails on to their inventory, online retailers reap rich profits and their customers profit from the limitless choice.

Anderson pays brief homage to Malcolm Gladwell and James Surowiecki, whose modish books The Tipping Point and The Wisdom of Crowds resemble Anderson's new volume in many ways. All three books epitomise an apparently highly successful new American publishing genre. All three started off as magazine articles and are perfect flight fodder. Each is a gentle polemic, written by a smart journalist, advancing a simple thesis.

The authors put their arguments crisply and lucidly: there are few repetitions, deviations or hesitations. Their themes are encapsulated in their snappy titles, which are designed to infiltrate common parlance - The Tipping Point and The Wisdom of Crowds have already done so. Both expressions are now commonly used as if they were statements of accepted fact, that there are such things as tipping points, and that crowds are inordinately wise. Doubtless Anderson hopes we shall soon be chatting about "long tails" with similar conviction.

He is less keen, however, on another recent American book in much the same style - written in this instance by an academic rather than a journalist. Barry Schwartz's The Paradox of Choice finds little favour in The Long Tail . This is unsurprising once you note the two books' conflicting subtitles. Schwartz's pessimistic subtitle is Why More Is Less , which implicitly contradicts Anderson's optimistic How Endless Choice is Creating Unlimited Demand . But then Anderson could hardly be expected to endorse Schwartz's qualms regarding the benefits of endless choice. Not even the smartest of journalists can simultaneously sing the praises of endless choice and admit that endless choice ain't all it's cracked up to be.

The "long tail" phenomenon undoubtedly applies to books, recorded music, movies and the broadcast media - four leading areas of commercial creativity. In each of those four sectors the web has vastly enlarged the range of products easily accessible to consumers. Amazon is the archetypal long-tail retailer. While the average large book store stocks about 100,000 titles, Amazon's inventory runs to an astonishing 3.7 million titles. Another two American online retailers, Rhapsody and Netflix, offer 1.5 million music tracks and 55,000 DVDs respectively - at least ten times more than most bricks-and-mortar specialists. At the same time, the explosion in broadcast channels and the boom in MP3 players and podcasts have splintered television, radio and music audiences into myriad shards - again producing long tails that bear little resemblance to the mass audiences of yesteryear.

So far, so good. But Anderson is keen to establish the universal applicability of his thesis, doubtless to avoid The Long Tail becoming a long-tail book itself. He therefore tries frantically hard to prove that long tails are now to be found in all types of goods and services. Amazon, Rhapsody, Netflix and others have galloped ahead, Anderson claims, but the rest of the economy is on their tail - so long tails will soon be swishing about everywhere. "The principles of the Long Tail (extend) to industries that make up most of the world's economies," he declares confidently. In trying to justify this hogwash, Anderson comes seriously off the rails. For a start, he pays little heed to the problems and costs of distribution. Small items of little value - such as books and CDs - can be delivered via established mail services and dropped in mail boxes. That's easy. They are cheap to send, unlikely to be pilfered, have an unlimited shelf life and can be delivered to absent purchasers. And broadcast services are the perfect exemplars of "products" that are simple and free to deliver, once the transmission system is operative.

However, goods that cannot be inexpensively delivered, or those that the purchaser has to take personal delivery, are another ball game. High distribution costs and complicated deliveries decimate the markets for niche products, and long tails quickly get shorn. Worse, Anderson pays even less attention to the costs of production. The cost structures of most goods are utterly unlike those of creative services. Manufacturing short runs of most products is exceedingly expensive. With the aid of brilliant computer systems, certain products - inexpensive clothes, for example - can be produced in small batches. But motor cars and petrol, washing machines and detergents, computers and cornflakes cannot - not at a reasonable price, anyway. Manufacturers have grown skilled at various kinds of "badge engineering" (providing fundamentally the same products in subtly different variations), but long runs and mass production are still the way to keep manufacturing costs down and consumer prices low.

Anderson frequently cites eBay as a long-tail marketer, but eBay is not involved in either production or distribution: second-hand and new goods are sold by individuals to other individuals. It is a wonderfully ingenious commercial process, but it is sui generis .

Then there is marketing. How are prospective purchasers to learn about the zillions of products lodged in those interminable tails? How can they choose between them? Anderson argues that online retailers get to know the tastes of their customers and can thus introduce their customers to goods they think will be appropriate. Combined with viral marketing and blogging, Anderson believes this will suffice to ensure that prospective customers learn what is in the tails. They will then be helped to choose by "filters": various types of online data designed to inform their selections. Well, yes and no. Amazon constantly recommends books to me: "You've bought alpha so you may be interested in beta, gamma and delta." But I have never yet been interested in beta, gamma or delta. Since Amazon keeps plugging away, I imagine some people do accept its recommendations. But not that many, I suspect. The attraction to Amazon is that it is cost-free marketing.

Unfortunately, most marketing is not cost-free. Almost every entrepreneur who becomes fascinated with technology under-estimates the difficulties, and the costs, of marketing new products. Yes, there are famous exceptions. So far, Google, Yahoo and others have done little or no traditional marketing, nor did Marks & Spencer for many decades, saying haughtily that if you provide excellent quality and top value you do not need to sully your hands with vulgar advertising. It does not say that now. As Google's products become more sophisticated and complex it will have to get into marketing in a big way. Marketing costs are another death knell for niche products.

And it is not sufficient to show that retailers such as Amazon, Rhapsody and Netflix can make big money out of long tails. What about the folk who produce the niche products that cram the tails? Those products survive on minuscule sales because their producers are in love with their art. Creative people will write books, play music and make videos for the love of it. So they are happy - not ecstatic, but happy - if Amazon sells a few copies of their work. This can succeed for creative goods and services, but it will not work for purely commercial products.

Finally, we return to Schwartz's problems of choice, to which Anderson gives short shrift. Anderson cites only one of the studies reported in The Paradox of Choice , in which consumers were given various jams to choose from, and the more variety they were offered, the fewer jams they finally chose. This proves that too much choice is oppressive, the study claimed. Not so, Anderson argues. The result occurred because the consumers did not have sufficient information on which to base their choices and so became confused. Online they would be able to take their time and investigate the jams in more detail. (Popularity, prices and manufacturing processes perhaps. But the most important thing about a jam is its taste.)

This highlights two of long-tail shopping's major lacunae. First, there are countless products it is inappropriate to buy online. Second, all this surfing and foraging on the net does not enthral everybody. Far from it. Who wants to scour the net for jam ingredients? No doubt Anderson, who edits Wired magazine, adores sitting in front of his screen searching for guff and stuff. But I doubt whether the great majority of people, less geekish people, find it such fun. The worldwide web is a wondrous thing - but for cheap consumer goods' specifications? Who has the time?

Over recent years there has been a host of studies on the problems attendant on the current burgeoning of choice. The plethora of choices already available in many fields brings in its wake a plethora of profound problems. We often worry ourselves silly before we choose, and then again afterwards when we fear we have chosen wrongly. Having to make too many choices can cause anxiety, stress and even despair. I cannot see how ever-growing tails are going to help with any of this. So I will be perfectly happy if endless tails never raise their heads (or their tips) in any but a tiny minority of markets.

Winston Fletcher is chairman, the Royal Institution, and for many years was a leading figure in advertising.

The Long Tail: How Endless Choice is Creating Unlimited Demand

Author - Chris Anderson
Publisher - Random House Business
Pages - 238
Price - £17.99
ISBN - 1 8441 3850 X

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