The Longer Tail
Great article in Wired about the impact of digital distribution on the media business:
For too long we’ve been suffering the tyranny of lowest-common-denominator fare, subjected to brain-dead summer blockbusters and manufactured pop. Why? Economics. Many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching - a market response to inefficient distribution.
Amen, my brother. The author, Chris Anderson (who is Wired’s editor-in-chief), goes on to cite some interesting statistics. For example, Amazon apparently makes more than half of its sales outside of the 130,000 most popular titles. Why 130,000? Because this is approximately the number of books stocked by a big box retailer like Barnes & Noble. In other words, a bricks-and-mortar bookstore loses half its potential revenues due to space constraints. And simply stocking more books in more space would not be a solution because it would be uneconomical: a book has to sell a certain number of copies every year to pay for the shelf space it takes up, so only relatively popular works are even worth bothering with in an old-economy media outlet.
Anderson does an excellent job of explaining why digital delivery will radically change these economics (and, in the case of innovators like Amazon and Netfix, has already done so). In particular, he illustrates how media products tend to obey a power law (although he could have made this a lot more explicit if, like me, he had been willing to totally bewilder half of his readership). What this means is that there is a relatively small number of megahits that sell tons and tons of copies. There are somewhat more “microhits” that still sell well. And then there is the “long tail”, gazillions of items that hardly sell at all. The curve thus produced is similar to the one for the number of links to a given website (among many other things that also follow power laws). A few superportals like Yahoo and Google have millions of external links, while uncounted minor websites have practically no one linking to them. This blog, for example.
What Anderson doesn’t touch on is the impact of digital production on this state of affairs. Amazon may make more than half of its revenues from titles that a traditional bookseller couldn’t justify stocking, but the authors of these books still had to jump through a fair number of hoops before their efforts could see the light of day. In particular, they had to find a publisher and convince her to spray a symbolic representation of their creative output onto a bunch of pulped, flattened dead trees.
In my opinion, an even bigger impact will be felt as production and consumption of media go fully digital. There are still massive overheads inherent in the business model of an Amazon or Netflix, and this constrains the number of economically viable products despite the fact that physical shelf space is no longer a consideration. Now imagine that I could sit down at my word processor, crack open a six pack or two and crank out a 200 page book on where to find the best brands of canned tuna in different central European countries, making the book available in digital form for online download (for a modest fee). The enterprise could end up being profitable for me even if my potential audience is much, much smaller than that required by a traditional book (even one sold over the web).
The same applies to music and film, where the overall cost of acquiring a top-notch production setup continue to plummet. For example, a $2000 PC or Mac is probably sufficient to create a totally professional-sounding hit song (a modicum of talent is also helpful). The result will be a veritable explosion in the volume and variety of media available for purchase. As discussed at the end of the Wired article, the biggest problem may end up being how to separate the wheat from the chaff in a world with no physical limits on content production and distribution.
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