If you've ever searched fruitlessly at a bricks-and-mortar retailer, only to find what you sought online at Amazon.com (Nasdaq: AMZN ) or eBay (Nasdaq: EBAY ) , you've experienced the Long Tail. If you've ever seen a great, obscure indie movie that Netflix (Nasdaq: NFLX ) recommended, you've experienced the Long Tail. If you've ever been a fan of hard-to-find content and knew you could find exactly what you wanted on Amazon or Apple's (Nasdaq: AAPL ) iTunes, you're well aware of the ramifications of the Long Tail.
This past summer, Wired editor Chris Anderson's long-awaited book, The Long Tail: Why the Future of Business Is Selling Less of More, hit the bookshelves, both physical and virtual. Anderson popularized the concept in a 2004 Wired article, in which he illustrated his argument with a graph that showed hit books, games, albums, and such making up the large "head" of sales, accompanied a long "tail" of niche content that sells, too. Having been fascinated by the original article, several of us here at Fool HQ rushed to read the book.
A future of niches
Anderson discusses a future in which niche content and products gain economic importance, while blockbusters and hits lose some of the power they've enjoyed over previous decades. In the past, supply and demand were dominated by scarcity, subject to the twin tyrannies of geography and limited distribution. With the Internet as a growing and fairly limitless platform for distribution, information, and marketing, sales of products of all types can flourish. The hits, determined by big-bucks marketing, star power, and simple availability, will no longer be the greatest drivers of commerce.
The Long Tail is a big idea, and it appeals to investors who are watching the changing landscapes for retail and niche products, as well as the media conglomerates grappling with signs that blockbusters are no longer a sure thing. Take the movie industry's dismay at its recent series of big-budget disappointments.
However, not everybody agrees with Anderson's premise. Most notably, The Wall Street Journal's Lee Gomes took exception to Anderson's projections for sales in the tail. Gomes produced some data undermining Anderson's "98 Percent Rule," which implies that 98% of content online will sell. He pointed out that iTunes is still a hits-based business, for example, and that some businesses show that an increase in available content leads to a decreasingly impressive "tail" of sales. (Anderson posted his reactions to Gomes' criticism and data on his Long Tail blog.)
An evolving phenomenon
It's always good to consider criticism for any big idea, especially one as exciting as this. Any reasonable person would agree with Gomes that we should wait and see how the trends bear out before we trash the hits and blockbusters. (After all, this is a constantly evolving idea for the long term, not a short-term change.) Nonetheless, Anderson's idea is a legitimate theory with plenty of proof that something major is afoot -- something rule-breaking, to say the least.
Even beyond the plentiful examples discussed in Anderson's book, we can see examples of a "long tail" in other industries. Take the shopping mall, for example. Consumers went from a minimal choice of clothing and goods at their local department store to a place where they could find niche products on a daily basis. Instead of finding only mainstream products, customers could stumble into a Zumiez (NYSE: ZUMZ ) store and outfit themselves in full board-sport attire, for example. Now, as Anderson points out, the World Wide Web makes the tail infinitely long.
A further example of this phenomenon is the job-search industry. Before the Internet, applicants would have to find names and addresses manually and submit information through the mail -- a long and costly process, in which most applicants applied to the same big companies. But now, with job searches available through companies such as Monster.com (Nasdaq: MNST ) , an applicant can simply upload a resume and wait for offers in response. And with high-traffic blog sites creating their own job searches, even applicants looking for specialized jobs have an easy way to get access to them.
Join the party!
As you can see, Chris Anderson's Long Tail is simply a well-documented and well-evidenced series of observations of the way our world is changing. We find the implications for business models, and how companies can take advantage of the change, especially intriguing. To further discuss the book and our thoughts, we have invited Chris Anderson to give an interview, which we will publish on The Motley Fool. We'd like to invite you, our Foolish virtual colleagues, to submit questions for Chris Anderson. Just click here to email us your question.
We've seen the Long Tail at work in the world. Now's the time to increase the Long Tail of information -- send us your question today to participate!
Alyce Lomax and Shruti Basavaraj would love to hear what you'd want to ask Chris Anderson. Shruti owns shares of eBay, while Alyce owns no shares of any company mentioned above. Amazon, eBay, and Netflix are allMotley Fool Stock Advisorrecommendations, and Zumiez is aHidden Gemspick. The Motley Fool's disclosure policy is worth reading.