June 27, 2008

The July-August issue of the Harvard Business Review has an article by Anita Elberse of the Harvard Business School that puts a damp academic blanket on the firestorm created by Chris Anderson and his hit book, "The Long Tail." In "Should You Invest in the Long Tail?" Elberse writes about her studies of sales patterns of music and video and concludes that businesses should aim for the hit titles of the short head because they are what people increasingly desire.

In "The Long Tail," Anderson admits hits will never go away. "Hits, like it or not, are here to stay," he wrote. "Long Tail markets tend to be a bit flatter than traditional markets, but they still have their share of blockbusters." But the book often jumps back and forth between "hits are here to stay" and "hits are a thing of the past" sentiments. The bottom-line theory espoused by "The Long Tail," the one takeaway, is that the Internet is doing away with mass culture.

Anderson's theory of niche-over-mass culture is based upon the belief that the mere availability of niche products spells doom for hits. Given the choice, he argues throughout the book, people will make different purchases. Not only are CD sales down, he wrote, but customers are "losing their taste for the blockbuster hits."

But consumers, Elberse has found, still opt for hits.

No matter how I slice and dice the customer base, customers give lower ratings to obscure titles. A balanced picture emerges of the impact of online channels on market demand: Hit products remain dominant, even among consumers who venture deep into the tail. Hit products are also liked better than obscure products. It is a myth that obscure books, films, and songs are treasured.


Elberse later wrote of the strategic implications of her findings:

For Chris Anderson, the strategic implications of the digital environment seem clear. “The companies that will prosper,” he declares, “will be those that switch out of lowest-common denominator mode and figure out how to address niches.” But my research indicates otherwise. Although no one disputes the lengthening of the tail (clearly, more obscure products are being made available for purchase every day), the tail is likely to be extremely flat and populated by titles that are mostly a diversion for consumers whose appetite for true blockbusters continues to grow. It is therefore highly disputable that much money can be made in the tail. In sales of both videos and recorded music – in many ways the perfect products to test the long-tail theory – we see that hits are and probably will remain dominant. That is the reality that should inform retailers as they struggle to offer their customers a satisfying assortment cost-efficiently. And it’s the unavoidable challenge to producers. The companies that will prosper are the ones most capable of capitalizing on individual best sellers.

At his blog, Anderson wrote in defense of his book and conclusions (not that he was defensive). My problem with his post is that it spends too much time with semantics and not enough time addressing Elberse 's findings about consumers' taste for obscurity.

The main issue here isn't to nitpick over what percent of books or albums represent what percent of activity. The shape of the curve is well established, and Elberse and Anderson don't have vastly different data. The main thrust of "The Long Tail" is not the shape of the tail, it's the assertion that targeting niches is the best business strategy.

The key issue here is the degree to which consumers demand obscure titles. Is activity in obscure titles is simply curiosity rather than genuine interest? Is the "tyranny of physical space," as Anderson calls the limited selection offered by brick-and-mortar retailers, all that props up the hits?

In the book, Anderson wrote that "we're seeing a shift from mass culture to massively parallel culture," or "millions of microcultures." But that doesn't appear to be the case. Mass culture is alive and well on the Internet. Consumers know the bad from the good. They know what's popular and they will gravitate towards the hits. Niches will continue to exist, and heavy users will continue to dabble in niches, but the level playing field of digital distribution isn't going to do away with mass culture.

AddThis Social Bookmark Button
Posted by Glenn at 11:13 AM | |

[music jobs] HR Manager at EMI NA; New York, NY.