Those associated with technology and its markets knows that any popular explanatory framework will suffer a semantic death at the hands of marketers, promoters and other hucksters. Sometimes sooner than later. Why, just this week...
I heard a senior exec of a large enterprise software explain why their architecture supports and enhances the Long Tail phenomenon. And shortly thereafter received a pitch from a component architecture startup saying exactly the same thing. Both rubbish. Let's review, shall we?
The potential for a Long Tail market (or attention) distribution exists when the fixed costs of production, distribution, and buying are reduced by technology or other means. Then you don't need as many units of whatever to amortize the fixed costs to a competitive point, and niche products are supported with a decent ROI. BigCo's appeal to the Long Tail falls down right here, as I didn't hear one word about how they are going to reduce the substantial (indeed, notorious) fixed costs of adopting their solutions. Megabuck antes on the buy side will likely keep down the size of their market to the point where extending the tail of developer solutions into specalized niches is problematic from an ROI standpoint.
The degree to which a Long Tail evolves depends on the degree to which costs of transactions are also reduced. Transaction costs aren't just monetary, they also include the overhead and cognitive burdens of finding, deciding on, and integrating the value of each purchase (or use of your attention), as Kevin Laws ably points out. The bigger the monetary and non-monetary transaction costs in a market, the larger the granularity of the practical transactions, the less chance for the fine grained decision making that supports a Long Tail distribution. And I'm here to tell you that the transaction costs of deciding to read or not read a blog post are in no way comparable to those implied when choosing to adopt a software module, form a relationship with its vendor, and build it into architecture and business process for the future.
Yes, technology can in some cases also mitigate transaction costs, by automating much of the search process, often replacing branded, manual aggregation. But with automatic, requirements driven programming still largely in the Real Soon Now category, that doesn't apply to software. Modular software vendors, flagged with the programming flavor du jour, have long ignored the transaction costs aspects of selling at the module level, and have all left larger or smaller craters on the landscape. The attentive will recall that I worked at Kaleida Labs - sic transit gloria. That's one lesson learned on OPM that still holds. You're not going to find my partners' money at the bottom of one of those holes, wannabe LittleCo.
So this is my moral for this weekend: Just say 'no' to bogus Long Tail pitches. This useful meme, like all others, is on its way to the shark tank. But let's at least try to delay its arrival there until Chris Anderson's book can appear and its publisher recoup his munificent advance.
Tim
I have one question, why is the Tech industry so quick to fall into the latest buzzword? Is the need to be bleeding edge so intense in products that are reaching maturity that they are like the 60 year old lady that swears she doesn't look a day over 30?
I typically can tell the difference.
Have a great trip, or even better, you are reading this after you got back and had a great trip.
Posted by: Tom | April 15, 2005 at 13:39
Can I offer an possible Long Tail example? Vacuum tubes.
With the fall of Communism, long-sheltered manufacturers in Russia, Eastern Europe and China, with low fixed and variable costs suddenly had access to Western markets where the former capitalist manufacturers had largely abandoned the market.
Add the Internet with its low marketing and finding costs plus low cost shipping of high value, low weight, small volume items, and the market has grown.
I'd estimate that 10% of the "high end" audiophile electronics market now uses vacuum tubes.
Is this what you had in mind?
Posted by: Joseph Somsel | April 16, 2005 at 14:44
I'd like to see more short story publishers and writers try to understand the long tail. Since you can't buy short stories on Amazon, it's difficult to do with them what happened to the Krakauer book, but there may be an opportunity with blogs to direct readers into smaller niches better. I certainly hope so.
f
Posted by: Fred Schoeneman | April 18, 2005 at 19:28
Tom - thanks for the wishes, we had a great time! Boring vacation photos post to follow shortly. I think your question on the susceptibility of Tech to buzz phrases deserves a post of its own, so look for that after I've dug through a few days of e-mail.
Joseph - vacuum tubes are an interesting dual example. They've been used in the past as a classic 'Two Curves' technology example, where the Soviet Bloc countries kept their bets on vaccum tubes (first curve), while the West bet on initially inferior but eventually triumphant semiconductors (second curve). I would say their current market is indeed a Long Tail example. The initial costs are low - or maybe we should say they were sunk long ago by the citizens of the Communist countries. The variable costs of finding on the Internet and shipping via the globalized logistics system are also low. Yes, a good example!
Fred - short stories run straight into the non-monetary transactions cost problem. How do you know the worth of the item until you've read it - and thereby received the whole value? Author's reputation is a biggy here, to reduce the angst of the decision with trust: I liked his last one, I'll take a chance again. Bundling is the usual outcome, e.g., anthologies. How to do that on the net?
Posted by: Tim Oren | April 19, 2005 at 15:18
Seems to me that long tails (for physical products) are closely related to the interest rate and to inflation. If you're a bookstore, and your cost of funds is 18% (as it was during the Carter era) this goes into your inventory carrying costs, and it becomes more difficult to justify shelf space for the book that may sit around for 3 months before being sold...better to focus on best-sellers or close approximations thereto.
Posted by: David Foster | April 29, 2005 at 14:02
David, you should also look at the tax rates on held inventory as an issue for both retailers and distributors. But at this point I think the Long Tail phenomenon is well enough established that a rise in interest, inflation and taxes would not kill off (for instance) the Amazon model, instead it would finally force print-on-demand into the marketplace.
Posted by: Tim Oren | April 29, 2005 at 15:27
Tim,
I hear you on the bundling. Cost isn't really an issue, though, since short story writers really don't get paid for their work. It just doesn't happen -- unless you consider sinecure at some university creative writing program the same as getting paid. Therefore, neither is monetizing. The real problem is figuring out how to help readers identify good stories. There are tons of bad ones out there and many writers only have one or two good ones. Some readers are interested in action, some are interested in lit-fic, some are interested in chic lit. Yet magazines don't specialize enough.
Anthologies are part of the answer, but there's a catch-22 there in that the only people you'd trust to put together an anthology are people you've heard of -- which would be authors. The problem with this is that lots of times, editors are lazy (especially online) and just publish their friends' work. It's one big reach-around. So there has to be a way to let the market define a niche, rather than an editor. That's got to be the answer. In any case, editors are fickle. I'd trust Amazon's review system over most editors' opinions.
It may not seem like a big deal, but think about your own approach to reading short stories. What's important is the ratio. If reader A reads short stories and finds that 40% of them are good and 60% of them are bad (to him), that may be enough of a risk/reward ratio for him to continue. It might not be enough for reader B. But what if that ratio goes down to 35/65? Will Reader A pick up that next short story or become discouraged? Will a marginal improvement of 45/55 be enough to get reader B reading?
The Internet should be forcing an explosion of the short story, but it isn't. And there has to be a reason why.
Posted by: Fred Schoeneman | April 29, 2005 at 17:41
There is also another market for vacuum tubes that doesn't involve high end stereo equipment. That's the market for guitar amplifiers (heads) and exotic guitar effect pedals. Granted, solid state amplifiers are quite popular but tube amps have a regular renewable following as long as young kids around the world dream of turning the dials to 11.
link: http://www.vacuumtube.com/tubemarket.htm
Posted by: Jay Cuthrell | June 10, 2005 at 10:32
Tim,
I'd like to interview you on my new PodTech.net InfoTalk show (yes its a podcasting show). I have different views than you. The long tail is about costs but you seem to contradict yourself in your post. I'm sure that I must be missing something. In either case lets talk about it on my show. I'm at [email protected]
btw: i just interviewed Chris Anderson on Friday so I'd love to have your take as well
Posted by: John Furier | June 12, 2005 at 23:48