In business, less will be more
There's a major shift in the way businesses offer their products to the public, according to Wired editor-in-chief Chris Anderson. His new book, The Long Tail: Why the Future of Business Is Selling Less of More, explores the ways in which our culture and economy are moving away from hits (popular products and markets), which reside at the head of the demand curve, and toward a huge number of niches in the tail of that curve. This Long Tail is resulting in a massive increase in choices for consumers, who until now have, by and large, unwittingly had their tastes shaped by what is widely available or most popular. BookPage asked Anderson, who writes a popular blog on the subject, to explain it all; he responded from a plane high over Texas.
What do you mean by the Long Tail?
Last year, 65,000 music albums were released only 700 made it to the shelves of America's No. 1 CD retailer, Wal-Mart. If you're into anything that isn't in the top 700 (whether it's non-mainstream or simply not a new release), you understand the Long Tail. Likewise if you're into documentaries, foreign films, or any other kind of movie that isn't stocked at Blockbuster. Many interesting examples were put forward by readers of the [Long Tail] blog, too, such as microbrews as the Long Tail of beer and insurgency as the Long Tail of warfare.
You emphasize that, while choice is certainly preferable to scarcity, there remains a need for good filters to help people find their way through myriad options. What are the best filters?
Amazon continues to lead the way. It has good examples of the most important kinds of filters: search, personalized recommendations, reviews, rankings, even specialized filters such as statistically improbable phrases. Outside of books, Google is of course the ultimate filter and the innovation around helping you find music you'll like is just beginning.
You say the alternative to let people choose is choose for them. How do we know the limits of our filters?
I'm against choosing for people if that means guessing what they want and offering only that. I believe the best technique is to order choice in ways that reflect individuals' expressed and observed preferences, while still offering unbounded variety. The best filters will get this right and be rewarded with happy consumers; others will have to evolve until they get it right.
How should businesses alter their approaches as niches become more plentiful and influential?
Those who can see the world outside the hits will prosper most. That means understanding how to market to niches and make a profit from modest sales. A key tactic will be the ability to scale down achieve economic efficiencies so you don't have to just focus on hits. That can be as simple as digital distribution, which drops the marginal cost of goods close to zero, or as complicated as self-service, giving customers the tools to help themselves.
But hits are here to stay?
The curve that defines the Long Tail is ubiquitous in everything from markets to nature. It is, above all, one of inequality: a few things have high impact and a large number of things have low impact. This is as true of music albums as it is of earthquakes. Some things are always going to be more popular than others, and word-of-mouth will exaggerate those differences. But the difference between hits and niches seems to be shrinking: there's now room for both of them, so it's not hits or niches, but hits and niches.
The Long Tail blog's tagline is a public diary on the way to a book. How did the blog shape the book?
The blog was a fantastic aid. It had three advantages for me, in writing a nonfiction, research-heavy book based on a published article [Wired, Oct. 2004]: 1) It allowed me to keep the momentum going between the publication of the article and the book; 2) I gave away some of my research results and ideas, but got back many times that from my smart readers; 3) Those thousands of readers have great word-of-mouth influence, which I imagine will help market the book. I was so encouraged by my experience, I'm thinking of ways to introduce some of that technique to Wired.
Are there more books in your future?
Absolutely, but I've promised my wife I'd finish the book tour for this one before turning to the next!