The Long Tail: Big Hits and Big Misses

The ” Long Tail” is a colloquial name given to various statistical distributions characterized by a small group of events of high amplitude and a very large group of events with low amplitude. Coined by Wired Magazine writer Chris Anderson in 2004, the Web’s Long Tail has since gone on to perplex academics and challenge online marketers.The concept is straightforward. Think Hollywood movies: there are big hits that really hit big, and thousands of films that no one ever hears about. In economics, it’s the Pareto principle: 20% of anything products 80% of the effects. It’s these non-hit misses that make up the Long Tail. Anderson claims to have discovered a new 98% rule no matter how much content you put online, someone, somewhere will show up to buy it. eBay would seem to be a perfect example. The online tag sale contains millions of items drawn from every Aunt Tilly’s closet in the world and still seems to find a buyer somewhere for just about anything.

On the Internet, where storage and distribution costs are near zero, Amazon is able to offer 3 million books for sale compared to a typical large bookstore with 40,000-100,000 titles. The same is true of CDs, DVDs, digital cameras, and portable MP3 players. Wherever you look on the Web, you find huge inventories, and a great many items that few people are interested in buying. But someone is almost always searching for something. With a billion people online, even a one-in-a-million product will find 1,000 buyers. According to Anderson, online music sites sell access to 98% of their titles once a quarter. According to Netflix, 60% of its 85,000 titles are rented at least once a day by someone. Unlike physical stores such as Wal-Mart and Sears, online merchants have much lower overhead costs because they do not have physical stores and have lower labour costs. Therefore that can load up on inventory including items that rarely sell.

There are several implications of the Long Tail phenomenon for web marketing. Some writers like Anderson claim that the Internet revolutionizes digital content by making even niche products highly profitable, and that the revenues produced by small niche products will ultimately outweigh the revenues of hit movies, songs, and books. For Hollywood, and all content procedures, this means less focus on the blockbusters that bust the budget, and more emphasis on the steady base hit titles that have smaller audiences but make up for it in numbers of titles. The Long Tail is a democratizing phenomenon: even less well-known movies, songs, and books can now find a market on the Web. There’s hope for your blog and garage band! For economist, the Long Tail represents a net gain for social welfare because now customers can find exactly the niche content they really want rather than accept the “big hits” on the shelf. The Web’s Long Tail makes more customers happy, and the possibility of making money on niche products should encourage more production of “Indy” music and film.

The problem with all these misses in the long Tail is that few people can find them because they are- by definition- largely unknown. Hence, in their native state, the revenue value of low-demand products is locked up in collective ignorance. Here’s where recommender systems come into play: they can guide consumers to obscure but wonderful works based on the recommendations of others.

In many cases, recommendations are made based on past purchasing behaviour of the user, which may or may not reflect the needs or preferences of the user today. The ability to narrow down the list of potential options, however, makes the information gathering process more efficient and for many users very helpful.