Stolen Article from WSJ about anti-Long tail theory

A friend who subscribes to the WSJ online sent me this article.  I’ll be able to read it for only 7 days, so I copied and pasted it here so we could discuss.  I’ll talk more later about choices and decision-making, which is really the heart of the matter between these two opposing theories.

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Study Refutes

Niche Theory

Spawned by Web

July 2, 2008; Page B5

Had PowerPoint been around 150 years ago, Thoreau might have warned us to beware not only of enterprises that require new clothes, but also of those that require new paradigms.

A book from 2006, “The Long Tail,” was one of those that appear periodically and demand that we rethink everything we presume to know about how society works. In this case, the Web and its nearly unlimited choices were said to be remaking the economy and culture. Now, a new Harvard Business Review article pushes back, and says any change occurring may be of an entirely different sort.

The Long Tail theory, as explained by its creator, Wired magazine editor Chris Anderson, holds that society is “increasingly shifting away from a focus on a relatively small number of ‘hits’ (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail.”

The reason involves the abundance of easy choice that the Web makes possible. A record store has room for only a set number of titles. ITunes, though, can link to all of the millions of songs that its servers can store. Thus, said Mr. Anderson, “narrowly-targeted goods and services can be as economically attractive as mainstream fare.” Managers were urged to adopt their business plans accordingly.

Since appearing two years ago, the book has been something of a sacred text in Silicon Valley. Business plans that foresaw only modest commercial prospects for their products cited the Long Tail to justify themselves, as it had apparently proved that the Web allows a market for items besides super-hits. If you demurred, you were met with a look of pity and contempt, as though you had just admitted to still using a Kaypro.

That might now start to change, thanks to the article (online at tinyurl.com/3rg5gp), by Anita Elberse, a marketing professor at Harvard’s business school who takes the same statistically rigorous approach to entertainment and cultural industries that sabermetricians do to baseball.

Prof. Elberse looked at data for online video rentals and song purchases, and discovered that the patterns by which people shop online are essentially the same as the ones from offline. Not only do hits and blockbusters remain every bit as important online, but the evidence suggests that the Web is actually causing their role to grow, not shrink.

Mr. Anderson responded on his Long Tail blog, thelongtail.com, saying much of the difference between his analysis and hers involved how hits and non-hits, or “head” and “tail” in the book’s lingo, are measured. Aside from that, he was generous in praising the article, and said he welcomed the sort of rigorous scrutiny the theory was getting.

In addition to her data crunching, Prof. Elberse reminded readers of substantial bodies of qualitative social research that suggest “The Long Tail” may have been wrong in its description of what makes consumers tick. The book implies that readers and movie viewers are eager to cast off the shackles imposed by physical inventory so they can frolic among the thousands or millions of titles in the Long Tail.

But Prof. Elberse describes research showing that even in our cultural consumption we tend to be intensely social folks. We like experiencing the same things that other people are experiencing — and the mere fact that other people are experiencing and liking something makes us like it even more. Far from being cultural rugged individualists, most of us are only too happy to have others suggest to us what we’d like.

Faithful readers of this column might recall its own skepticism about the idea when the book first hit the stores. In retrospect, “The Long Tail” seems to have followed the template of many Wired articles: take a partly true, modestly interesting, tech-friendly idea and puff it up to Second Coming proportions.

Some of the reasons for the popularity of the Long Tail were as interesting as the idea itself. For one, it flattered its readers, many of whom were in the tech industry, by suggesting (yet again) that the Internet was changing everything. What’s more, since many in the tech elite have a contemptuous view of traditional cultural gatekeepers like record labels and movie studios, they were predisposed to appreciate anything that predicted an erosion of those institutions’ cultural power.

Bloggers had a special role in talking up the theory, which is no wonder considering how it held out the promise that even the most obscure among them could win a robust audience. The sad truth is that the blogosphere is as hit-driven as the rest of the world, with a tiny percentage of blogs getting a huge chunk of the traffic, and with many blogs simply going unread.

The Web is clearly changing cultural consumption patterns, but those changes don’t seem to involve the sort of drastic flattening of demand curves predicted by the Long Tail. While whole new cultural categories — YouTube videos, for example — are indeed emerging, they seem to quickly settle into the same winner-take-all dynamic experienced in the pre-Google age. Don’t toss out those old paradigms just yet.