July 7, 2006

From The New Yorker: A Review of The Long Tail [7:25 am]

Between the 4th and other activities, I only just got around to reading the latest issue last night, and found this provocative piece - Going Long - pdf

The least convincing part of Anderson’s book is his treatment of what he calls “the short head,” the part of the curve where popular products reside. Although he acknowledges that best-selling books and blockbuster movies won’t vanish overnight, he suggests that demand for them will gradually decline: “the primary effect of the long tail is to shift our taste towards niches.”

Is this what we’re seeing? In the film industry, more movies are being produced than ever before, but seven of the ten all-time top-grossing films worldwide have come out since 2000: three “Lord of the Rings” movies, three “Harry Potter” movies, and “Shrek 2.” It’s true that over-all attendance at movie theatres has been slipping, but the biggest films are still doing well, as was demonstrated recently by “The Da Vinci Code” and “X-Men: The Last Stand,” both of which enjoyed highly successful opening weekends despite tepid reviews. Four of the top-selling novels ever published—the works of J. K. Rowling and Dan Brown—have appeared since 2000, too.

[...] There’s another blind spot in Anderson’s analysis. The long tail has meant that online commerce is being dominated by just a few businesses—mega-sites that can house those long tails. Even as Anderson speaks of plenitude and proliferation, you’ll notice that he keeps returning for his examples to a handful of sites—iTunes, eBay, Amazon, Netflix, MySpace. The successful long-tail aggregators can pretty much be counted on the fingers of one hand. Although the online economy has existed for only a decade, businesses like these—and you can add Google and Yahoo—have already established seemingly impregnable positions. If you’re a typical Internet user, when you need to find information you go to Google; when you’re looking for a book or a CD, you go to Amazon; when you want a new golf club, you go to eBay; when you want to download a song, you go to iTunes.

There’s an ugly name for industries that are controlled by three or four big firms: oligopolies. A few decades ago, these lumbering creatures were easy to spot. In the skies, cosseted airlines like American, United, and Delta charged passengers a small fortune for the privilege of flying; in broadcast television, ABC, CBS, and NBC dictated what viewers could watch. Today, thanks to globalization, deregulation, and technological progress, many of the twentieth-century industrial behemoths have fallen by the wayside. But don’t assume that giant, exploitative firms are a thing of the past.

[...] In recent years, eBay has sharply increased its commission rates; Amazon has admitted charging its customers different prices for the same goods; and Apple Computer has stubbornly refused to make its iTunes service compatible with portable music players other than iPods. Has the New Economy really moved past the familiar “winner take all” dynamic? That depends on whether you’re looking at the long tail—or at who’s wagging it.

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