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July 8, 2008

Data Says Forget the “Long Tail” — Will We Still Be Chasing Blockbusters in 2050?

ME Liz Strauss wrote this at 5:32 am

Anita Elberse Did the Research

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Anita Elberse studied sales in the media and entertainment industries to test the Blockbuster strategy — putting most resources behind a small number of products — against the Long Tail strategy — selling fewer units of a far-wider range of items (a lists too long for brick-and-mortar channels to inventory.)

To find out, I investigated sales patterns in the music and home-video industries—two markets that Anderson and others frequently hold up as examples of the long-tail theory in action. Specifically, I reviewed sales data obtained from Nielsen VideoScan and Nielsen SoundScan, which monitor weekly purchases of videos and music through online and off-line retailers; from Quickflix, an Australian DVD-by-mail rental service; and from Rhapsody, an online music service that allows subscribers to choose from a large database of songs for a fixed monthly fee (and which Anderson cites often in The Long Tail).

Elberse’s findings were no surprise that the 10% across the markets did close to 80% of sales and represented more units than most stores could inventory. They also showed the long tail that Chris Anderson wrote about in his blockbuster book of that name. The results there showed that as sales move online, niche titles that sold a few units almost doubled for any given week during 2000-2005. However, Elberse also found that the number of niche titles that didn’t sell at all or quadrupled.

Thus the tail represents a rapidly increasing number of titles that sell very rarely or never. Rather than bulking up, the tail is becoming much longer and flatter.

Elberse’s advice to product developers was

  1. Stick to blockbuster strategies of resource allocation.
  2. If you serve the long tail, keep costs low and know that success is unlikely.
  3. To gain visibility and reach, focus on your most popular offerings.
  4. Leverage a strong product mix across your online presence.

She offered similar advice to retailers.

Chris Anderson’s Response

In a response to Anita’s article, Chris Anderson responds and mentions that he collaborated with Anita Elberse on some of his research. He explains how and why he reaches a different conclusion reading her most current data.

Let me start by saying that the paper looks rock solid and I’m sure her analysis is accurate. But there is a subtle difference in the way we define the Long Tail, especially in the definitions of “head” and “tail”, that leads to very different results.

My point is not to suggest that Elberse is wrong and that I’m right, it’s only to point out that different definitions of what the Long Tail is, from “head” to “tail”, will generate wildly different results.

A question of semantics?

One thing is certain, Chris Anderson book The Long Tail was auctioned and supported in the traditional blockbuster strategy.

Which strategy will own Internet commerce in 2050?

-ME “Liz” Strauss
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Filed under Marketing, Successful Blog | 6 Comments »




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6 Comments to “Data Says Forget the “Long Tail” — Will We Still Be Chasing Blockbusters in 2050?”

  1. July 8th, 2008 at 6:25 am
    Karin H. said

    against the Long Tail strategy — selling fewer units of a far-wider range of items

    Hi liz

    Above quote is not how I understood Chris Anderson’s theory. Long Tail: in this increasing becoming smaller world (technology, internet etc) there is no longer need to only have blockbusters, but many more opportunities for niche-markets to reach an optimum numbers of clients to be profitable than before the new technology.

    Big companies have a need for blockbusters – the space they need to have everything on ‘display’/in stock would be eating too much in their profits. Small niche companies – using technology, which is still getting cheaper – profit from the ‘long tail’ here.

    Karin H. (Keep It Simple Sweetheart, specially in business)

  2. July 8th, 2008 at 7:19 am
    ME Liz Strauss said

    Hi Karin!
    I was trying to find a way to paraphrase Chris’ “sell less of more,” statement. But I hear your adjustment and totally agree.

    That issue for big corporation in the brick and mortar work is what drives the blockbuster strategy. It’s not the same online where “on demand” rather than warehousing can be the order of the day.

  3. July 8th, 2008 at 7:32 am
    Karin H. said

    Hi Liz

    Would you mind if I go as far as ‘brick and mortar’ companies utilising online technology don’t need blockbusters too?
    (Really like to think our small company is a living – and breathing – example of the long tail principle ;-) )

    I see the Long Tail strategy in 2050 as winner – if nothing new/better/simpler/quicker turns up in the meantime!

    Karin H

  4. July 8th, 2008 at 8:19 am
    randulo said

    Liz et al,

    I loved the book, but yes, first of all it’s ironic that The Long Tail itself was purveyed to such success within blockbuster space, but more importantly, Sturgeon’s Law which also pulls in that direction: “95% of *everything* is crap.

    The long end is well-served by the net and niche sites and companies, though and that’s a Good Thing.

  5. July 8th, 2008 at 8:49 am
    ME Liz Strauss said

    Hi Karen!
    I think anyone who needs shelf space and inventory has to look toward blockbusters to get the ROI from it. I think you’re right about 2050. :)

  6. July 8th, 2008 at 8:50 am
    ME Liz Strauss said

    Hi Randulo!
    I think all of us are lucky that we can now find the things that suit us individually.

    Yeah I like the irony too!

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