Sustainable Pace

November 11th, 2008

The Long Tail
(Chris Anderson, 2006)

"The Long Tail" by Chris Anderson, editor of "Wired", is a description of an economic trend, loosely based on the Pareto Principle.

The marketplaces of the latter half of the 20th century have been dominated by hits: a store carried only few items, which ideally sold in huge numbers. Carrying less popular items just didn't pay off, as conventional stores could only hold a very limited amount of items. But as the internet entered, offering these rarely requested items hardly increased expenses: No longer was real storage space required, merely hard disk space and bandwidth. All of a sudden a store could carry millions of items, and it even paid off if an item only sold like two units a year. Just multiply two units by a million items.

The Long Tail diagram

Imagine a hyperbolic curve: The x-axis defines items, the y-axis sales per year. The hits of the market are a tiny segment on the left: Few items which sell in huge numbers. This is what a conventional store carried. The rest of the curve is "the long tail": Millions of items which only sell a few times. An example of a long tail market is music: A conventional record store only had a few thousand records, while a store like iTunes has millions.

In long tail markets, hits become less dominant, as less popular items are able to rise from the tail to the head of the curve: Every item in the long tail is suddenly a possible hit.

Anderson illustrates the long tail idea with a lot of examples. Maybe take a look at Wikipedia's article on "The Long Tail", or read Chris Anderson's blog. Following up on the long tail idea, Anderson recently published an article well worth reading: "Free! Why $0.00 is the future of business". I find this particularly interesting, especially when reading the article with open source software in my mind.

Update: In July 2008 Anderson published a revised edition of this book; I have only read the 2006 version.