A test of any theory is how many impassioned objections it generates. By that measure, the Long Tail could be doing better, since nobody's really ripped it or me to shreds yet (bring it on!). Indeed, all the best criticism has come in the comments here, where all sorts of sloppy thinking and phrasing on my part have been caught and corrected with remarkable wisdom, insight and civility. Thanks, but where's the fun in that?
Today, however, brought some hope with one of the more straightforward attempts to refute the theory. It comes from Shelly Palmer, a composer and media consultant (and blogger), Writing in MediaPost (free registration req'd) he calls the Long Tail "a myth",
mostly because I've underestimated the costs of making archive material
available. Fighting economics with economics is my favorite battle, so
let's dive in with an extensive quotation from Palmer's piece:
There is a very real point where marginal cost exceeds marginal gain and it happens very close to the borderline of the top 20 percent of the selections available on the Long Tail. So, in essence, the Big Hump [his phrase, unfortunately based on a statistical misunderstanding, for Pareto's 80-20 rule] is still the appropriate model for investors and content owners to follow.
Take a movie that already exists. Retain counsel (internal or external) to get all of the appropriate clearances for reduction of the work to the final form factor - ones and zeros. Rent a film chain and color correction suite for the day. Make a 4K file of the entire movie. Down-convert it to every usable format for current distribution and then create files in every resolution required from 56k up.
Now the fun starts. Create meta-tags and descriptions that are meaningful to search engines so people can find the work. Add a DRM (digital rights management) wrapper, so you can get paid. Come on, take a guess... how much have we spent on this single title? Call it $15,000 sitting on a server ready to go. Now remember, we don't know who wants to watch this movie, we are just sure that in time, every movie will be watched according to the Zipfian distribution. Add the cost of money to this equation and multiply by every title in your library. Still sound like a good idea?
I didn't think so. You probably want to do an analysis to determine which movies are the best investments: Which will bring the best return in the shortest time frame? In other words, you will apply the Big Hump to the Long Tail to determine if your content is worth encoding at all.
But isn't the Long Tail an accurate way to look at content usage? Yes, it is. It's just not a profitable way to look at a back catalog that was not created with the Long Tail in mind. It is never less expensive than in the original edit suite. But after the fact, there are very real costs associated with encoding and storage. When you calculate those costs and the cost of capital, the value chain (or lack thereof) is clear.
So, as it has been for time immemorial, the Big Hump is the clear winner for modeling return on investment in the information age or any other. No disrespect intended to those who have been spinning the tale of the Long Tail.
Sigh. Not as bruising as I'd hoped. There are some good points here, but unfortunately they're in the minority, largely because Palmer sees the Long Tail from too narrow a perspective.
First, it's a trivial point but let's correct the math. A Pareto distribution is not a bell curve, but is instead another long tail curve that looks pretty much like a Zipf or any other powerlaw.
Bell curve (aka "normal distribution")
Second, the Long Tail is about more than just archives and back catalogs. As I mentioned in the previous post, less than 1% of the CDs currently available
are sold at Wal-Mart, which also carries less than 3% of the new music
released each year. That's not stuff moldering away in some archive;
that's music still on the market, even though only a tiny fraction of
it is available in traditional retail. iTunes, Amazon, Rhapsody and
their ilk didn't have to look very far to add a few orders of
magnitude to the average consumer's range of choice.
And that's just entertainment media. There's also the Long Tail of advertising, physical goods, software, people and all the new independent and peer-production content that's now being made because there are ways for it to reach a market or at least an audience. The notion of an archive isn't even meaningful for most of those. Lesson: the Long Tail isn't just about Hollywood.
Third, the example Palmer gives of wrapping old movies in DRM and making them available online is indeed a pretty poor Long Tail economic model, largely for the reasons he gives. But that's not the only way to tap the potential of a movie archive. A much better one is to distribute DVDs via a Long Tail retailer like Netflix.
Take Sony's $5 billion deal to buy MGM last year. Why did they pay so much? According to the video trade press, "Sony is buying MGM chiefly for its rich catalog of classic movies and plans to exploit that catalog however it can." DVD sales are the fastest growing part of the movie business, and lend themselves to any number of Long Tail distribution models. Just ask the guy who built a huge business in $1 DVDs of old movies, somehow avoiding most of the costs Palmer describes. Maybe Palmer doesn't see DVDs as part of Long Tail distribution. If so, he has either misunderstood the concept or has some good reason for discounting DVDs that he unfortunately hasn't described.
Finally, most of the costs Palmer enumerates don't apply to other
media, such as music or books or even most modern TV and other video.
All of them have far more friendly Long Tail economics, either because
they're already digital or can easily be converted.
Perhaps Palmer has a reason for discounting them, too, but again he
hasn't given it. If anyone takes a better swing at the theory, I'll be
sure to share all the gory details here. Hope springs eternal.