The Long Tail

Al Gore, rockstar (live!)

As you might have guessed from Wired's cover story last month, Al Gore is one of my heroes. Back in my science days (early 90s) I was lucky enough to see him up close as the chairman of the Senate Science and Technology subcommittee. For all the jokes, his work in promoting what was then called the National Information Infrastructure really was instrumental to the development of the Internet.

I particularly remember several hearings he held with scientists and scientific visualization experts from the National Center for Supercomputing Applications (which would later become the birthplace of the Mosaic web browser, which in turn led to Netscape). None of the other committee members bothered to show up, so he came down off the dais and sat at the witness table with the visiting researchers to geek out over the 3D simulations and advanced (for the time) SGI workstations. This was a Gore we never saw in the 2000 Presidential Campaign: passionate, intensely curious, scientifically sophisticated and, yes, human--even funny.

What's notable about that scene around the witness table is that it combines the three main theme in the life of Al Gore: politics, technology and the environment. The simulations he was being shown at these hearings were climate models, some of which showed early work in projecting the effects of global warming. When he was introducing bills to build out the Internet, one of his main objectives was to make it easier for scientists to collaborate remotely on climate research, to try to understand the effect of human-generated carbon emissions on global temperatures.

Now Gore is back, and his passions have converged in a campaign--movie, book, speaking tour and web effort--to focus the world's attention on global climate change. Gore's a new kind of environmentalist--what we call a "Neo Green". Rather than calling for us to dial back our lifestyle, slow development and return to the land, he looks for technological solutions (both in energy generation and conservation) that allow continued economic growth with less environmental cost. No surprise that he sees technology as a solution rather than the problem: he's on the board of Apple and is a special advisor to Google.

If you happen to be in New York City on Thursday you can see him in action yourself. Wired is holding a town hall discussion at Town Hall with Gore, NASA's James Hansen, Laurie David, and Lawrence Bender, moderated by Wired Contributing Editor John Hockenberry, Thursday, May 25, from 8-10pm. I'll be doing the introductions.

You can get tickets here.

Lego: How they do it

In my post last week on the new Lego Factory, which now only ships you the pieces you need rather than expensive bags of (too many) assorted parts, I promised I'd find out how the did it. Yesterday I spoke to Michael McNally, Lego's Brand Manager, who explained how they cracked the tricky picking and packing problem of total mass customization.

The answer: they pack the kits by hand, piece by piece. In one of Lego's Denmark factories, one packing station is now dedicated to Factory. The 520 pieces available in Factory are a number large enough to be interesting but small enough to be stored in bins that are no more than a step or two away for the packer. (The previous model used prepacked bags from the Creator series, which it could ship from a US warehouse). As it happened, Lego had recently automated some other parts of its Denmark operation so it had a few extra workers, who it was able to reassign to this job.

It's not a big job so far--only about 3,000 kits have been sold from the 75,000 uploaded--but that relatively small number and high upload-to-purchase ratio may be in part due to the high kit prices imposed by the previous inefficient parts strategy, which could easily double to price of a model. Now that Lego has been able to drop the average model price by 60% with this only-what-you-need packing process, I suspect more people will be tempted to buy what they design.

Next steps, McNally says: more pieces (including more minifigs) and making the software a bit easier to use.

Tim O'Reilly, Long Tailer

Tim O'Reilly, the CEO of O'Reilly Media, the technology book publisher, helped a lot (along with his research staff) with my book research. Now he's just posted a fascinating Long Tail analysis of his own book sales compared to the industry at large.

You should go read the whole thing, but here's a taster. His team plotted Nielsen Bookscan data (major bookstores) for the top 10,000 titles, grouped by sales decile. They then did the same for the top 10,000 boot titles on Safari, their own online ebook service. The results are as follows:

What makes this a Long Tail analysis? After all, the tails are the same length (10,000) titles. The answer is the there are two scarcity functions that tend to make sales hit-heavy in tradition bricks-and-mortar retail:

1. Limited shelf space and thus limited inventory
2. Limited "findability" due to constraints of physical organization and the fact that hits get all the prime real estate.

Safari helps in both those dimensions, but in this instance I suspect we're mostly looking at the effect of the second. When books are easier to find, thanks to all the online advantages of search, recommendations, easy sampling and dynamic popularity lists, the niches are on an equal footing. And thus overall sales tend to be less hit-heavy.

There's a lot more analysis and charts in Tim's post. Read the whole thing.

UPDATE: In the comments to his post, Tim clarifies that the graph shown actually represents 2,100 books, not 10,000. "The data displayed is for the intersection of the two data sets. That is, for the Safari graph, it's for the 2100-odd books that appeared in both the Bookscan top 10,000 AND in Safari. Books that don't appear in both sources are not represented in the Bookscan graph."

Lego Factory--Now not broken!

Readers of the blog will recall my fascination with all things Lego (in my defence, I've got a lot of kids). I use the company as a case study in applying the Long Tail to consumer packaged goods, in everything from mass customization to peer-production.

Lego Factory is the company's service that allows you to design your own models and have the parts sent to you in a cool Lego kit-style box (and share your designs with others in a Lego marketplace). It's a great idea, but it's been hampered in the past by gnarly fulfillment issues that inflated the cost of the kits by including too many pieces you don't need. (I described the problem here).

Basically, the combinatorial possibilities of 7,000 possible parts in 75 possible colors (that's more than a half-million variations) created an overwhelming picking-and-packing challenge. So Lego limited choice in two ways. First, each model could only be built from a single set brick palette, such as car parts. Second, those parts come in pre-packaged bags of a fixed number of bricks, so you'd likely get more than you needed. If you weren't careful, a simple vehicle that might cost less than $10 in retail could turn out to cost nearly $100 in Lego Factory simply because it uses those bags of parts inefficiently.

Now Lego's just announced a very welcome new version of the software (1.6) that fixes this problem, only charging you for the pieces you use. You're still limited to certain set palettes of parts (although they now include train pieces and minifigs), but somehow they've found a way not to ship more than you need. Lego claims average savings of 60%. I've got a call in to Lego HQ to find out how they did it, but for now we can just enjoy the good news...and start designing!

Come see the Long Tail of Time--Live!

I'm excited about a Long Now event that I'll be doing on "the Long Tail of Time" with Will Hearst this Friday in San Francisco. I've been doing a lot of research on what I call the "4th dimension" of the Long Tail, and this will be the first time most of it sees the light of day. Some hints are here and here, but there's more. It's a rich seam.

The official announcement follows:

This Friday Chris Anderson (WIRED's editor) and Will Hearst (from Kleiner Perkins) take the "long tail" revolution into a new dimension---time.  They have good news for long-term thinking: the tyranny of the new is over.

 

"How endless choice is creating unlimited demand" is the description line on Anderson's forthcoming book (July), THE LONG TAIL.  Thanks to plummeting costs of inventory and distribution on the Internet, best-sellers of anything (products, services, ideas) sell better than ever, but so does everything else, and that changes the world.  Tiny-sellers to tiny niches now have aggregate power greater than the best-sellers that used to rule.

 

But what about old stuff?  Google is a time machine, says Anderson.  Old stuff, instead of vanishing the way it used to, now accumulates more links over time and thus more "authority."  Search engines value relevance over freshness. 

The new is always provisional.  The consequential old is perpetually on tap, its consequence always renegotiable.  Internet time, long considered pathologically rapid, apparently contains its own cure.

Note the different venue this month.  Instead of Fort Mason, the talk will be at The Palace of Fine Arts Theater :

"The Long Time Tail," Chris Anderson with Will Hearst, Palace of Fine Arts Theater (by the Exploratorium), San Francisco, 7pm, Friday, May 12. The lecture starts promptly at 7:30pm.  Admission is free ($10 donation welcome as ever, not required).

This is one of a monthly series of Seminars About Long-term Thinking organized by The Long Now Foundation, usually on second Fridays, usually at Fort Mason (but not this time).  If you would like to be notified by email of forthcoming talks, please contact Simone Davalos--- simone@longnow.org,

Directions are here; a map is here. Everyone's welcome. Hope to see you there!

Longer...and a lot flatter

In a post a few weeks ago, I hinted at some work I'm doing quantifying how the shape of demand of Long Tail markets differs from their bricks-and-mortar competitors.

This isn't as easy as it sounds: it's often hard to do a proper apples-to-apples comparison between the two. For instance, the traditional retail market for music is for CD albums, while the online market is mostly for digital singles, which often include just a few tracks from an album. But there are ways to adjust the data to compensate for those differences, using such techniques as grouping online singles by album and using an average of their rank as a proxy for the album's rank online. It's not good enough to publish yet, but I'm comfortable that it's at least directionally correct at this point.

Here are two data sets that illustrate this offline/online difference in demand patterns. The first is DVDs, comparing Nielsen DVDScan offline point-of-sale data (a proxy for Blockbuster) with Netflix. I've just shown it through the top 100, since that's where the differences are most visible. But the trend continues throughout the catalog--hits are a far larger part of the business offline than they are online. Or, to put it another way, Netflix's demand is more evenly spread between hits and niches than Blockbuster's.

The next chart does the same for music, comparing Nielsen's Soundscan (CD retail) data with Rhapsody downloads. To avoid over-compressing the vertical scale, I've started this one at rank 100 and to make the curve easier to observe I've only shown the top 5,000 albums. As you can see, online music is even less hit-centric than online DVDs, which is saying something.