Anita Elberse, a Harvard Business School associate professor, has a really interesting article in the new Harvard Business Review that analyzes some Long Tail data and challenges some of the theory's predictions. Based on Rhapsody music data and DVD rental data from an Australian Netflix clone called Quickflix, she concludes that the blockbusters are not losing share to the long tail of niche products in those markets; indeed, they're gaining it. She writes:
Although no one disputes the lengthening of the tail (clearly more obscure products are being made available for purchase every day), the tail is likely to be extremely flat and populated by titles that are mostly a diversion for consumers whose appetite for true blockbusters continues to grow.
That's surprising (not least to me), and now that I've had a chance to give the paper a quick read, let me jot down some quick thoughts on why Elberse (who I collaborated with on some of my research and respect highly) would come to such different conclusions than I do.
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.
The best example of this is in what she describes as a growing "concentration" of sales around a relatively small number of blockbuster titles. In the Rhapsody data, she finds, the top 10% of titles (out of more than a million in that data sample) accounted for 78% of all plays, and the top 1% account for 32% of all plays. That sounds pretty concentrated around the head, until you reflect, as she notes, that "one percent of a million is still 10,000--[...]equal to the entire music inventory of a typical Wal-Mart store."
This is a good moment to remind everyone of the normal definition of "head" and "tail" in entertainment markets such as music. "Head" is the selection available in the largest bricks-and-mortar retailer in the market (that would be Wal-Mart in this case). "Tail" is everything else, most of which is only available online, where there is unlimited shelf space.
So in the data she cites, the head of the online music market represents 32% of the all plays, and the tail represents 68%. That's certainly no challenge to the Long Tail theory; indeed, it's even more tail-heavy than the data I cited in my book (probably because I used a more generous estimate of 50,000 tracks for Wal-Mart's inventory).
She then looks at Quickflix data. Here the top 10% of DVDs accounts for 48% of all rentals, and the top 1% accounts for 18%. "The concentration [of sales around the blockbusters] is not as strong as Rhapsody, but it's still substantial," she writes.
But here, too, the use of percentages misleads. Quickflix had 18,000 titles at the time of the research, compared to the average Blockbuster's 3,000 titles--there's only a factor of six between their inventories, as opposed to a factor of 100 in the Wal-Mart/Rhapsody comparison. If you look at her chart, you'll see that the top 3,000 titles (ie, the amount equal to Blockbuster's inventory, or the "head") accounts for 70% of rentals and the "tail" accounts for just 30%, making it more concentrated on the head than Rhapsody, not less. (BTW, I calculated almost exactly the same split for Netflix in the book.)
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.
Anyway, it's getting late and I just wanted to highlight a few other interesting data points and conclusions from her article:
- Much of the paper is about consumer satisfaction in the head vs tail. In the Quickflix data, she says, "customers give lower ratings to obscure titles...it is a myth that obscure books, films and songs are treasured. What consumers buy in Internet channels is much the same as what they have always bought." That may be true for the specific example of the Australian DVD data, but it is not clear from the paper why she feels able to extrapolate that to all Internet commerce.
- The heaviest DVD renters were the most likely to venture into the tail; light consumers largely concentrated on the hits.
- In music, of the 2.4 million digital tracks sold in 2007 in the US (most of them through iTunes) 24% sold only one copy and 91% sold fewer than 100 copies.
And there are pages and pages of other nuggets like this. It's an excellent article, and although I don't agree with all the conclusions, I'm delighted to see research of this rigor on the topic. Recommended.