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Businesses The Almighty Buck

"Long Tail Effect" Doesn't Work As Advertised, Say Wharton Researchers 82

Posted by timothy
from the econtalk-has-good-anderson-interview dept.
Death Metal writes "In a working paper titled, 'Is Tom Cruise Threatened? Using Netflix Prize Data to Examine the Long Tail of Electronic Commerce,' Wharton Operations and Information Management professor Serguei Netessine and doctoral student Tom F. Tan pull information from the movie rental company Netflix to explore consumer demand for smash hits and lesser-known films. Netflix made its data available as part of a $1 million prize competition to encourage the development of new ways that will improve its ability to introduce customers to lesser-known titles they might find appealing." In short, the researchers say that the Long Tail effect described by Chris Anderson is much less important in the real world than popularly held. Says the article: "The key difference between the opinion of [Anderson's] book and the study by Wharton researchers is how they define 'hits' and 'niches.' In the book, Anderson focuses on the definition of hits in absolute terms such as the top 10 or top 1,000 products, while Netessine and Tan argue that, to take growing product variety into account, one has to define popularity in relative terms, such as the top 1% or top 10% of products, to properly assess the presence or absence of the Long Tail."
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"Long Tail Effect" Doesn't Work As Advertised, Say Wharton Researchers

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  • Missing the point (Score:4, Insightful)

    by BadAnalogyGuy (945258) <BadAnalogyGuy@gmail.com> on Sunday September 20, 2009 @04:57AM (#29481779)

    The long tail doesn't threaten those at the top any more than it isolates those at the bottom. It only describes the shape of the market which necessarily has only a few specific market products which are used by the majority and the rest of the products with very few customers in the "long tail". It's a market definition, not a competition definition.

    You can cut the tail off of a gecko at any point, but it doesn't mean that somehow the tail can exist without a fat end and a thin end. Since the tail is simply the appendage attached to the abdomen, wherever it is attached defines its fat end, and where it ends is the thin end. Even if you cut the tail off completely, all that you've done is stimulated the tail regrowth reflex.

    • Re:Missing the point (Score:5, Informative)

      by JimboFBX (1097277) on Sunday September 20, 2009 @05:08AM (#29481813)
      The working title of the paper is misleading, since there is no mention of "threat", an "effect", or anything of that sort. In fact, all I got out of it was that they were just debating something rather trivial and inconsequential - the definition of a "hit" in a statistical model and how using "top 1000" or so is improper based on NetFlix data.

      To be honest, this isn't really "news" worthy of a front page listing.
      • Re:Missing the point (Score:5, Interesting)

        by mabhatter654 (561290) on Sunday September 20, 2009 @11:14AM (#29482917)

        But few retail stores stock more that 50 or 100 current titles, so I think the original idea is quite good. Movie theaters show only 12 or so films at a time, even in big cities. Opening a Brick and Mortar store or theater up to even 1% of "hits" say music/movies that actually made a popularity chart in the last 50 years would be an impressive achievement. Even blockbuster movies like Star Wars or Indiana Jones become "unpurchasable" in a relatively short amount of time.... They've already hit "bargin bin" status in most retail outlets.

        Having a surefire way to get at that back catalog would be highly important. The real key is getting business to focus on marketing in "long tail" manner. Something like Netflix is interesting because they are a business that really pays no penalty for keeping extra DVDs in the warehouse.... but how do they get people interested in WATCHING them. I find Emusic to be a similar thing in that area, but again, the hardest part is matching up MORE stuff I'm interested in rather than what publishers are currently marketing. I think Disney has the best handle on it because they republish back catalog in a big way every 10 years or so... making it "new" again to a new group of people. How do you do that for general things like "Bing Crosby" movies or "Rogers and Hammerstein" musicals? Heck, even getting recent Anime published in English in a reasonable time is difficult, or finding material from Electronica/J-Pop scenes due to publishers only wanting to publish "top 10" material.. when the majority of people don't BUY that stuff.. but they all would buy a different part of the top 500 or so songs.

        • by MacWiz (665750)

          Even blockbuster movies like Star Wars or Indiana Jones become "unpurchasable" in a relatively short amount of time...

          This is artificial scarcity. They are only unpurchasable because the long tail isn't profitable enough for the big studios, who will stop making copies as soon as they can't sell a boatload of them anymore.

          Disney has the best handle on it because they republish back catalog in a big way every 10 years or so... making it "new" again to a new group of people.

          Disney is the worst manipulator of

        • Having a surefire way to get at that back catalog would be highly important. The real key is getting business to focus on marketing in "long tail" manner. Something like Netflix is interesting because they are a business that really pays no penalty for keeping extra DVDs in the warehouse.... but how do they get people interested in WATCHING them.

          You *don't.*

          Star Wars and Indiana Jones are rightly bargain-bin items. That's because everyone has seen them in every imaginable permutation (in theaters, on
    • Re:Missing the point (Score:5, Interesting)

      by Anonymous Coward on Sunday September 20, 2009 @05:09AM (#29481821)

      It only describes the shape of the market

      That's precisely the point. If the shape is such that a top movie gets only 1% of the market, top movies won't make enough profit to justify hiring Tom Cruise and it's a problem for him.

      • by anagama (611277)

        If the shape is such that a top movie gets only 1% of the market, top movies won't make enough profit to justify hiring Tom Cruise and it's a problem for him.

        Tom Cruise is his own reason to justify not hiring Tom Cruise.

        • by swilly (24960)
          To be fair, he was awesome in Tropic Thunder. The highlight of the movie really. And his cameo in Austin Powers Goldmember was pretty funny too.
    • by mangu (126918) on Sunday September 20, 2009 @05:53AM (#29481939)

      The long tail doesn't threaten those at the top any more than it isolates those at the bottom. It only describes the shape of the market

      But the shape of the market is exactly the point. In a competitive market profit margins are very thin and a relatively small difference may mean life or death to a company. In the entertainment industry we often see an effect where the biggest productions often seem to struggle to break even, while relatively small investments may bring huge profits.

      Defining a "hit" as one of the top ten or top 1000 or any absolute number is stupid. It reminds me of a political joke in the Soviet Union, where the result of a race between two athletes, a Russian and an American, was reported in the press as "the Russian came in second while the American was next to the last". In electrical and electronics engineering threshold values are often defined as the point where the power is one half of the maximum, the so-called "-3 dB" points.

      • Biggest productions from my anecdotal experience seem to make a ton more money than the movie was made with.
          • by wfolta (603698)

            Parent has it right: What you read about is that the film cost X in production costs and raked in Y in box office receipts, where Y > X. But from what I understand, no film has ever officially made a profit: it gets eaten up by all kinds of Byzantine expenses. The music industry is slightly less corrupt -- really big bands actually get a profit -- but it's incredible to read about how little a smash hit will make for the actual musicians who created and performed it.

            Of course, that has nothing to do with

            • by digitig (1056110)
              Whoosh...
            • by onepoint (301486)

              Film's and music make very good profit's, but it's called creative accounting. It can be very attractive to invest in movies where a know amount of tax losses will occur over a set period of time. The music industry has a different set of rules, don't forget that a band gets an advance to produce the music ( venture capital investment ), the returns on that investment must be paid before the band gets a dime ( I seem to recall the band called Boston, and how they got screwed ).

              I have invested in movie deals

            • by emjay88 (1178161)

              no film has ever officially made a profit

              How can the movie companies afford to continue to make them?

      • by coaxial (28297) on Sunday September 20, 2009 @07:38AM (#29482195) Homepage

        Defining a "hit" as one of the top ten or top 1000 or any absolute number is stupid. It reminds me of a political joke in the Soviet Union, where the result of a race between two athletes, a Russian and an American, was reported in the press as "the Russian came in second while the American was next to the last". In electrical and electronics engineering threshold values are often defined as the point where the power is one half of the maximum, the so-called "-3 dB" points.

        There are 17,770 movies in the Netflix Prize training set. 1000 movies account for 5.63% of movies for the entire dataset. This 5% account for 63% of all rentals. If you use your threshold of "half of the maximum," then you have the top 100 movies. More to the point, your threshold definition using decibels is predicated on the data being normally distributed, and this data conforms to a power distribution, most likely Zip-Ian.

        Getting back to your point of defining a "hit" based on profitability, that too is poor way of defining it. It's much easier for a very cheap film to make multiples of it's budget in revenue, but still no one sees it. Number of viewers has always been the traditional way of defining a hit. Revenue is just proxy for that.

        • by drinkypoo (153816)

          Getting back to your point of defining a "hit" based on profitability, that too is poor way of defining it. It's much easier for a very cheap film to make multiples of it's budget in revenue

          Its. Its budget. Anyway, forget profitability, Hollywood is now interested in profit. That's why they're making more direct-to-DVD movies (especially chick flicks, which lose nothing on the small screen) and the quality of effects in blockbusters like Wolverine or Watchmen is in the toilet. Trying to figure out the most popular movies of all time is vaguely interesting, but since Netflix assuredly already rents them, not actually very useful.

      • Re:Missing the point (Score:5, Interesting)

        by khchung (462899) on Sunday September 20, 2009 @07:51AM (#29482231) Journal

        Defining a "hit" as one of the top ten or top 1000 or any absolute number is stupid.

        While it sounds stupid, using a top xx% is, in a way, validating the idea of long tail.

        Why? Because before Amazon, when book stores are still only brick and mortar, there is only so much physical space to hold top 1000 or however many number of books. Note that this number is fixed, it won't grow because more kinds of books are published.

        So having an absolute number of top 100 or top 1000 simply corresponds to the physical constraint that most bookstore can only put so many books on the shelf.

        The advantage that Amazon has over physical book stores is that it can hold practically unlimited number of books. So only now, without the physical constrain, we can practically use top 10% instead. This, in fact, proved that there are many more profitable books outside top 1000 (or however many), and that physical bookstores are missing out many sales due to it.

        • Re:Missing the point (Score:5, Interesting)

          by ukyoCE (106879) on Sunday September 20, 2009 @09:50AM (#29482547) Journal

          This, in fact, proved that there are many more profitable books outside top 1000 (or however many), and that physical bookstores are missing out many sales due to it.

          YES.

          This is exactly why I've stopped using brick and mortar retailers almost entirely. They carry such a limited selection that it's often a wasted trip.

          This goes for video rental stores once they consolidated (in my area) to a chain of "new release-only" stores. I switched to Netflix and have never been back, and have converted many friends to Netflix too.

          Music stores, which in my area have never carried anything but the most popular overpriced crap. Now I buy from Amazon or direct from musicians' websites.

          Groceries are one of the few markets left worth using brick and mortar stores for. Anything else is just a showroom for cheaper online stores, at this point.

          • by onepoint (301486)

            You my friend need to brows a used book store or a flea market.
            Sometimes it's not the need that gets filled, but the desire of
            fulfillment from finding the just perfect something that you want.

            • by CptNerd (455084)
              I have a used book store on Amazon, you insensitive clod!
              Of course, I'm not allowed to post the link here, but still...
        • by droptone (798379)

          The advantage that Amazon has over physical book stores is that it can hold practically unlimited number of books. So only now, without the physical constrain, we can practically use top 10% instead.

          I am pretty sure a minor but important point made in The Long Tail was that not only did you have to combine massive inventory with a good recommendation system to have a widely successful business. The recommendation system is key since people will tend to regress toward the hits without outside influence.

      • Re:Missing the point (Score:4, Interesting)

        by Znork (31774) on Sunday September 20, 2009 @10:48AM (#29482793)

        In the entertainment industry we often see an effect where the biggest productions often seem to struggle to break even

        It's called Hollywood accounting [wikipedia.org] and has very little to do with actual 'profits'. Small productions might also seem 'unprofitable', once they learn to have their Cayman Island subsidiary charge the project $500k for the producers porta-potty rental. Actual profits are simply funnelled to the desired destination by way of semi-internal charges for rents, distribution, marketing, consulting, etc, etc. As long as your costs are to yourself, nothing really has to make a profit...

        And, of course, the monopoly rights industries are nothing like a competitive free market.

        Either way I think it's premature to analyse the long tail to any extent. Copyright in itself drives the distortion of the market by encouraging excessive marketing and inordinate market control, creating an economic situation where it's better for the major players that people buy fewer products for more, than more products for less, and they do all they can, with a fair level of success, to push that market shape.

        • by Shark (78448)

          Very interesting point there... I wonder what use they might have for such low profit figures. Could it be used to justify draconian drm and lobbying against fair use, launching a crusade against p2p technologies, etc? Oh, I imagine there's a very nice tax incentive as well.

          • by gobbo (567674)

            I wonder what use they might have for such low profit figures

            Every film production has three budgets: the studio budget (for investors), the taxman budget, and the real budget (producer eyes-only). There's a combination of outrageous above-the-line costs (producer and main actor fees) and, as the GP mentioned, dubious inflated line items, that allow these production budgets to play various stakeholders for chumps.

          • by Sj0 (472011)

            There was a story recently about Lord of the Rings, how the estate of J. R. R. Tolkien was to receive no royalties because of Hollywood accounting -- a movie that grossed 6 billion dollars worldwide had been put down on paper to show it hadn't turned a profit. Peter Jackson sued the studios as well, claiming their accounting methods understated revenues, and settled for an undisclosed sum.

            • by Dog-Cow (21281)

              It's a shame the estate was involved at all. I sincerely hope every member of the estate dies penniless and painfully. Hopefully over a couple of decades.

              • by Sj0 (472011)

                I agree, from a policy point of view. I don't think it's right that copyrights for works by long dead artists are still in effect. On the other hand, it IS their right under the law, and I'd rather hate on the copyright industry for lobbying for the laws and the congress for passing them than hating on the estate for simply following the law to their benefit.

      • by tehcyder (746570)

        Defining a "hit" as one of the top ten or top 1000 or any absolute number is stupid. It reminds me of a political joke in the Soviet Union, where the result of a race between two athletes, a Russian and an American, was reported in the press as "the Russian came in second while the American was next to the last".

        In Soviet Russia jokes laugh at you.

    • All the recent brouhaha about the "long tail" doesn't merely relate to the shape of the distribution (which has been known for a long time); it's about inferences people draw from that shape.

      A lot of the inferences I have seen are unwarranted, and papers like this come to the same conclusion.

    • Yes, it looks to me as if they are arguing about the relative shape of the tail, not about whether the long tail exists.

      The existence of a long tail doesn't really negate the presence of a fat head as well.

    • by Blink Tag (944716)

      It only describes the shape of the market ... It's a market definition, not a competition definition.

      Not wholly accurate. The "long tail" phenomenon as used in this context describes the belief that the revenue gained from the long tail exceeds that gained from the top selling items. The idea encourages production and sales of items that appeal to niche markets.

      This idea has not yet been born out by the marketplace. While it's true that those who frequent Slashdot (and let's be honest, most here are probably close to being outliers in any normal distribution) may enjoy the less popular media the populates

      • >The "long tail" phenomenon as used in this context describes the belief that the revenue gained from the long tail exceeds that gained from the top selling items.

        That's idiotic. The purpose of the long tail is to ensure the survivability of the business versus competition. The reason why the tail is "long" (and thin) is because it doesn't generate a lot of interest or revenue.

        What the tail does, is to provide depth to an otherwise-shallow business. 7-11 convenience stores are an example of a bu
        • by Blink Tag (944716)

          >The "long tail" phenomenon as used in this context describes the belief that the revenue gained from the long tail exceeds that gained from the top selling items.

          That's idiotic. The purpose of the long tail is to ensure the survivability of the business versus competition. The reason why the tail is "long" (and thin) is because it doesn't generate a lot of interest or revenue.

          I didn't say I agreed with the claim. It's an idea that (as you point out) is not intended for to brick-and-mortars; the long tail is given as a reason why web business are superior to physical stores.

          The term was coined and perpetuated by Chris Anderson, author of The Long Tail and, more recently, Free.

          Increasingly, long-tail claims are being disproved by researchers.

  • by SevenSpirits (1266138) on Sunday September 20, 2009 @05:02AM (#29481799)
    If you add an insignificant product to the end of the tail, it obviously increases the proportion of market share of the first X% of products. That's simple math!* If your model of the "long tail" completely fails in the simple case of adding a once-purchased product, maybe your model sucks and Chris Anderson's model was more useful. * Yeah, there's a small requirement of proportional market share of the Xth percentile product vs the insignificant one, but no need to nitpick that.
    • Re: (Score:3, Interesting)

      >If you add an insignificant product to the end of the tail,
      >it obviously increases the proportion of market share of the first X% of products.

      Yeah, but add a product because it is important by itself. Consider adding Dewar's to a store that has no blended scotch whiskey.

      Will Dewar's increase niche sales? No. Will it increase single-malt sales? No. However, with a gaping hole in the scotch section, can you let Dewars die on its own?

      Of course not. You must have it. Now that you have
    • Re: (Score:1, Insightful)

      by Anonymous Coward

      If you add an insignificant product to the end of the tail, it obviously increases the proportion of market share of the first X% of products. That's simple math!* If your model of the "long tail" completely fails in the simple case of adding a once-purchased product, maybe your model sucks and Chris Anderson's model was more useful.

      But that DOES matter if you are buying into CA's conclusion that the "Long Tail" is important from a business perspective. Nobody I've read disputes that the total sales of more obscure DVDs (for example) may be quite significant in aggregate compared to the sales of blockbuster titles. However in order to apply a "Long Tail" business model you are going to have a truly vast quantity of inventory that will mostly move very, very slowly (maybe one or two copies per year of each SKU). You will have much great

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        Please don't use DVDs as an example of long tail economics. Having a physical copy of every item in the tail will in most cases completely negate any kind of profit. The whole point is that with virtual products (or print on demand) you can have much, much higher storage density with limited cost. Only then can you afford to only sell two items a year.

      • by DarkOx (621550)

        True, but if you are making product available that is not generally available elsewhere you can charge higher margins. Consider record stores for example usually carry a much wider catalog than say a Best Buy, Target, or Boarders Books. They usually charge $19 for anything that is not this weeks mega hit as well. If you could find it at Best Buy it would probably be $16 but you can't find it there. You pay extra because the Record store made it available.

        The Record store has two problems, first they hav

        • That's exactly how it works. You pay a slight premium for selection. Selection=knowledge. You are always selling knowledge.

          The long tail is unpleasant and difficult to maintain, but in business, the effort put into maintaining an appearance is the main source of competition. The business that is working more diligently should win.

          Of course, whether customers are savvy enough to recognize the winner is always a gamble. Sometimes pure drivel wins. Sometimes, businesses deliberately dumb themselve
  • by Anonymous Coward on Sunday September 20, 2009 @05:47AM (#29481923)

    OK, I am not a mathematician, but this paper makes me deeply skeptical.

    If the input data is indeed heavy tail (non-existing higher moments) or quasi-heavy tail (existing, but extremely large higher moments) how on earth they can use variance, R^2 and other measures? They may not even exist! And if the input is quasi-heavy tail, then of course they exist, but the convergence time could be arbitrarily long!

    I had the unpleasure to work with quasi-heavy-tailed data, and it is really enlightening. You watch the evolution of some metric (e.g.: avg) as the function of incoming data, and you see of course convergence. At least for a while. And then in sudden an extreme outlier comes in, and the avg takes a huge jump! Now if your input is heavy tailed enough, you can be never sure that your measure finally came to rest (converged), or the next jump is just over the corner!

    I hope a more educated person clarifies this, I am just an engineer.

    • Re: (Score:3, Insightful)

      by Ambitwistor (1041236)

      Generally they're talking about Pareto or power-law distributions, which aren't quite as degenerate as, say, the Cauchy distribution with no higher-order moments. You're right that they should check for the existence of the moments they care about; I presume they do, but I don't know.

      • by NonSequor (230139)

        The thing is that when you're just looking at data points as they come in, you can't tell if a distribution is well-behaved. It's possible for the data to look like it's coming from a well-behaved distribution, but then you run into an outlier that's way too far out.

        Those power-law distributions have cut-offs for the shape parameter for the higher order moments to exist. If the shape parameter is near the boundary, then I would imagine that there's a good chance that you could end up with a sample that look

        • The thing is that when you're just looking at data points as they come in, you can't tell if a distribution is well-behaved.

          If you make distributional assumptions (e.g., "it's a power law"), you can put probabilistic bounds on the shape parameters. If you're near a boundary, yes, there's going to be a high probability that the true parameter is on the "bad" side of the boundary. If you're far from a boundary, then there's a low probability. This is obvious.

          If you don't make distributional assumptions, there's little you can conclude about the nature of any distribution.

          • by NonSequor (230139)

            If you don't make distributional assumptions, there's little you can conclude about the nature of any distribution.

            I guess really my issue is that I think distributional assumptions are dangerous, particularly when you're modeling the behavior of crowds.

            These sorts of systems can shift behaviors if they run into a constraint that hasn't revealed itself yet.

            • I think distributional assumptions are dangerous, particularly when you're modeling the behavior of crowds.

              Yeah, that's true. But if you can model the behavior of the individuals as a simple enough Markov model (i.e., linear weight transitions) you can actually solve for exact moments. Scary. On the other hand, I have this odd feeling that most individuals aren't very linear.

  • by Bacon Bits (926911) on Sunday September 20, 2009 @06:05AM (#29481967)

    I just want to thank the submitter/editor for providing the link to Wikipedia for those of us who don't know what's meant by the Long Tail. As it happens, I do know what the "long tail" is, but one of the more tiring aspects of SlashDot is the number of narrow articles that hit the front page that wholly lack any sort of description.

    • Well put.

      --My 'favorite' instances are when an article is loaded up with acronyms with no explanation. It happens everywhere, not just Slashdot, that I find myself scanning an article in reverse looking for a bloody definition --and about as often as not, never finding one. Something about that just makes me steam.

      Of course I can always wiki a definition myself, but the nice thing about having one linked directly from an article description is that I can be reasonably assured that the author is using the

    • by LakeSolon (699033) *

      My feeling about Slashdot is that the submissions (and posts) should be heavy on links to references (such as Wikipedia where appropriate).

      And that descriptions of terms can therefore be left out since this isn't print, and we may as well save the space (and mental bandwidth) since we have this handy new hyperlink feature.

      Unfortunately far too many submissions are just the leading paragraph of the story copy/pasted, and painfully obviously not meant for this audience. Why these are even accepted (or, god fo

  • by Sique (173459) on Sunday September 20, 2009 @06:15AM (#29481983) Homepage

    Then the 80/20-rule is just a good rule of thumb.

    If we have a simple hyperbolic distribution (which is a special case of Pareto), then adding more elements to the set and waiting for the distribution to renormalize as hyperbolic increases the relative weight of the top 20%. So if you have a big online retailer like Amazon with more titles than a conventional bookstore, then you can expect the top 20% sellers on Amazon generating a bigger part of all sales of Amazon than the top 20% of a bookstore in relation to all sales of said bookstore.

    • by ZombieWomble (893157) on Sunday September 20, 2009 @06:56AM (#29482085)
      What you posted describes the Pareto distribution, yes. However, the Pareto distribution is exactly the opposite of what the "Long Tail" model suggested by Andersen describes.

      The crux of Andersen's argument is that, while Amazon et al have the same demand for big-name titles, their tail is longer and higher than a traditional bookstore, and by defining a cut at a certain point (say, those with less than 5% of the peak sales, those outside the top 10% or whatever is appropriate) it can be seen that the low-volume sales represent a larger fraction of the total sales due to the extreme length of the tail.

      Quoting from the Wikipedia article on the topic:

      In the graph shown above, Amazon's book sales or Netflix's movie rentals would be represented along the vertical axis, while the book or movie ranks are along the horizontal axis. The total volume of low popularity items exceeds the volume of high popularity items.

      Andersen was suggesting that, in the limit of infinite items to sell and negligable stocking costs, much more profit is to be derived from the large number of items that sell a few copies than the few items that sell many copies.

      Indeed, it went further than that, suggesting that as people got used to having more choice, they would begin to shun the "popular" items in favour of more obscure titles, further fattening the tail. But that's even more speculative and somewhat independent of the other economic predictions.

      • Shifted exponential (Score:4, Informative)

        by AlpineR (32307) <wagnerr@umich.edu> on Sunday September 20, 2009 @07:38AM (#29482193) Homepage

        I'm picturing the demand curve as an exponential, shifted so that it intercepts both the x and y axes. There's a lot of demand for the most popular items, and declining demand for less and less popular ones. By definition, of course, but the shape of the curve matters. No matter how far out you go, there's always somebody who'll want it (given a large enough population).

        For a traditional bookstore, the x axis hits the curve pretty high. There's a substantial cost to stock each book, say $2.00/year. There's also a fairly small local demand, say 200 copies a week for a John Grisham novel. Only a few thousand titles sell fast enough to make a profit before that $2.00/year eats up the sale price minus wholesale price.

        For a mail-order/online bookstore, the cost to stock each book is lower since you only need a warehouse instead of reading stacks + comfy chairs + cashiers + parking. The cost to stock each book could drop to $0.50/year. The demand is now national, so that same John Grisham novel sells 20,000 copies a week. And a title that sold once a year in a traditional store now sells twice a week. So, many more titles can beat the clock and turn a profit.

        The shape of demand didn't change. In both cases it's an exponential cut off at the point of profitability. But that point is now much farther out along the x axis. So the online retailer can make money selling stuff that would never survive in a traditional store. And customers can find stuff online that they'd be lucky to ever see locally.

        • There are other issues that improve this type of retailers sales

          • A customer may buy an obscure item related to the popular one because it is both available and discoverable.
          • A customer may buy the popular items from Amazon because they also have the obscure ones, i.e they usually don't have to search for another source, this precludes competitors.
          • Amazon becomes the default supplier to most customers because of their ability to both provide diversity and methods for discovery.
          • Due to increasing concern over i
    • It's Zipfian.

  • by petes_PoV (912422) on Sunday September 20, 2009 @07:48AM (#29482217)
    Since these guys aren't using the same definitions that the original book used to describe hits, niches and long-tails it's really no surprise that they get different results - they've interpreted the data in different ways!

    The thing that's always struck me about the long-tail effect is that you've got to work it, to get value from it. Just having all the books or films by a particular author / actor isn't enough. You have to use that information and have the intelligent algorithms to guide your website visitors (or maybe "entice" would be a better word) to consider those alternate products. Just saying "Uuh, here's all the other stuff that guy's done" isn't enough, it needs enthusiasm and some knowledge of *why* a visitor might like a particular past work. That's where the gold lies: not in the long tail itself, but how you utilitise it.

    • Absolutely. The big hits are the big hits because they are (usually unlike anything in the long tail) known quantities. People you know have read and recommended them, or they base their recommendations on previous, related work. You tell people that District 9 is a movie about alien apartheid, you may not get much of a response. Tell them that it's a Peter Jackson movie, and interest skyrockets, because people have enjoyed his work before.

      People want to know that their time and money is about to be wel

      • by coaxial (28297)

        You tell people that District 9 is a movie about alien apartheid, you may not get much of a response. Tell them that it's a Peter Jackson movie, and interest skyrockets, because people have enjoyed his work before.

        Which is really a shame since it's really a Neill Blomkamp movie. Same thing with 9 and and Shane Acker. Watching the previews, you'd think Tim Burton did it. Granted, in this case promoting the exec producer is giving a boost to the film, but there's no reason to give the actual writer-director the short shrift, when plenty of movies are billed "From executive producer Uncle Moneybags, comes the latest film by director Mr. Filmmaker..."

    • Yup. Logged on to say the exactly same thing. They might well have done some interesting research and have nice data, but they aren't by no means disproving Anderson's conjecture, just because they redefined the issue.

  • Movies? (Score:1, Interesting)

    From my own experience, I sometimes get an obscure book because I have a particular reason to get that specific title (be it for the subject or the writer). I listen to obscure music because it sits somewhere in my playlist and the player is on when I'm doing something else.

    Reading a novel takes time but I find it no problem to put a book down while I prefer to watch a movie from start to finish in one go. Books on a particular subject I read when I have the time and the interest, or else use them as refere

  • I thought that I would have to re-design all of my amplifiers.

  • by Bob9113 (14996) on Sunday September 20, 2009 @12:13PM (#29483261) Homepage

    In the book, Anderson focuses on the definition of hits in absolute terms such as the top 10 or top 1,000 products, while Netessine and Tan argue that, to take growing product variety into account, one has to define popularity in relative terms, such as the top 1% or top 10% of products, to properly assess the presence or absence of the Long Tail.

    So let me see if I get this:

    Anderson says, "Assume a bell curve with a sufficiently large ordinal scale X axis. Select a sufficiently narrow segment in the center. The area under the curve not included in that segment will be greater than the area under the curve included in that segment."

    Netissine and Tan respond, "However: Select a segment in the center whose width is a fixed percentage of the ordinal scale of the X axis. Select a percentage which is sufficiently large. Now the area under the curve in the included segment will be greater than the area not included."

    For this, Anderson gets a best selling book, and two Wharton academics get a paper out of stating the counterpoint?!?

    My brother went to Wharton. He is extremely smart. I know many of his friends from school -- they too are very intelligent folks. Wharton is not a kidding around school, it is pretty hard-core.

    My brother and his friends from school mostly make stunning amounts of money. Many of them work for banks in the sorts of positions which, particularly given the recent total failure of banks at their primary wealth-creating task (risk management), might lead one to wonder if they are really responsible for enough sustainable GDP growth to justify their extraordinary compensation. To correct the first sentence in this paragraph, my brother used to make stunning amounts of money. A few years ago this very conundrum led my brother to retire, because he could not live with the disproportion between his production and his compensation. Most of his friends from school are not so infected with ethics.

    Seeing this article, and the startling inconsequence of these supposed shining stars of business academia, I am inclined to agree with my brother's conclusion. And to reinforce my belief that we have, over the past 40 years, skewed the distribution of wealth toward the supposed best and brightest business thinkers, and away from all other areas of production, too heavily. Whether we, in chanting the mantra of ensuring that the business analysts and risk managers get fully compensated and motivated regardless of how outsized their compensation may appear to we mere mortals, have pushed the system much too far in that direction at the expense of compensation and motivation for those who are not business analysts and risk managers. Whether there may be forces at work which already influence cashflow in their direction, and our supposed levelling of the tax code has instead removed the normalizing force that was preventing an unhealthy portion of GDP from flowing to those with abnormally high influence on the flow of GDP -- but who, recent evidence suggests, are not really so extraordinary in their contribution to it.

    • I think of the human brain in two respects. Software and hardware.

      IQ tests are like hardware benchmarks. And sure, I've known my own share of not-kidding-around-smarts kind of people. (Who practically need cooling fans on their heads.) --But the software many of them were running was basically, "Donkey Kong". Which is to say, I've known more clued-out 'smart' people than I'd be comfortable shaking a stick at.

      Sounds like your brother was one of the very few who had, "Wisdom 1.0" installed.

      It's an unfort

    • "and away from all other areas of production, too heavily."

      Truer words were never spoken. There are no lack of things that could be done, but very little interest in them.

      Google Oil Drum Henson for an example. If you want, get in touch.

      Keith Henson hkhenson at rogers dot com
  • I thought the long tail was significantly discredited a while ago. Lets check google [google.co.uk]. hmm, not entirely. however, the guy who wrote it keeps coming up with new ideas which get a lot of attention and even praise before cooler heads actually think about it properly. The FT took a look at Chris Anderson's book freemium and, well, read John Gapper and his [ft.com] follow-up questions [ft.com].
  • No matter how large a catalog of content that Netflix and Amazon have, the real challenge is giving their users the tools to find the content. For movies, you can search for one or more parameters like categories, actors, awards, directors and even member favorites. Apple has tried to add some assistance for music with their "Genius" service, but each movie, song or book is like a painting - each one unique, and each can be identified using many descriptions.

    For travel, you have the advantage of narrow
  • There's always been a long tail in the demand curve, and it always will.
    What we need are useful recommendations that guide us from the head to the hidden treasures located along the tail area.

    Also, I find very disappointing that none (Wharton, Anderson, etc.) uses the Long Tail model proposed by Kalevi Kilkki ( http://firstmonday.org/htbin/cgiwrap/bin/ojs/index.php/fm/article/view/1832/1716 [firstmonday.org] ). This model has a better formal definition of the Head, Mid and Tail parts of the curve (not based neither on absolu

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