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Business - Written by on Monday, June 30, 2008 18:16 - 1 Comment

Denis Hancock
Could the body be more important than the head AND the long tail?

The Harvard Business Review recently published an interesting article called “Should You Invest in the Long Tail?” – to summarize the findings the answer would be a definitive “no”, which is based on a detailed analysis of sales data in relation to DVD rentals and digital music sales. Author Anita Elberse goes on to argue that the blockbuster model still rules, similar to the thinking behind books like The Winner Takes All Society. As one would expect, Chris Anderson has responded on his Long Tail blog, and a fairly interesting (and cordial) debate has ensued.

I don’t want to rehash all of the arguments in their entirety, but rather focus on carving out a middle ground between the two POVs.

One one hand, technology is enabling a such a rapid increase in the volume of “units” being produced in certain categories (think: digital music tracks for sale) that what was previously the long tail is now being pushed into the “head” / blockbuster category based on one commonly used definition – the top 10% or 1%. I don’t think such units really belong in the “head” category.

On the other hand, I also don’t think they fit into the long tail anymore (which Chris defined in relation to availability in bricks and mortar outlets, a definition that needs to evolve in markets where b&m is rapidly decreasing in importance). This leaves them somewhere in the middle. Since the body is in between the head and the tail, I decided to go with that (after an embarrassing foray with the term ‘middle tail’) – could the body end up being more important than either the head or the long tail?

However, I realize what I just wrote might be clear as mud, so let me provide a numerical example that builds on the research.

According to the article, the entire music inventory of a typical Wal-Mart store is equal to about 10,000 tracks, which for the sake of simplicity we’ll say represents all the music options available to consumers in a pre-digital age. Let’s say you define the “blockbusters” as the top 10%, and the long tail as the rest – that would be 1,000 blockbusters, and 9,000 in the long tail, and you could map out the sales accordingly. Alternatively, you could argue that that this entire group of 10,000 represents the “blockbusters”, and the long tail is what was sold via concerts and indie distribution outlets. It really doesn’t matter too much, as you will see in a second.

Jump forward to the digital age. The paper in question used Rhapsody for their digital music analysis, which offers more than one million tracks – let’s just say an even million. Even if you redefine “blockbuster” to only account for the top 1%, this now equals 10,000 tracks – or the entire music selection previously available at Wal-Mart. If you use top 10%, it’s approximately 100,000 tracks, and thus captures 10x what was previously available to “ordinary” consumers.

This leads to a rather obvious observation: as the sheer volume of content available to consumers has increased so quickly, what might have previously been considered the “long tail” can now – statistically speaking – be counted as part of the “head”, if you use the percentage method. The HBR article notes the top 10% of Rhapsody singles account for 78% of plays (and the top 1% account for 32%), which sounds highly concentrated, until you remember – as Chris notes in his response – this accounts for 100,000 songs (or 10,000 for 1%). Does anyone really think there are that many “blockbusters”? Does the long tail really not begin until the 100,001st most popular song?

So rearranging those numbers a bit, consider the following argument. Let’s say that right now the top 1% represents the head – that’s 32% of sales. The bottom 90% capture 22% of sales, which I’ll call the long tail. In turn, that 9% jammed in the middle is capturing 46% of sales – which I’ll call the body. While I’d need further research to verify it, the cost of developing and marketing that 9% is likely significantly lower than the costs associated with the top 1%. Might this body of work end up being the most important (read: profitable) of all? Perhaps even representing the content that is so good it sells itself?

There’s obviously still an underlying definitional problem here – as content is constantly added and nothing vanishes, what is the top 10% today becomes the top 1% sometime in the future, and the dividing lines might have to be moved again. However, the underlying concept might be an attractive one – maybe it’s not the head or the long tail that ends up mattering so much as what’s in between the two.



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Wikinomics » Blog Archive » Wikipedia - from ‘anyone can edit’ to ‘any reasonable person can join us in writing and editing…’
Jul 2, 2008 11:34

[...] I find this topic particularly interesting, as it’s similar to a question I brought up in the long tail post a few days ago – how long can you define what’s relevant in a digital context in relation to [...]

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