Review - The Long Tail

Wired magazine's article, "The Long Tail," outlines the current state of
multimedia distribution in North America. Written just over a year ago, it
discusses the various business models that attempt to take advantage of
heavy tailed Zipf distributions. That is, while there are a few very popular
media files, there are a great many unpopular media files who's revenues are
largely untapped. For example, while record label focus on promoting only
the few most popular artists, the author argues that as long as unpopular
tracks are made available they can be profitable.

The article focuses on three simple rules. Firstly, "make everything
available". The intuition here is that "almost anything is worth offering on
the off chance it will find a buyer". The difficulty is removing
distribution, packaging and promotion costs so that return on investment can
be maximized. Second, "cut the price in half." Although not likely to be
implemented any time soon, the argument is that consumers will buy higher
quantities at a lower cost. Lastly, "help me find it." By linking media in
relevant ways, consumers can be exposed to new content that they might not
have known about otherwise. A good example is Amazon's "people who bough
that also bought this" model.

It's been a year since this article was published and I believe the long
tail model is being looked at more seriously then ever. Just recently the
popular video publisher, Nintendo, announced that they would be offering all
of their classic titles via download onto their next generation video game
console. While this is encouraging, record labels continue to resist changes
in business model. Following the success of iTunes, they continue to push
for higher prices; and just recently, Steve Jobs announced that iTunes would
be moving to a multitiered pricing model. Popular songs will now cost more
then 99 cents.

While the author motivates the move to different pricing levels, I don't
think that increasing the price above 99 cents will increase profit, unless
titles that are not popular are lowered well below 99 cents. Moreover,
multitiered pricing can also be perceived as a tactic by record companies to
influence artist popularity among consumers.
Received on Mon Nov 28 2005 - 02:43:45 EST