Chris Anderson famously coined the term “The Long Tail” to depict what he envisioned as the “new marketplace”- a true shape of demand unfiltered by the economics of scarce, limited shelf space. In his book, The Long Tail: Why the future of Business is Selling Less of More, Anderson disrupts what he calls “hit-driven economics” (also known as the “blockbuster strategy” where retailers and distributors seek to maximize their returns by focusing their marketing resources on a small number of likely best sellers) – by predicting that with the advent of digital technology, we are increasingly shifting from a mass market into a “mass of niches”. In other words, in a culture unfiltered by economic scarcity, we will all be hipsters – individuals aware of and interested in new and unconventional music, books, movies, products, etc.
So…is this the end of “blockbusters” as we know it? Are we moving into an increasingly fragmented market where businesses should focus on niche markets? Or – as one Wharton professor pondered – “What’s going to happen to Tom Cruise?” More relevantly – is this the end of the reign of Queen Bey?
Before you start growing out your beards, buying everything flannel and raising your own kombucha, let’s consider these claims. While it is largely accepted that there is a long tail of demand, and research has proven that it can add up (Brynjolfsson, Hu, Smith 2006), is the demand for niche products really large enough to shift your focus away from creating bestsellers? Anita Elberse from Harvard Business School conducted her own research looking at Australian DVD rental service Quickflix.
In her research, Elberse finds evidence consistent with William McPhee’s theory of exposure which describes two types of distribution: “a natural monopoly” and a “double jeopardy”. In his theory, McPhee observes that light users of a product category are more largely interested in the popular products – creating a “natural monopoly” of popular products, or “hits”, On the other hand, a “double jeopardy” is another term for the double disadvantage niche products face in both being relatively unknown and – if known- are only recognized by people who “know better” or are experts in that product category. Elberse’s findings supported this theory revealing that customers who ventured further down the long tail into the relatively obscure movies were generally the heaviest users.
And when assessing the breakdown of their rentals based on decile of DVD popularity, Elberse found that even the users who rented the most from the lesser popular DVDs (left-most vertical column), still rented largely from the more popular movies with 34% of their rentals coming from the top 10% of rented DVDs (Elberse 2008). Research by Wharton professor Serguei Netessine on the more digital Netflix found similar results (Netessine & Tan 2009).
In her work, Elberse suggests that one explanation for the resilience of these popular titles is the social dynamic of it – people find value in listening to the same music or movies or subscribing to the same product type as their friends. Perhaps the strength of this social motivation may be what is keeping some hits so far ahead of the rest and is hindering the Long Tail from being “fatter”.
All in all, there is no question that a long tail exists. There is no question that the long tail is very long, and that with the product proliferation we are seeing now, it will no doubt continue to stay long. But Elberse and Netessine have a point – perhaps Anderson is being a little too quick to write off hits. Perhaps we are not all as hipster as he suggests we will be in this new “market of multitudes”.
So – what are your thoughts? Will the hits as we know it die out? Do you see a future post-digital disruption consisting of mass niches? Or are our tastes less hipster than Chris Anderson suggests?
Bibliography:
Andersen, C. (2006). The Long Tail. Hachette Book Group.
Anderson, C. (2008, June 27). Debating the Long Tail. Harvard Business Review. Retrieved from https://hbr.org/2008/06/debating-the-long-tail
Elberse, A. (2008, July-August). Should You Invest in the Long Tail. Harvard Business Review, 86(7/8), pp. 88-96. Retrieved from https://hbr.org/2008/07/should-you-invest-in-the-long-tail
Elberse, A. (2008, July 02). The Long Tail Debate: A Response to Chris Anderson. Harvard Business Review. Retrieved from https://hbr.org/2008/07/the-long-tail-debate-a-response
Manjoo, F. (2008, July 14). Long Tails and Big Heads. Slate. Retrieved from http://www.slate.com/articles/technology/technology/2008/07/long_tails_and_big_heads.html
Netessine, S., & Tan, T. (2009, September 16). Rethinking the Long Tail Theory: How to Define ‘Hits’ and ‘Niches’. Knowledge @ Wharton. Retrieved from http://knowledge.wharton.upenn.edu/article/rethinking-the-long-tail-theory-how-to-define-hits-and-niches/
Schonfeld, E. (2008, July 2). Poking Holes In The Long Tail Theory. TechCrunch. Retrieved from http://techcrunch.com/2008/07/02/poking-holes-in-the-long-tail-theory
Hi Kimberly,
Very interesting thought to contradict Anderson in his vision on the long tail and the dying out of hits as we know it. I don’t think that hits in general will cease to exist, as you already mention that the social motivation of consumers could ensure of this. The larger number of niches that ‘pop-up’ now-a-days do seem to make the long tail a lot longer than it ever was.
But thinking about this I am wondering whether the definition of a market niche maybe requires an update in this digital era. It is now referred to as a “small but profitable segment of a market suitable for focused attention by a marketer” (businessdictionary.com, 2017). When we take into account that Information Technology has enabled us to personalize just about anything, to satisfy everyone’s needs, is it then really still referred to as fulfilling the needs in a market niche?
Would be curious to hear your thoughts on this.
Additional sources:
http://www.businessdictionary.com/definition/market-niche.html