In his book ‘The Long Tail’, Chris Anderson describes a cultural shift in how we purchase products and consume content. To kick off, Anderson describes the era of scarcity.
“An average movie theatre will not show a film unless it can attract at least 1,500 people over a two-week run. That’s essentially the rent for a screen. An average record store needs to sell at least four copies of a CD per year to make it worth carrying; that’s the rent for a half inch of shelf space. And so on, for DVD rental shops, video-game stores, booksellers, and newsstands.”
Later, he continues:
“The radio spectrum can carry only so many stations, and a coaxial cable only so many TV channels. And, of course, there are only twenty-four hours of programming a day.”
In all of these examples the amount of products that could be stocked, or content that could be broadcast, was limited by the constraints of the physical world. This era of relative scarcity led to a cultural focus on the few product with the highest demand. A focus on the hits.
“For the past century, entertainment has offered an easy solution to these constraints: a focus on releasing hits. After all, hits fill theatres, fly off shelves, and keep listeners and viewers from touching their dials and remotes.”
This makes sense. When you can’t stock everything, you stock only he highest sellers. When you can’t broadcast everything, you broadcast only the most viewed.
“The world of shelf space is a zero-sum game: One product displaces another. Forced to choose, each link in the entertainment industry naturally enough chooses the most popular products, giving them privileged placement. By putting our commercial weight behind the big winners, we actually amplify the gap between them and everything else.”
The demand curve during the era of scarcity looks something like this:
However, somewhere in the early 2000s, ‘hit’ products and ‘hit’ content seemed to reach its peak.
“Between 2001 and 2007, the music industry’s total sales fell by a quarter. But the number of hit albums fell by more than 60 percent. In 2000, the top five albums—including megahits from Britney Spears and Eminem—sold a combined 38 million copies. In 2005, the top five sold just half that; only 19.7 million copies. In other words, although the music industry is hurting, the hit-making side of it is hurting more. Customers have shifted to less mainstream fare, fragmenting to a thousand different subgenres. For music, at least, this looks like the end of the blockbuster era.”
Just as the ‘hit’ had been built by an era of scarcity, it seems the ‘hit’ had been felled by an era of abundance.
“What caused a generation of the industry’s best customers […] to abandon the record store? The industry’s answer was simply “piracy”: The combined effects of Napster and other online file trading and CD burning and trading gave rise to an underground economy of any song, anytime, for free. And there’s something to that. Despite countless record industry lawsuits, the traffic on the peer-to-peer file-trading networks has continued to grow, with about 10 million users now sharing music files each day.
But while technology was indeed behind the customer flight, it didn’t just allow fans to sidestep the cash register. It also offered massive, unprecedented choice in terms of what they could hear. The average file-trading network has more music than any music store. Given that choice, music fans took it. Today, not only have listeners stopped buying as many CDs, they’re also losing their taste for the blockbuster hits that used to make them throng those stores on release day.”
It seems that by removing the constraints of the physical world, the internet created an era of abundant choice.
“From the perspective of a store like Wal-Mart, the music industry stops at less than 60,000 tracks. However, for online retailers like Rhapsody the market is seemingly never-ending.”
Where Wal-mart (the physical retailer) stock 60,000 music tracks, Rhapsody stocks 4,500,000. Where Blockbusters stock 3,000 DVDs, Netflix stocks 90,000. Where Barnes & Noble stock 100,000 books, Amazon stock 5,000,000. Furthermore, not only is all of that choice now available, but almost all of it “sells”.
“Not only is every one of Rhapsody’s top 60,000 tracks streamed at least once each month, but the same is true for its top 100,000, top 200,000, and top 400,000—even its top 600,000, top 900,000, and beyond. As fast as Rhapsody adds tracks to its library, those songs find an audience, even if it’s just a handful of people every month, somewhere in the world.”
The demand curve during the era of abundance looks something like this:
It seems that as the constraints of the physical world are lifted, unlocking supply and near unlimited choice, demand is following. Anderson sums up this economic and sociological shift neatly in a one paragraph summation of his ‘Long Tail’ theory.
“The theory of the Long Tail can be boiled down to this: Our culture and economy are increasingly shifting away from a focus on a relatively small number of hits at the head of the demand curve, and moving toward a huge number of niches in the tail.”