The Long Tail Distribution in Media
https://hbr.org/2008/07/should-you-invest-in-the-long-tail
In her article, “Should you invest in the long tail distribution?,” appearing in the Harvard Business Review, Anita Elberse argues that in today’s digital age, pursuing a “blockbuster strategy” ends up being more valuable than focusing on the profits obtained in the long tail. The long tail refers to a section popularity distribution, and in particular, describes product which are obscure and esoteric, and thus may not be as popular. In the mid 2000s, some, such as author Chris Anderson, argued that with the advent of the Internet, it is more profitable for a company to invest in a large number of niche, relatively unpopular products, rather than in a few best-selling, “blockbuster hits”. While providing access to a vast array products in the long tail has certainly become cheaper for companies, thanks to digital distribution channels (along with other factors), Elberse asserts that a company should still focus on selling a few, very popular hits. Analyzing the sales data of some large media companies over a 5 year period, she finds that the most popular music titles garnered even more profit, thereby becoming all the more popular. As for the tail, she finds that while the tail lengthens, it is also flat, suggesting that investing in the tail is less profitable than doing so in the head of the distribution. Thus, she admonishes companies to not abandon the time-honored blockbuster strategy, as it easier to profit on higher sales volume.
Elberse’s results suggest that more enhanced and wider distribution channels, due to the Internet, have actually caused population distributions to more closely match a power law relation in a rich-get-richer model, as we have seen in class. An important factor to consider in such a model is the cost of selling a given product. It may be wise, she suggests, to focus on long tail sales volume too, provided that the costs of doing so are low. Companies like Amazon and Spotify have managed to develop business models which allow them to successfully tap into the long tail.
Overall, it is remarkable how well real life popularity distributions fit the rich get richer model; it remains to be seen how future technologies and sociological trends will affect this fit, if at all.