(Not) making money in the 'long tail'

The idea of the "long tail," a concept popularized by Wired's Chris Anderson, permeates much of what is going on with the evolution of IT.

After all, it's the mass participation of almost everyone in creating content of various types that's driving an enormous amount of IT build out--which, in turn, may well change even how and who builds computers in the future. Simply put, the long-tail premise is that bestsellers aren't in the majority when one tallies up the sales at Amazon.com or the page views on blogs. Rather, it's the total of the far more numerous other 80 or 90 percent of content.

Less abstractly, Anderson's argument is about business. Namely, he argues companies can make money selling to the long tail as shown in the data that I discuss in this 2005 post. I thought and think that it's a powerful concept--although I also think it fair to ponder how many companies are truly well-positioned to make money from the long tail.

When Amazon, Netflix, and Google make their appearance as exemplars for the umpteenth time, one starts to wonder. (In all fairness, Anderson has additional examples; Amazon and Netflix just make particularly rich, data-heavy case studies.)

However, as well noted by Alex Iskold over at Read/Write Web this morning, there's a slightly subtle, but very important, distinction to be made when we're discussing making money on the long tail. It's about making money on the long tail, not making money in it.

According to Iskold:

The precise point of Anderson's argument is that it is a collective of the long tail amounts to substantial dollars because the volume is there. The retail/advertising game is a game based on volume. You make money on a lot of traffic to a single popular site or the sum of smaller amounts of traffic to many less popular sites.

Or, as NatC in the comments below Iskold's blog reformulates it:

Amazon can make money from the long tail, while authors of 'minor' books won't. In the same way, Google makes money from the blogosphere's long tail, but small blogs don't.

Iskold then goes onto ponder the longer-term implications. Will bloggers drop out when they find out that no one's reading them?

Here, I think he's on less solid ground.

Authors and musicians wrote "minor" books and songs that were remaindered...long before there was the idea of the long tail. Today's discovery and recommendation systems could doubtless stand much improvement--which makes efforts like the Netflix Prize and Paul Lamere's Search Inside the Music project at Sun Labs so interesting. Nonetheless, by any reasonable measure, the ability of consumers to discover long-tail content is far better than it's ever been in history.

And, let's be honest, creating that long-tail content has never been primarily about making money.