Book Review: The Long Tail: Why the Future of Business is Selling Less of More

With all the business titles to choose from, I get overwhelmed maintaining a reading list of titles I will actually read, or, are worth reading.  Amazon’s Kindle ‘one-click’ has made-it way too easy to amass a virtual stack of unread books on my iPad. Of necessity, I have become more selective on what I read,

Many new business titles lack compelling value, and detract from reading some of the ‘classics’ that I regard as must reads;  The Innovator’s Dilemma by Clayton Christensen; On Strategy by Michael Porter; Crossing The Chasm by Geoffrey Moore;  The Goal: A Process of Ongoing Improvement by Eliyahu Goldratt; The Black Swan: The Impact of The Highly Improbable by Nicolas Taleb. This is a short list of the many excellent business titles that are required reading.

I was underwhelmed with my read of The Long Tail: Why The Future of Business is Selling Less of More by Chris Anderson. I read Mr. Anderson’s article of the same name in a 2006 issue of WIRED magazine. It was a thought-provoking article, but  hardly warrants a ‘book’ version, in which I found little additional value.

The author describes changes that cause small, incremental, sales volume from more products; depicted as asymmetry in the tail of an otherwise normal statistical distribution. The depiction is accurate, but in my opinion, extremely constrained,  to some very specific markets. Specifically, products that have undergone revolutionary change in business models; e.g.,  music, film, books,

These markets experienced a ‘perfect storm’ where new customer acquisition costs plummeted, resulting from more ‘eyeballs’, thanks to Amazon, Apple iTunes, Netflix.  This was coincident with changes in packaging (digital vs. physical media), distribution (internet download vs. shipping). This convergence , with enormous ‘unserviceable demand’ (individual titles, available immediately vs. entire albums) was an unprecedented ‘disruptive’ event, period.

The author is correct that the distribution of revenue contribution is tailing-off, i.e., total revenue contribution is increasing from additional products (at a rate of lower marginal revenue contribution per unit), but this is a result of well-known micro-economic theory affecting supply & demand.

The author compares the “80 / 20 rule”, the modern-day lexicon for Pareto’s Principle (states that for many phenomena 80% of consequences stem from 20% of the causes, and named for Italian economist Vilfredo Pareto) with “The 98% Principle”. That ‘principle’ was coined by the experience of a firm Anderson interviewed that provided ‘jukebox’ services, specifically, 98% of their 10,000 catalog of unique songs was played once per quarter.

Namely, the acquisition costs of new customers (in this case music or books) has dropped precipitously, and the cost-of-goods-sold has decreased almost exponentially; both attributable to the internet. In the case of the former, the marginal cost of a ‘new set of eyeballs’ belonging to a prospective buyer is near zero.

The author provides ‘evidence’ of “how broadly the theory has been applied”; that’s like me taking credit for discovering gravity because I fell-off my sofa the other night, on which I was standing to change a light bulb.

In summary, there is no new dynamic or trend described in this book; it’s renaming (often inaccurately) a business trend based on Amazon, Netflix, and iTunes.

Read the article reprint in WIRED magazine; you’ll get the full benefit of the argument, it doesn’t warrant a book to explain it.

About Don

Former C-Level Exec of NASDAQ company InfoSec Certifications: CISSP, CISO (Carnegie Mellon CIO Institute) / Founding member of several 'startups' / Georgetown University, Masters, Technology Management / InfoSec Certifications: CISSP, CISO (Carnegie Mellon CIO Institute)
This entry was posted in Leadership & Management. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s