The Long Tail and oligopolies
Chris Anderson's book The Long Tail has gotten a lot of attention, well-deserved. He explains how the Internet has changed the market for all kinds of goods simply by bringing down the cost of inventory and marketing and making it possible to sell effectively to niche group members who are actively looking for products that have no mass market appeal. It celebrates the triumph of the back list, where movies, CDs and books that were at one time uneconomical to store and ell because of their low individual sales volume, now have become a viable business because it is now possible to reach a worldwide audience of potential buyers. That audience, cumulatively, is enormous, and companies have proven that you can make a living selling highly niched products.
What this means is that the obstacles in the way of getting shelf space are, to an extent, being eliminated. You can bypass the supermarket buyer, the music company, the book publisher, the TV networks, and open your own direct channels. From a consumer point of view, you are in no longer limited by the books currently in stock at your local Borders, the songs played on Clear Channel stations, the DVDs stocked by Blockbuster.
But I believe he goes astray on some points. It's ironic that the book proclaiming the end of the "hit-based" economy was released in the same month as the most empty of hit movies, Pirates of the Caribbean: Dead Man's Chest opened, and that film was one of the biggest hits of all time, bringing in $422 million in its theatrical release, as well as the having highest first day opening ever. Nobody told Disney execs that the age of "hit-driven economics" is over. Nor were Anderson's publishers, Hyperion (ironically also a division of Disney) unhappy to see the book making the best seller lists rather than, like most books, having only a few readers.
More serious, the vision of a lively market with lots of competition from small entities implicit in the book. In some ways that s true; books, CDS, and exotic mustards from smaller companies have a chance to generate business and the people who want their products will find them. But at the same time, the Long Tail has generated its own oligopolies,
Companies cite din the books, including NetFlix, iTunes, Rhapsody, Amazon, eBay, and even Google are new oligopolies (and in cases like eBay and Google almost monopolies), that are replacing looser retail oligopolies in some area. True, these companies are kinder to some small businesses, the small publishers, moviemakers, and record labels; on the other hand, they are speeding even further the demise of the local book stores, record store, or movie retail outlet.
John Cassidy in the New Yorker in his review of the book "Going Long," July 10, 2006, notes this return of market domination in the guise of the new economy
"Today, thanks to globalization, deregulation, and technological progress, many of the twentieth-century industrial behemoths have fallen by the wayside. But don't assume that giant, exploitative firms are a thing of the past. In recent years, eBay has sharply increased its commission rates; Amazon has admitted charging its customers different prices for the same goods; and Apple Computer has stubbornly refused to make its iTunes service compatible with portable music players other than iPods. Has the New Economy really moved past the familiar 'winner take all' dynamic? That depends on whether you're looking at the long tail-or at who's wagging it."
