Everyone by now must be familiar with the theory by Wired’s Chris Anderson that in the Internet age, there is more money to be made on the vast majority of creative works that are niche items than in the few that are very popular. He has depicted this through what is called a Pareto curve, where the Y axis rates popularity. Thus, big hits are high up against the Y axis, then as popularity decreases the curve moves out farther along the X axis, approaching the axis. The long tail is that portion hugging the X axis; it’s low in popularity, but it’s quite long. Does the area under that portion of the curve surpass the area under the head of the curve with the few popular works?

A new analysis says no, it doesn’t. An article in The Register describes it far better than I can, but the essence is that even in the digital age, where in theory anyone can access anything they want, most people still pursue the same number of creative works they always have. Essentially demand follows something called a Log Normal distribution, which is what has been charted in this area for at least 50 years and heavily weights a small portion of works.

Now the analysts providing evidence debunking Anderson’s work — economist Will Page and Mblox founder Andrew Bud — are a bit blunt, even harsh. I wrote at the time Anderson’s book came out that he made some tremendous leaps of faith, extrapolating a small amount of data across numerous industries without studies to support his arguments. That said, there’s something intuitive about the Long Tail in a digital age, in that it is easier to find more obscure works if you’re looking for them, and that would seem good for creators who didn’t make it big. Would the tail be larger than the head? No, but one can assume there would be more demonstrable interest in works in the tail in a digital era because it’s hard to measure interest before that era when the works simply couldn’t be found.

The Arts & Labs blog has an interesting perspective on this. Essentially, they argue that the conclusions by Page and Bud are already visible in the marketplace, because online distribution companies are fighting tooth and nail to gain access to the high-quality creative works most in demand by consumers. I agree with that. Every time I’m at Digital Hollywood I fear sitting down at a lunch or dinner table, because it’s always filled with distribution entrepreneurs convinced (incorrectly) that I can somehow help them make a deal with one of my corporate members. It’s enough to make me want to hole up in my hotel room and order room service.

There’s another perspective here as well, however. Those works out there on the tail; how were they produced, given that they are so unlikely to earn enough to pay for themselves? Many of them were self-produced, but not all. Most sound recordings, motion pictures, books, etc., do not turn a profit. Yet they are still produced. Is it because creative industries are filled with idiots?

Don’t answer that. I will, though; they are in fact not. Nobody, and I mean nobody, knew that some obscure southern lawyer named John Grisham or an insurance salesman named Tom Clancy would become runaway bestsellers. Every publisher of every long tail work hoped that the work would turn a profit. That’s why they took a chance on the work. But they can afford to take the chance because a few works — like The Firm or The Hunt for Red October — climb up the Y curve of the head and subsidize the production of all of those other works. To put it in Silicon Valley terms, the head provides the venture capital for the tail.

This is a virtuous relationship that has existed with creative works as long as there has been a way to produce them and market them to consumers. That hasn’t changed with the advent of the Internet, because the Internet hasn’t changed that unpredictable nature of consumer appetites. So however we measure the tail, and whether there is in fact a tail as Anderson depicts, let’s remember that we need to ensure the rights of creators are preserved so all works we enjoy can be created, profitable and unprofitable.

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This entry was posted on Wednesday, November 19th, 2008 at 4:21 pm by Patrick Ross and is filed under economy, internet, market forces. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.