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The Long Tail: A Review — Part 2

Niche and local markets have long existed – yet Chris Anderson argues they are new, and revolutionizing the digital economy.
August 2, 2006

This is the second part of my ongoing review of Chris Anderson’s book, The Long Tail. In the first part I confessed to having avoided, until now, reading this much ballyhooed book on the digital economy.

To my dismay, Anderson’s introduction is spent trying to convince readers of two points: that niche markets have been an overlooked part of traditional sales for many years, and that he has created the first economic “framework” of the digital age.

I’m dismayed largely because the first point, while true in a general sense, doesn’t reflect the reality of digital commerce; and, on the second point, he disregards more than a decade of economic forecasting and study from entrepreneurs.

His first point is both a little bit true and a lot misleading. The part Anderson gets right is that niche markets have been largely ignored, in the sense that economists – or those in charge of the purse strings at the large entertainment companies – have helped to restructure their companies in such a way that they were not equipped to handle the emerging digital economy, which has grown because people can access content anywhere, anyhow, anyway (a catch-phrase that was being bandied about when I started covering these companies in 1999 – and I’m sure it was around long before that).

This disjunction was, in large measure, I was always told, due to the increasing complexity of copyright and intellectual property laws, which were not designed for the digital age. It was impossible for companies – whether movie studios or knitting pattern distributors – to unleash their entire back catalogues of content, because nobody was quite sure who owned what.

Where Anderson’s thesis begin to derail, though, is on page nine, when he declares: “To think that basically everything you put out there [on the Web] finds a demand is just odd.”

But anyone who’s spent any time online wouldn’t find it “odd” that basically everything finds an audience. In fact, those who’ve adopted a digital lifestyle know that it is the nature of the Web.

In 1984, when I was 12 years old, my parents bought me a computer and modem. I had no idea what to do; however, my math teacher gave me some numbers of local Bulletin Board Systems, which I immediately connected to. From there, I found more numbers, and called them. Along the way, I left messages for others, read the profiles of those who stopped by, took recommendations on killer games to play, movies to see, and BBSs to visit.

It was that small, localized niche market that first led me to anime and Ultima. And that scenario, without a doubt, was repeating itself thousands of times over.

Fast forward 15 years. In the go-go late-nineties, as the Web emerged as a force of economic nature, hundreds of digital entertainment companies were funded and launched, ready to capitalize on the massive back inventories of companies. Almost without exception, those startup companies folded in the great dotcom crash of 2001, a crash driven in some measure by the inability of entertainment companies to unravel their licensing agreements. (This, of course, applies only to the digital entertainment industry, which, one would think, was a large driver of new technologies.)

The point is that niche markets have existed long before the digital era, although many have existed beyond the reach of the large entertainment companies. First-sale rights, which allow people to purchase a CD and then resell it, created a used-store niche market (and flea markets, which were another underground niche market that many times involved illegal sales). Those back-catalogue collections sold on late-night television were an attempt by the music industry to capitalize on pre-existing music. Local entertainment stores – the neighborhood bodegas that house comics, alternative music, off-beat movies – have always existed in towns.

These niche markets were familiar not only to general consumers, but also to rising entrepreneurs in the emerging digital economy of the late-nineties. I think one could make a reasonable argument that when music first went online, with the help of the folks who would eventually start the Internet Underground Music Archive (IUMA), or even later, with the emergence of the file-trading network Napster, people began to perceive the power of niche markets and back catalogues. (Of course, one could go even farther back, into the mid-to-late-seventies, when online worlds were in their infancy, and people began sharing information, posting news articles and the like online. Many of those can be accessed today through Google’s search engine.)

You would not realize any of this, though, by reading Anderson’s introduction. For him, this “long tail,” as he calls it, was revealed to him on 2004, and was the beginning of a new economy.

This review will continue sporadically over the next few weeks, as I continue to read, ponder, and discuss with others in the digital media industry.

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