1. Introduction The tracking of top-seller lists is a national obsession. Our culture is a massive popularity contest. We are consumed by hits—making them, choosing them, talking about them, and following their rise and fall. Every weekend is a box-office horse race, and every Thursday night is a Darwinian struggle to find the fittest TV show and let it live to see another week. A few hit songs play in heavy rotation on the radio dials, while entertainment executives in all these industries sweat as they search for the next big thing. This is the world the blockbuster built. The massive media and entertainment industries grew up over the past half century on the back of box-office rockets, gold records, and double-digit TV ratings. No surprise that hits have become the lens through which we observe our own culture. We define our age by our celebrities and mass-market products—they are the connective tissue of our common experience. The star-making system that Hollywood began eight decades ago has now spun out into every corner of commerce, from shoes to chefs. Our media is obsessed with what’s hot and what’s not. Hits, in short, rule. Yet look a little closer and you’ll see that this picture, which first emerged with the postwar broadcast era of radio and television, is now starting to tatter at the edges. Hits are starting to, gasp, rule less. Number one is still number one, but the sales that go with that are not what they once were. Hollywood Loses Most of the top fifty best-selling albums of all time were recorded in the seventies and eighties (the Eagles, Michael Jackson), and none of them were made in the past five years. Hollywood box-office revenue was down by more than 6 percent in 2005, reflecting the reality that the theatergoing audience is falling even as the population grows. Every year network TV loses more of its audience to hundreds of niche cable channels. Males age eighteen to thirty-four, the most desirable audience for advertisers, are starting to turn off the TV altogether, shifting more and more of their screen time to the Internet and video games. The ratings of top TV shows have been falling for decades, and the number one show today wouldn’t have made the top ten in 1970. In short, although we still obsess over hits, they are not quite the economic force they once were. Where are those fickle consumers going instead? No single place. They are scattered to the winds as markets fragment into countless niches. The one big growth area is the Web, but it is an uncategorizable sea of a million destinations, each defying in its own way the conventional logic of media and marketing. >>> 2. iTunes Killed The Radio Star The great thing about broadcast is that it can bring one show to millions of people with unmatchable efficiency. But it can’t do the opposite—bring a million shows to one person each. Yet that is exactly what the Internet does so well. The economics of the broadcast era required hit shows—big buckets—to catch huge audiences. The economics of the broadband era are reversed. Serving the same stream to millions of people at the same time is hugely expensive and wasteful for a distribution network optimized for point-to-point communications. There’s still demand for big cultural buckets, but they’re no longer the only market. The hits now compete with an infinite number of niche markets, of any size. And consumers are increasingly favoring the one with the most choice. The era of one-size-fits-all is ending, and in its place is something new, a market of multitudes. This book is about that market. >>> 3. The 98 Percent Rule This book began with a quiz I got wrong. One of the things I do as the editor of Wired is give speeches about technology trends. Because I started my career in the science world and then learned economics at The Economist, I look for those trends first in hard data. And, fortunately enough, there has never been more data available. The secrets of twenty-first-century economics lie in the servers of the companies that are all around us, from eBay to Wal-Mart. Although it’s not always easy to get the raw numbers, the executives at those companies swim in that data every day and have a great intuitive feel for what’s meaningful and what isn’t. So the trick to trend-spotting is to ask them. Which is what I was doing in January 2004, in the offices of Robbie Vann-Adibé, the CEO of Ecast, a “digital jukebox” company. Digital jukeboxes are just like regular jukeboxes—a big enclosure with speakers and blinking lights, often found in bars—with the difference that rather than a hundred CDs, they have a broadband connection to the Internet and patrons can choose from thousands of tracks that are downloaded and stored on a local hard drive. During the course of our conversation, Vann-Adibé asked me to guess what percentage of the 10,000 albums available on the jukeboxes sold at least one track per quarter. I knew, of course, that Vann-Adibé was asking me a trick question. The normal answer would be 20 percent because of the 80/20 Rule, which experience tells us applies practically everywhere. That is: 20 percent of products account for 80 percent of sales (and usually 100 percent of the profits). But Vann-Adibé was in the digital content business, which is different. So I thought I’d go way out on a limb and venture that a whopping 50 percent of those 10,000 albums sold at least one track a quarter. Now, on the face of it, that’s absurdly high. Half of the top 10,000 books in a typical book superstore don’t sell once a quarter. Half of the top 10,000 CDs at Wal-Mart don’t sell once a quarter; indeed, Wal-Mart doesn’t even carry half that many CDs. It’s hard to think of any market where such a high fraction of such a large inventory sells. But my sense was that digital was different, so I took a chance on a big number. I was, needless to say, way, way off. The answer was 98 percent. How Technology Is Turning Mass Markets Into Millions Of Niches In 1988, a British mountain climber named Joe Simpson wrote a book called Touching the Void, a harrowing account of near death in the Peruvian Andes. Though reviews for the book were good, it was only a modest success, and soon was largely forgotten. Then, a decade later, a strange thing happened. Jon Krakauer’s Into Thin Air, another book about a mountain-climbing tragedy, became a publishing sensation. Suddenly, Touching the Void started to sell again. Booksellers began promoting it next to their Into Thin Air displays, and sales continued to rise. In early 2004, IFC Films released a docudrama of the story, to good reviews. Shortly thereafter, HarperCollins released a revised paperback, which spent fourteen weeks on the New York Times best-seller list. By mid-2004, Touching the Void was outselling Into Thin Air more than two to one. Online Word Of Mouth What happened? Online word of mouth. When Into Thin Air first came out, a few readers wrote reviews on Amazon.com that pointed out the similarities with the then lesser-known Touching the Void, which they praised effusively. Other shoppers read those reviews, checked out the older book, and added it to their shopping carts. Pretty soon the online bookseller’s software noted the patterns in buying behavior—“Readers who bought Into Thin Air also bought Touching the Void”—and started recommending the two as a pair. People took the suggestion, agreed wholeheartedly, wrote more rhapsodic reviews. More sales, more algorithm-fueled recommendations—and a powerful positive feedback loop kicked in. Particularly notable is that when Krakauer’s book hit shelves, Simpson’s was nearly out of print. A decade ago readers of Krakauer would never even have learned about Simpson’s book—and if they had, they wouldn’t have been able to find it. Online booksellers changed that. By combining infinite shelf space with real-time information about buying trends and public opinion, they created the entire Touching the Void phenomenon. The result: rising demand for an obscure book. >>> 5. The End Of The Hit Parade As the twenty-first century opened, the music industry—the ultimate hit machine—basked in its power. The resounding commercial success of teen pop—from Britney Spears to the Backstreet Boys—showed that the business had its finger firmly on the pulse of American youth culture. The labels had finally perfected the process of manufacturing blockbusters, and their marketing departments could now both predict and create demand with scientific precision. On March 21, 2000, Jive Records demonstrated that clout by releasing No Strings Attached, the second album by *NSYNC, the latest and greatest of the boy bands. *NSYNC had been developed at an even larger label, BMG, but on the advice of its marketing gurus had switched to the urban-oriented Jive to get more street cred (and counter a slightly fey image). It worked. The album sold 2.4 million copies in its first week, making it the fastest-selling album ever. It went on to top the charts for eight weeks, selling 11 million copies by the end of the year. The industry had cracked the commercial code. They had found the elusive formula to the hit, and in retrospect it was so obvious: Sell virile young men to young women. What worked for Elvis could now be replicated on an industrial scale. It was all about looks and scripted personalities. The music itself, which was outsourced to a small army of professionals (there are fifty-two people credited with creating No Strings Attached), hardly mattered. Labels had good reason for feeling confident. Fans were flocking to record stores. Between 1990 and 2000, album sales had doubled, the fastest growth rate in the industry’s history. The business trailed only Hollywood in the entertainment industry ranks. *NSYNC - The Peak Of The Hit Bubble But even as *NSYNC was celebrating its huge launch, the ground was shifting beneath the industry. The Nasdaq had crashed the week before the album’s release, and continued to fall sickeningly the rest of the year as the dot.com bubble burst. No other albums that year set records, and total music sales fell, for only the third time in two decades. Over the next few years, even after the overall economy recovered, the economics of the music industry got worse. Something fundamental had changed in 2000. Sales fell 2.5 percent in 2001, 6.8 percent in 2002, and just kept dropping. By the end of 2005 (down another 7 percent), music sales in the United States had dwindled more than a quarter from their peak. Twenty of the all-time top 100 albums had come out in the five-year period between 1996 and 2000. The next five years produced only two—OutKast’s Speakerboxx/The Love Below and Norah Jones’s Come Away with Me—rank 92 and 95, respectively. It’s altogether possible that *NSYNC’s first-week record will never be broken. Imagine if this boy band goes down in history not just for launching Justin Timberlake but also for marking the very peak of the hit bubble, the last bit of manufactured pop to use the twentieth century’s fine-tuned marketing machine to its fullest, before the gears were stripped and the wheels fell off. Who Killed The Hit Album? What caused a generation of the industry’s best customers—fans in their teens and twenties—to abandon the record store? The industry’s answer was simply “piracy”: The combined effects of Napster and other online file trading and CD burning and trading gave rise to an underground economy of any song, anytime, for free. And there’s something to that. Despite countless record industry lawsuits, the traffic on the peer-to-peer (“P2P”) file-trading networks has continued to grow, with about 10 million users now sharing music files each day. But while technology was indeed behind the customer flight, it didn’t just allow fans to sidestep the cash register. It also offered massive, unprecedented choice in terms of what they could hear. The average file-trading network has more music than any music store. Given that choice, music fans took it. Today, not only have listeners stopped buying as many CDs, they’re also losing their taste for the blockbuster hits that used to make them throng those stores on release day. Given the option to pick a boy band or find something new, more and more people are opting for exploration, and are typically more satisfied with what they find. Peer-to-peer file trading is so massive that a small industry has now grown up around it to measure and learn from the experience. The leading such analyst is Big Champagne, which tracks all the files shared on the major peer-to-peer services. What it’s seeing in the data is nothing less than a culture shift from hits to niche artists. Today, music fans are trading more than 8 million unique tracks, almost all of them far outside the Billboard Hot 100. There is a thriving subculture that’s into “mashups” (playing a track from one artist over atrack from another artist), and another that’s into music composed on the eight-bit chips once found in Nintendo video-game machines. Plus, a lot of indie rock of the sort that makes for great shows but no radio play. Notably, boy bands are not particularly popular. >>> 6. Long Tails Everywhere From purely virtual retailers such as eBay to the online side of traditional retailing, the virtues of unlimited shelf space, abundant information, and smart ways to find what you want—Bezos’s original vision—have proven every bit as compelling as he thought. And as a result, there are now Long Tail markets practically everywhere you look. Just as Google is finding ways to tap the Long Tail of advertising, Microsoft is extending the Tail of video games into small and cheap games that you can download on its Xbox Live network. Open-source software projects such as Linux and Firefox are the Long Tail ofprogramming talent, while offshoring taps the Long Tail of labor. Meanwhile, the Internet has enabled the longest, er, tail of pornography for every possible taste and kink. More esoteric examples include the proliferation of microbrews as the “Long Tail of beer,” the growth of customized T shirts, shoes, and other clothing as the “Long Tail of fashion,” and the growth of online universities as the “Long Tail of education.” >>> 7. Make It, Get It Out There, And Help Me Find It The theory of the Long Tail can be boiled down to this: Our culture and economy are increasingly shifting away from a focus on a relatively small number of hits (mainstream products and markets) at the head of the demand curve, and moving toward a huge number of niches in the tail. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly targeted goods and services can be as economically attractive as mainstream fare. But that’s not enough. Demand must follow this new supply. Otherwise, the Tail will wither. Because the Tail is measured not just in available variety but in the people who gravitate toward it, the true shape of demand is revealed only when consumers are offered infinite choice. It is the aggregate sales, use, or other participation of all those people in the newly available niches that turns the massive expansion of choice into an economic and cultural force. The Long Tail starts with a million niches, but it isn’t meaningful until those niches are populated with people who want them. The Six Themes Of The Long Tail Age 1. In virtually all markets, there are far more niche goods than hits. That ratio is growing exponentially larger as the tools of production become cheaper and more ubiquitous. 2. The costs of reaching those niches is now falling dramatically. Thanks to a combination of forces including digital distribution, powerful search technologies, and a critical mass of broadband penetration, online markets are resetting the economics of retail. Thus, in many markets, it is now possible to offer a massively expanded variety of products. 3. Simply offering more variety, however, does not shift demand by itself. Consumers must be given ways to find niches that suit their particular needs and interests. A range of tools and techniques—from recommendations to rankings—are effective at doing this. These “filters” can drive demand down the Tail. 4. Once there’s massively expanded variety and the filters to sort through it, the demand curve flattens. There are still hits and niches, but the hits are relatively less popular and the niches relatively more so. 5. All those niches add up. Although none sell in huge numbers, there are so many niche products that collectively they can comprise a market rivaling the hits. 6. Once all of this is in place, the natural shape of demand is revealed, undistorted by distribution bottlenecks, scarcity of information, and limited choice of shelf space. What’s more, that shape is far less hit-driven than we have been led to believe. Instead, it is as diverse as the population itself. Bottom line: A Long Tail is just culture unfiltered by economic scarcity. >>> 8. The Wikipedia Phenomenon In January 2001, a wealthy options trader named Jimmy Wales set out to build a massive online encyclopedia in an entirely new way—by tapping the collective wisdom of millions of amateur experts, semi-experts, and just regular folks who thought they knew something. This encyclopedia would be freely available to anyone; and it would be created not by paid experts and editors, but by whoever wanted to contribute. Wales started with a few dozen prewritten articles and a software application called a Wiki (named for the Hawaiian word meaning “quick” or “fast”), which allows anybody with Web access to go to a site and edit, delete, or add to what’s there. The ambition: Nothing less than to construct a repository of knowledge to rival the ancient library of Alexandria. This was, needless to say, controversial. For one thing, this is not how encyclopedias are supposed to be made. From the beginning, compiling authoritative knowledge has been the job of scholars. It started with a few solo polymaths who dared to try the impossible. In ancient Greece, Aristotle single-handedly set out to record all the knowledge of his time. Four hundred years later, the Roman nobleman Pliny the Elder cranked out a thirty-seven-volume set of the day’s knowledge. The Chinese scholar Tu Yu wrote an encyclopedia on his own in the ninth century. And in the 1700s, Diderot and a few of his pals (including Voltaire and Rousseau) took twenty-nine years to create the Encyclopédie, ou Dictionnaire Raisonné des Sciences, des Arts et des Métiers. Individual work gradually evolved into larger team efforts, especially after the arrival of the Industrial Revolution. In the late eighteenth century, several members of the Scottish Enlightenment started to apply the industrial principles of scientific management and the lessons of assembly lines to the creation of an encyclopedia such as the world had never before seen. The third edition of the Encyclopædia Britannica, published between 1788 and 1797, amounted to eighteen volumes plus a two-volume supplement, totaling over 16,000 pages. Groups of experts were recruited to write scholarly articles under the direction of a manager, organized by a detailed work chart. Now Wales has introduced a third model: the open collective. Instead of one really smart guy or a number of handpicked smart guys, Wikipedia draws on tens of thousands of people of all sorts—ranging from real experts to interested bystanders—with a lot of volunteer curators adopting entries and keeping an eye on their progression. In Wales’s encyclopedia calculus, 50,000 self-selected Wikipedians equal one Pliny the Elder. Wikipedia and Rhapsody In a sense, you can think of Wikipedia as equivalent to Rhapsody, the music site. There are the popular top 1,000, which can be found in any encyclopedia: Julius Caesar, World War II, Statistics, etc. These are like the hit songs. With these, Wikipedia is competing with professionals at their best, who produce well-written, authoritative entries that deploy facts with the easy comfort that comes with great scholarship. The main advantage of the user-created Wikipedia model for these entries is its ability to be up-to-date, have unlimited length and visual aids (such as photos and charts), include copious links to support material elsewhere, and perhaps, better represent alternate views and controversies. In the middle of the curve, from the 1,000th entry to where Britannica ends at 80,000, are the narrower subjects: Caesarian Section, Okinawa, Regression Analysis, etc. Here, the Wikipedia model begins to pull ahead of its professional competition. Unlimited space means that the Wikipedia entries tend to be longer and more comprehensive. While the average length of a Britannica entry is 678 words, more than 200,000 Wikipedia entries (more than two entire Britannicas) are longer than that. Meanwhile, the external links and updated information emerge as a key advantage as Wikipedia becomes a launching place for further research. Then there is the Tail, from 80,000 to 1 million. These are the entries that Wikipedia has that no other encyclopedia even attempts to include. Its articles on these subjects—Caesar Cipher, Canned Spam, Spearman’s Rank Correlation Coefficient—range from among the best in Wikipedia (those written by passionate experts) to the worst (self-promotion, score-settling, and pranks). While many critics focus on the worst entries, the really important thing about Wikipedia’s Tail is that there is nothing else like it anywhere. From hard-core science to up-to-the-minute politics, Wikipedia goes where no other encyclopedia—whether constrained by paper or DVD limitations—can. Britannica doesn’t have an entry about the Long Tail phenomenon (yet), but Wikipedia’s entry is not only well written and thorough, it’s also 1,500 words long (and none of it was written by me!). >>> 9. Lonely Island One size of incentive doesn’t fit all. People create things for all sorts of reasons, ranging from expression to reputation. What makes this important is that there is increasingly frictionless mobility in the Long Tail. In a seamless digital marketplace, from iTunes to the Web itself, content that starts at the bottom can easily move to the top if it strikes a chord. Understanding the diverse incentives that can motivate the creators of such content becomes essential in finding and encouraging it. Speaking at a conference in mid-2005, Barry Diller, the media mogul chairman of IAC/InterActiveCorp, acknowledged that peer production is interesting, but he scoffed at the idea that it is a force capable of rivaling Hollywood. “People with talent won’t be displaced by 18million people producing stuff they think will have appeal,” he confidently predicted. What are the odds that he’s right? Well, if you define “people with talent” only as those who have a proven ability to make mass-market blockbusters, Diller may have a point. But there’s more to creativity than Hollywood hits, and people who can strike a chord can come from anywhere, via any path. Take Akiva Schaffer, Jorma Taccone, and Andy Samberg. Until recently, they fit nicely into the category of people Diller’s talent-identification machine had efficiently filtered out. After college, the three high school buddies relocated to Hollywood together. They moved into a big house with low rent on Olympic Boulevard and dubbed it the Lonely Island. Then they tried to figure out how to break into the entertainment industry as a comedy troupe. That's Ka-blamo! It isn’t easy for an individual comic to make it in TV—even as a writer—but it’s even harder for a preassembled team. Sure enough, the threesome quickly ran up against all the usual barriers in their hunt for work in Hollywood. However, rather than subject themselves to endless rejection, the three took their act—now named after their home—online. Borrowing some video gear, the Lonely Island crew started producing short-form comedy videos and songs. Schaffer’s kid brother Micah—a tech consultant and Internet agitpropster—threw together their Web site, thelonelyisland.com, in 2001. The Lonely Islanders started with white-boy rap music videos, presented with signature deadpan humor. One of the first videos was about things that are “ka-blamo!” (as in, “You kissed Shannen Doherty”) and things that aren’t (“I majored in pottery”). As is sometimes the case for such amusing ephemera, the video circulated widely on the Internet. At one point, a Dutch DJ “mashed” it up (mixed it with other video footage), further boosting its popularity. Soon more videos and fan mashups followed, something the group encouraged by releasing their videos under a Creative Commons license that freely permitted creative reuse. In just a few years, the Lonely Island was “Internet famous,” which is to say they were big with the demographic that has traded its TV time for online time, constantly surfing the contours of online subculture. Lonely Island And Saturday Night Live As the group’s cult following grew, word of their shorts got to Saturday Night Live star Tina Fey and the show’s creator, Lorne Michaels. In mid-2005, the threesome flew to Manhattan for auditions with the most famous team in comedy. In short order, all of the Dudes were hired. In December 2005, the Lonely Island crew did another one of their white-boy rap sendups on SNL. Riffing on the Chronicles of Narnia film, the sketch was, as expected, twisted, wrong, and very, very funny. Now that the crew is on network TV, the skit went out as broadcast on a Saturday night, when it was watched by the usual (dwindling) audience, most of whom no doubt laughed and forgot about it. But some people had recorded the show to their DVRs, and a few of them recognized a flash of brilliance in the Narnia skit. So they uploaded the video to the Internet. After it started to take off in the usual link frenzy, NBC heard the stampede and put the video on the official SNL site and even iTunes. Then, once again, the viral video effect kicked in—this time bigger than ever. Jeff Jarvis, a media commentator, described the impact like this: “I haven’t heard anyone buzz about, recommend, or admit to watching SNL in, oh, a generation. But suddenly, I hear lots of buzz about the show. And it’s not because millions happened to start watching when the show happened to actually be funny again. No, the buzz is born because folks started distributing the Narnia bit, which indeed is funny, on the Internet, and people are linking to it. NBC is learning the power of the network that no one owns.” And sure enough, links to the SNL site increased more than 200-fold in the two weeks after the video started circulating. The Lonely Island tale has come full circle. Misfits rejected by the entertainment industry go online and get popular. Entertainment industry wakes up to this phenomenon in the hard-to-reach demographic of influential twenty-somethings and hires the misfits. The kids do the same thing on broadcast TV, but since that influential demographic doesn’t actually watch much TV, it isn’t until the skit goes back online (now amplified by the net-kids-make-it-big appeal) that the skit gets really popular. Thus SNL, previously scorned by the online generation, suddenly gets cool again by tapping into the authentic underground spirit blossoming online. Once upon a time, the show used to handpick its talent pool from obscure regional theaters and improv troupes. Now they also find it online. >>> 10. The Ants Have Megaphones. What Are They Saying? We’re entering an era of radical change for marketers. Faith in advertising and the institutions that pay for it is waning, while faith in individuals is on the rise. Peers trust peers. Top-down messaging is losing traction, while bottom-up buzz is gaining power. Dell spends hundreds of millions each year on promoting its quality and customer service, but if you Google “dell hell” you’ll get 55,000 pages of results. Even the word “dell” returns customer complaints by the second page of results. The same inversion of power is now changing the marketing game for everything from individual products to people. The collective now controls the message. For a generation of customers used to doing their buying research via search engine, a company’s brand is not what the company says it is, but what Google says it is. The new tastemakers are us. Word of mouth is now a public conversation, carried in blog comments and customer reviews, exhaustively collated and measured. The ants have megaphones. Birdmonster In the course of researching this book, I decided to track the progress of Birdmonster, an up-and-coming San Francisco band fronted by Peter Arcuni, an editorial assistant at Wired. The experience proved all too instructive. Birdmonster is a prime example of how the three forces of the Long Tail are overturning the status quo in the music industry. Like all new rock bands, Birdmonster started by hustling for gigs. But rather than pestering club owners for a break, the band members realized that there was now a smarter way. In club booking, the headliners are typically signed up first. Then, once the dates are set in the calendar, the club looks for opening acts to support them. Since virtually all club schedules are now online, opportunities for opening acts can be found simply by searching for the letters “TBA” and some other keywords to limit the search to local clubs. Then it’s simply a matter of contacting the club and offering to fill that gap in their lineup. But getting the club owners’ attention isn’t enough; they need to know that you’ll be able to attract a crowd, too. For that Birdmonster used grassroots Internet marketing. It started an online mailing list and encouraged fans to register as “friends” on the band’s MySpace page. It put a few songs on that page and listed its other gigs, along with pictures. Bookers could check it out, listen to songs, and see pictures from previous shows, while reading raves from the band’s fans. Birdmonster also courted Internet radio stations, which have none of the constraints of traditional broadcast. As it happened, it was “Ted,” the owner of San Francisco’s BagelRadio.com, who convinced the booker to give Birdmonster its first big break, an opening gig for Clap Your Hands Say Yeah. That (and a battle-of-the-bands contest) led to opening for the White Stripes, which was at that moment the pinnacle of indie rock. Birdmonster had arrived. Who Needs A Record Label? It was time to go beyond live gigs. The band recorded three tracks in a local independent studio and self-published them as a mini album, which they sent to a music service called CD Baby, which takes albums on consignment and sells them online. CD Baby, in turn, transferred the digital tracks to iTunes and other top music services, so they could be bought or streamed just like the biggest label hits. The band then emailed song tracks and personal notes to various MP3 blogs, getting a positive mention on several, such as Music for Robots, which brought yet more attention. The band’s MySpace page started filling up with fans, and soon managers, labels, and industry folks came calling with deals. But then something surprising happened: Birdmonster turned the offers down. As Arcuni put it, “We’re not anti-label in principle, but the numbers (risk vs. reward) didn’t add up.” A music label exists primarily to fulfill four functions: (1) talent scouting; (2) financing (the advances bands get to pay for their studio time is like seed capital invested by a venture capitalist); (3) distribution; and (4) marketing. From Birdmonster’s perspective, they didn’t need a label to provide that. A growing local fan base, amplified online, had already spotted their talent. Improving digital recording technology had made studio time cheaper than ever—they could record the tracks in a few days in the studio and then mix and overdub them at home using personal computers. The cost to record the entire album was less than $15,000, which they covered with credit cards and savings. CD Baby and a similar company called Cinderblock provided the distribution, which gave them a reach as broad as iTunes, Rhapsody, and the other top services. And MP3 blogs and MySpace were free marketing. Why sign their life away now to a label, they reasoned, when they could record and distribute their music themselves and keep their creative independence? If the first self-released album did well, they’d be in a much stronger negotiating position with the label, for rereleasing the first album in stores, or for the second album, much as My Chemical Romance was after its first album. And if it didn’t, there were still live shows and touring, which are really the best part of being in a band anyway. And so Arcuni quit his day job (our loss!) and set off to become a professional musician, emboldened in a DIY age where technology has shifted the balance of power from label to band. >>> 11. The Wal-Mart Effect Of the estimated 30,000 new albums released each year, Wal-Mart carries just 750, according to David Gottlieb, a former label executive. That works out to only 2.5 percent of the new music released each year; and those 4,500 titles in the total inventory are less than half a percent of all the music available. Entire categories, from Dance to Spoken-Word, are either missing or buried deep in catch-all categories such as “Rock/Pop/R&B.” There are no copies of the Rolling Stones’ Exile on Main Street or Nirvana’s Nevermind. There you have it. Scarcity, bottlenecks, the distortion of distribution, and the tyranny of shelf space all wrapped up in one big store. Again, it’s ironic, this paradox of plenty: Walk into a Wal-Mart and you’re overwhelmed by the abundance and choice. Yet look closer and the utter thinness of this cornucopia is revealed. Wal-Mart’s shelves are a display case a mile wide and twenty-four inches deep. At first glance that may look like everything, but in a world that’s actually a mile wide and a mile deep, a veneer of variety just isn’t enough. >>> 12. We Are Entering An Era Of Unprecedented Choice. And That's A Good Thing In 1978, Saturday Night Live featured a skit about the “Scotch Boutique,” a store in a trendy mall that sells nothing but Scotch tape in many varieties. Its proprietors puzzle over the absence of customers—they offer so many kinds of tape that surely one should appeal to nearly everyone. And yet no traffic. The skit reveled in the cluelessness of the tape-obsessed store owners. Could anything be more absurd than a Scotch Tape store? Yet in 2004, a store called “Rice to Riches” actually opened in Manhattan. It sells rice pudding in more than twenty flavors and nothing else. It is reportedly doing well and expanding into a mail-order business. Meanwhile, the White House chain just sells home furnishing in white. It's proven so successful that it’s been joined by the Black House. Yesterday’s joke is today’s reality. We are in the midst of the biggest explosion of variety in history. You can see it all around you, but sometimes a few numbers make the point even better. There are precisely 19,000 variations of Starbucks coffee, according to the advertising firm OMD. In 2003 alone, 26,893 new food and household products were introduced, including 115 deodorants, 187 breakfast cereals, and 303 women’s fragrances, according to Mintel International’s Global New Products database. Back in the 1960s, Chevrolet’s Impala sedan accounted for more than 1 million of the 8 million cars sold each year, close to 13 percent of a market that had no more than forty different kinds of cars. Today, in a car market nearly ten times that size, there are more than two hundred and fifty models available (more than one thousand if you count all the variants). Fewer than ten of those sell more than 400,000 units, or one-half percent of the market. >>> 13. What's It Like To Live In A Long Tail World? In the early 1980s, in the dark days at the very end of disco, a proto–Long Tail music culture emerged in a former industrial strip in Chicago. A half decade after the release of Saturday Night Fever, the craven commoditization of clap tracks and R&B had reached the end of its run and consumers were rebelling. They’d had enough of the bland and formulaic output of a music industry trying to clone its previous hits. People attending a baseball game in Chicago’s Comiskey Park were invited to bring all their unwanted disco records, and after the game they tossed the vinyl refuse into a massive bonfire to the chant of “Disco Sucks.” But in a nightclub called the Warehouse, the resident DJ, Frankie Knuckles, was doing something new. He was wildly remixing, mashing up different genres of music into something brand-new. Knuckles took old disco classics, new Eurobeat pop and synthesized beats, including those produced with then-new drum machines, and turned them into a frantic, high-energy amalgamation of recycled soul. Taking its name from the club, this new sound became known as house music. The sound spread to another Chicago club called the MusicBox, where DJ Ron Hardy took it up several notches with massive volume and a frenetic pace, something, it was said, that was inspired by his heroin use. Then, eventually, the sound traveled to the north of England, where house became the foundation of what would later emerge as the Rave scene. What was notable about the rise of house was that it was both a reaction to the bankruptcy of blockbuster culture and a vibrant culture of its own. DJs and clubs created a music industry that was radically different from pop music. Clubbing is really about surfing the Long Tail of dance music, and this ecosystem has seen the evolution of new models of innovation around it. >>> 14. Video After Television “TV is not vulgar and prurient and dumb because the people who compose the audience are vulgar and dumb. Television is the way it is simply because people tend to be extremely similar in their vulgar and prurient and dumb interests and wildly different in their refined and aesthetic and noble interests.” —David Foster Wallace Nobody thought the future of television would look like this. On October 15, 2005, an eight-month-old startup called YouTube unveiled the ultimate Long Tail marketplace of the moving image. Apple’s iTunes’ polished video store may have had far more network TV content, but YouTube let anyone upload their videos for free and let anyone instantaenously view them by simply clicking on a big play button. . The result was predictably messy, a near-random collection of everything from banned commercials to baby videos. But it was also a glimpse into a world of infinite variety, where commercial and amateur video content compete head to head...and the amateurs often win. On any given day the first YouTube page, with its most popular videos of the moment, said it all. In the rows of thumbnails you could find clips of commercial content (from The Colbert Report to Britney Spears missteps) intermixed with short clips of dumb dogs, funny commercials, and an octopus eating a shark (which was amazing, by the way). And on the next page and the next and beyond, there was more of the samge: snowboarding wipeouts, funny songs, and people playing video games very, very well. YouTube - The Distribution Channel Of Choice By Spring 2006, users were uploading 100,000 videos a day to YouTube and viewers were watching around 100 million clips daily, either on the site itself or in "embedded" YouTube players on third party sites such as blogs. That's five million hours of video watching a day, which put YouTube at about the viewership of a medium-sized TV network. No wonder that Google bought the company in late 2006 for $1.65 billion. Today Google Video and YouTube have become the distribution channel of choice for not just the Long Tail of contend producers but also studios and networks trying to reach a new audience. Broadcast networks can make Google Video a storefront for their archives, or just a place to host teasers of upcoming shows. It’s already becoming a resource for the Indian diaspora, which can now find Hindi shows that are only broadcast on the subcontinent (legality: suspect). And indie filmmakers can now find out if anyone wants to pay $12 (or $3 for a day pass) to watch their masterpieces. Not having distribution is no longer an excuse for obscurity. Video Marketplaces Meanwhile Microsoft, Yahoo!, AOL, and a host of others have started their own video marketplaces. The biggest of these sites now rival mainstream TV. Yahoo!’s music video viewership would put it between MTV and VH1 in audience share. More people watch the most popular Jon Stewart segments online than see them live. Popular online video shows, such as Tiki Bar TV, are routinely watched by several hundred thousand people a day, which puts their viewership on a par with good-sized cable TV shows. MSNBC’s The Abrams Report, with a multimillion-dollar budget and a crew of dozens, was at the time of this writing watched by an average of 215,000 homes per day. Rocketboom, a Jon Stewart–like comedy news program created online by exactly two people for the cost of some videotapes, two lights, and a cardboard map, was watched by 200,000 homes per day over the same period. Now it’s selling advertising and got $40,000 for the five thirty-second spots in its first week. Not quite as high as broadcast TV revenues, perhaps, but the networks would kill for those margins. This day has been predicted for a decade, but it took the mainstreaming of broadband for it to finally arrive. A generation that grew up online and developed its media consumption habits in the bandwidth paradise of American university dorm rooms is now totally comfortable watching video on a computer screen. Increasingly, though, they don’t have to. The home networking boom is connecting broadband to the living room, and network TiVos, other digital video recorders, and broadband-connect video-game consoles such as the Xbox 360 are bringing online content to ordinary TVs. >>> 15. eBay - How Far Can The Niche Revolution Reach? For a company that started less than ten years ago as little more than an experiment in whether the Internet could do a better job of selling old stuff than a garage sale, eBay is nothing less than a phenomenon. On any given day some of its 60 million active users are selling or buying more than 30 million items, making eBay one of the largest retailers in the world—brokering more than $100 million in transactions each day. But there’s a big difference between eBay and Wal-Mart, which sells a roughly equal volume of stuff. Most of the goods eBay is selling can’t be found on the shelves of big traditional retailers, and most of the people selling them aren’t traditional retailers. Instead, eBay is both the Long Tail of products and the Long Tail of merchants. It’s a classic user-created marketplace, with eBay itself simply the facilitator. It has brought nearly every Long Tail tactic to bear, extending variety to levels unimaginable before the Internet. Like Amazon’s Marketplace program, eBay is built around the notion of distributed inventory: All it provides is a Web site on which buyers and sellers meet and agree on a price (about half of the time via eBay’s original auction process, and the other half with a Buy It Now fixed price). So its inventory costs are zero. It’s not quite as easy as turning the computers on and watching the money roll in, but it’s not far off. EBay is also a self-service model—sellers create their own product listings and handle their own packaging and mailing. So eBay has managed to build its huge business with remarkably few people on salary. It has about $5 million in revenue per employee, nearly thirty times that of Wal-Mart. Finally, it offers filters, mostly in the form of search and a multilevel category structure, to help buyers find what they’re looking for. The range of products for which the eBay model has proven to work has exceeded anyone’s expectation. It now does far more than clear the nation’s attics. It’s also America’s largest used-car dealer and largest seller of automotive parts. It’s among the largest sports equipment sellers and is one of the largest computer dealers. With its purchases of Half.com (overstock items) and Shopping.com (an online superstore selling new goods), it now extends from head to tail, selling both the newest blockbuster products and the most narrow niche goods and one-offs. More than 724,000 Americans report that eBay is their primary or secondary source of income, according to an ACNielsen study in 2005. In the UK, Nielsen found that more than 68,000 cottage industries, from CD shops to sculptors, depend on the site for at least a quarter of their income. On average, each eBay-based business employs nine staffers, and almost half of those businesses earn more than three-quarters of their income through the site. It’s the ultimate small-business aggregator. eBay Vulnerability But eBay is not the perfect Long Tail marketplace, for a reason that I and the team of Stanford Business School students who worked with me on an eBay case study discovered early in our research. One of the questions we asked is why eBay did not have Amazon-like recommendations, product reviews, ranking by price and ratings, and other sophisticated filters. The answer is that eBay, surprisingly, often doesn’t know what’s being sold on its site. It knows who is selling and who is buying, but because the product listings are created by the sellers themselves and each seller describes things differently, there is nothing like the standard “shelf-keeping unit,” or SKU, designation (a unique product number) that most retailers use to track their inventory. (There are exceptions in categories such as CDs and cars, where eBay has encouraged sellers to use standard categories and nomenclature in their listings.) Without this product-level information, eBay can’t offer many of the powerful filter technologies, such as recommendation engines, that drive demand so effectively at other Long Tail retailers. And because sellers can list their products in so many different ways, including misspelling them, it’s even hard for buyers to know if they have indeed found all the examples of what they’re looking for. This represents a significant vulnerability in eBay’s otherwise remarkable marketplace. Most of eBay’s sales volume comes not from grannies selling old Beanie Babies, but from nearly 400,000 small- and medium-sized merchants worldwide who use eBay as a storefront. But most of them have their own Web sites, too, and Google’s Froogle, Yahoo! Shopping, and other aggregators are finding smarter and smarter ways to extract the necessary information from these hundreds of thousands of merchants and create a virtual marketplace that can offer product-comparison features eBay cannot. The challenge for eBay will be to do the same within its own service, keeping competitors at bay by providing better filters to help customers find what they want and buy with confidence, not just in the seller but in the product. >>> 16. eBay Vulnerability But eBay is not the perfect Long Tail marketplace, for a reason that I and the team of Stanford Business School students who worked with me on an eBay case study discovered early in our research. One of the questions we asked is why eBay did not have Amazon-like recommendations, product reviews, ranking by price and ratings, and other sophisticated filters. The answer is that eBay, surprisingly, often doesn’t know what’s being sold on its site. It knows who is selling and who is buying, but because the product listings are created by the sellers themselves and each seller describes things differently, there is nothing like the standard “shelf-keeping unit,” or SKU, designation (a unique product number) that most retailers use to track their inventory. (There are exceptions in categories such as CDs and cars, where eBay has encouraged sellers to use standard categories and nomenclature in their listings.) Without this product-level information, eBay can’t offer many of the powerful filter technologies, such as recommendation engines, that drive demand so effectively at other Long Tail retailers. And because sellers can list their products in so many different ways, including misspelling them, it’s even hard for buyers to know if they have indeed found all the examples of what they’re looking for. This represents a significant vulnerability in eBay’s otherwise remarkable marketplace. Most of eBay’s sales volume comes not from grannies selling old Beanie Babies, but from nearly 400,000 small- and medium-sized merchants worldwide who use eBay as a storefront. But most of them have their own Web sites, too, and Google’s Froogle, Yahoo! Shopping, and other aggregators are finding smarter and smarter ways to extract the necessary information from these hundreds of thousands of merchants and create a virtual marketplace that can offer product-comparison features eBay cannot. The challenge for eBay will be to do the same within its own service, keeping competitors at bay by providing better filters to help customers find what they want and buy with confidence, not just in the seller but in the product. Will Wright and Spore You can get a glimpse of this already. Will Wright, the legendary video-game designer, is putting the finishing touches on his next game, Spore. In it, you’ll be able to evolve your own creature, imbuing it with traits and characteristics of your own design. If you like your work, you’ll be able to upload the creation to the Spore servers. And then, for about $20, you can have it 3D printed into a real action figure—colors, texture, and all. Each one is unique and will show up at your front door in a matter of a week or two. Think of it as the Long Tail of merchandising, and a mind-blowing glimpse of what’s still to come. Like everything else, tomorrow’s Long Tail of Things will be aggregated, efficiently stored as bits, and then delivered to your home via optical fiber. Only then will it be materialized, coming full circle to atoms again at the point of consumption. It sounds like science fiction, but then again so did having an entire music library in your pocket just a decade ago. In the worlds of entertainment and information, we’ve already lost the capacity constraints of shelf space and channels, along with their one-size-fits-all demands. Soon we may lose the capacity constraints of mass production, too. The explosion of variety we’ve seen in our culture thanks to digital efficiencies will extend to every other part of our lives. The question tomorrow will not be whether more choice is better, but rather what do we really want? On the infinite aisle, everything is possible. >>> 17. Exclusive: The Latest On The Long Tail In the months since the original publication of The Long Tail, two remarkable things have happened. First (and ironically for a book about the power of niches) it became a bestseller, from the New York Times top-ten in America to the number one non-fiction book in China. But more importantly, it was read and resonated in industries that I had never even considered as Long Tail markets. Hundreds of readers have written me to illustrate how the Long Tail is playing out in everything from church communities (Christian home schooling is the Long Tail of education!) to porn (perhaps the best example of the true diversity of taste in the human population, but I’ll leave it to others to, er, flesh that out). I was often asked for more examples of Long Tail effects outside of the digital realms of media and entertainment. In the book’s earlier chapters I gave examples from eBay to Lego, but readers wanted to know whether the trend towards market fragmentation and consumer demand for niche products also applied to traditional retail and packaged goods, too. The answer is that it does, although not quite as dramatically as in the pure digital realms where the economics of distribution have changed most rapidly. The Long Tails Of Fashion, Travel and Food Fashion turns out to be a great example, ranging from the existing niche markets of boutique and couture (which launch the trends that will eventually make it to the Short Head of mass-market retail) to the emerging markets of vintage clothing (eBay is the largest retailer of that) and DIY t-shirt design on sites such as Threadless.com. Travel is another. The cut-price airline boom led by the likes of EasyJet and RyanAir has essentially lowered the cost of distribution for millions of travelers who are now visiting cities and regions outside of the tourism mainstream, from Eastern Europe to smaller cities and towns in Western Europe. Then there’s the exploding market for organic and ‘artisanal’ food, which started as a microniche in markets such as my native Berkeley and the Slow Food movement around small Italian farms and has now gone mainstream through Whole Foods. The sight of Wal-Mart scrambling to source enough organic milk to satisfy the demand from its millions of Middle America customers is a dramatic example of how quickly Long Tail forces can reach the Head. The Long Tail Of Beer One of the coolest and most surprising (even refreshing!) extensions of the theory last year was to alcohol. Anheuser-Busch, America’s leading distiller, created a division called Long Tail Libations to market niche liqueur products, from ‘craft beer’ to regional brands. I got in touch with Anheuser-Busch to find out why the shift from hits to niches was coming to drinks, too. I understand how the Internet lowers the costs of distribution in many markets to allow for more choice (infinite ‘shelf space’), but how does that apply to bottles on real shelves? Pat McGauley, vice president of Long Tail Libations, explained: Anheuser-Busch's embrace of niche beers is not driven by a radical change in the economics of distribution, but rather reflects a broader trend toward niches across our culture. Anheuser-Busch happens to be unique among brewers in that it's large enough to control its own distribution network (the others go through third-party distributors, who are hard to sell on the virtues of micromarkets) and is thus able to experiment with far more products aimed at niche consumers. Over the last ten years, the company has hugely expanded the number of beers, coolers and other alcoholic drinks it offers, from 26 brands in 1997 to 80 brands in 2007. Today it makes organic beers, drinks for women, and a host of microbrews such as Bare Knuckle Stout and ZiegenBock (available only in Texas). But the thing that really blew me away was its latest beer. In its quest to find ever more finely-grained brew niches, it has now moved beyond the organic, beyond the artisanal, beyond even the local. It has now discovered the non-allergenic beer market. In late 2006 it announced a gluten-free beer called Redbridge, which is made from sorghum, not wheat or barley. In retrospect it makes perfect sense—there’s a market for gluten-free food of all sorts, so why not beer, too? Indeed, the market for non-allergenic products of all sorts is a classic Long Tail opportunity, something I discovered when I learned that the market for niche vacuum cleaners extends beyond robots (Roomba) and high-end Dysons to machines with special filters to cut down on pollen and animal dander. The Long Tail And The Globalization Of Culture Another example is the application of the Long Tail to the globalization of culture. In sports, news and entertainment we're shifting away from thinking only about concentrated audiences in one geography to thinking about distributed audiences around the world. One country's hits are another country's niches. In Japan Anime and Manga are mainstream; here in the United States they're niche. Telenovelas are mainsteam in Latin America, but niche elsewhere. And then there's that whole soccer thing, which is seemingly mainstream everywhere but the US, where outside of World Cup time it can hardly be found on TV at all. Take cricket. It's huge in Commonwealth countries, as well as the Subcontinent and the rest of the former British Empire. In India, Pakistan, Australia, South Africa, New Zealand the the UK, all the big cricket matches are broadcast live on TV. Elsewhere they're virtually impossible to find. According to the economics of broadcast TV, this makes sense: you can only devote your scarce airwaves to content of mass appeal. But there are millions of cricket fans outside of those few concentrated markets. And they're as eager to watch live (or even recorded) cricket matches as their home-bound countrymen. Now, thanks to streaming web video, they can. There are about 25 million people in the Indian Diaspora, most of whom are in countries that don't broadcast cricket on TV. Think of them as the Cricket Diaspora, a distributed audience of potentially immense scale. The same for the Rugby Diaspora, the Soccer Diaspora, the Sumo Diaspora and so on. Then turn the tables and do the same for the potential global audience for US sports: the Football Diaspora, the Baseball Diaspora, the Basketball Diaspora. Then extend that to news, TV shows, music and more. See what I mean? Today, as more and more TV migrates from the scheduled world of live broadcast to the on-demand world of streaming Web video, we're about to enter an era where distributed markets are as good as concentrated ones. Long Tail video will reunite disaporas through their common culture, even if they are seen as a niche culture in the world around them. We already see this in the rise of Latino radio in the US; soon that will extend to every other immigrant culture, here and abroad. We often think of the Long Tail as a force of fragmentation, but it can be a force for unification for the already-fragmented, too.