Economics of the Long Tail in the Blogosphere

It appears the most interesting article in the last print edition of Wired is now online. “The Long Tail” talks about movie and music consumption in terms of the power law (i.e. there are a few very popular releases followed by an infinitely long set of steadily less popular ones), but explores the economic implications of being able to provide immediate access to everything, not just the most popular releases:

What’s really amazing about the Long Tail is the sheer size of it. Combine enough nonhits on the Long Tail and you’ve got a market bigger than the hits. Take books: The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon’s book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are (see “Anatomy of the Long Tail”). In other words, the potential book market may be twice as big as it appears to be, if only we can get over the economics of scarcity. Venture capitalist and former music industry consultant Kevin Laws puts it this way: “The biggest money is in the smallest sales.”

The same is true for all other aspects of the entertainment business, to one degree or another. Just compare online and offline businesses: The average Blockbuster carries fewer than 3,000 DVDs. Yet a fifth of Netflix rentals are outside its top 3,000 titles. Rhapsody streams more songs each month beyond its top 10,000 than it does its top 10,000. In each case, the market that lies outside the reach of the physical retailer is big and getting bigger.

When you think about it, most successful businesses on the Internet are about aggregating the Long Tail in one way or another. Google, for instance, makes most of its money off small advertisers (the long tail of advertising), and eBay is mostly tail as well – niche and one-off products. By overcoming the limitations of geography and scale, just as Rhapsody and Amazon have, Google and eBay have discovered new markets and expanded existing ones.

But that’s not all. You can extend this to Clay Shirky’s infamous “Power Laws, Weblogs, and Inequality” article. Shirky posited that online, the most famous bloggers get attention—incoming links—in something that looks like a power curve. But by extension of the principle of “the long tail,” once you get over the idea that there is a scarcity of attention online, everyone else’s blog looks more and more valuable. Why are there blog entries for just about any search you can do in Google? It’s not a bug. The individual voices of bloggers, even if they think they’re writing for no audience at all, can provide an infinite amount of interesting and valuable insight, provided someone helps you find it (that’s Rule 3 of the “long tail” phenomenon).

That’s why the most valuable services for blogs haven’t been authoring platforms—you can write a blog in Notepad and FTP it up, or you can choose from probably about a hundred different platforms written with varying degrees of professionalism—but services like Kinja, LiveJournal, Feedster, Technorati,, and of course Google itself that help you find the valuable and interesting content.