James F. "Jim" Moore

July 26, 2006

“Long tail” effect may not really be true; and author seems to back away from his claims for a “98 percent rule”–80/20 may still rule–see story in today’s Wall Street Journal

Filed under: Economics and cybenetics — jimmoore @ 12:29 am

Click here to read the full story in the Wall Street Journal, Wednesday, July 29, 2006

>Portals [column]

>

>by Lee Gomes

>

>“It May Be a Long Time Before the Long Tail Is Wagging the Web”

>

>Wall Street Journal, July 26, 2006; Page B1

Excerpt:

Let’s start this discussion where Mr. Anderson starts
his book, with his discovery of what he calls a paradigm-changing
statistic. In the introduction, he tells how he learns from Ecast, a
music-streaming company, that 98% of its catalog gets played at least
once a quarter — much more than most would predict.

This “98 Percent Rule,” as Mr. Anderson names it,
suggests the remarkable prospect that no matter how much inventory you
put online, someone, somewhere will show up to buy it. He writes,
“Everywhere I looked the story was the same. … The 98 Percent Rule
turned out to be nearly universal.”

Except it’s not. Ecast told me that now, with a much
bigger inventory than when Mr. Anderson spoke to them two years ago,
the quarterly no-play rate has risen from 2% to 12%. March data for the
1.1 million songs of Rhapsody, another streamer, shows a 22% no-play
rate; another 19% got just one or two plays.

Mr. Anderson told me in an email that he only
mentioned the 98 Percent Rule to show how he first got interested in
the book’s overall subject, adding, “I have no idea how broadly it
applies today.”

In the book’s main sections, Mr. Anderson writes that
as things move online, sales of misses will increase — so much so that
they can equal or exceed the sales of hits. The latter is the book’s
showstopper proposition; it’s mentioned twice on the book’s jacket.

I was thus a little surprised when Mr. Anderson told
me that he didn’t have any examples of this actually occurring. At
Netflix and Amazon, two of his biggest case studies, misses won’t
outsell hits for at least another decade, he said. None of these
qualifications are in the book.

Mr. Anderson told me the lack of an example of misses
outselling hits doesn’t diminish his basic point, which he said is
simply that the role of the tail “is big and getting bigger.”

By Mr. Anderson’s calculation, 25% of Amazon’s sales
are from its tail, as they involve books you can’t find at a
traditional retailer. But using another analysis of those numbers — an
analysis that Mr. Anderson argues isn’t meaningful — you can show that
2.7% of Amazon’s titles produce a whopping 75% of its revenues. Not
quite as impressive.

Another theme of the book is that “hits are starting
to rule less.” But when I looked online, I was surprised to see what
seemed like the opposite. Ecast says 10% of its songs account for
roughly 90% of its streams; monthly data from Rhapsody showed the top
10% songs getting 86% of streams.

Bloglines, the widely used blog-reading tool, lists
1.2 million blogs; real ones, not computer-generated “spam blogs.” The
top 10% of feeds grab 88% of all subscriptions. And 35% have no current
subscribers at all — there’s clearly no 98 Percent Rule in the
blogosphere.

At Apple’s iTunes, one person who has seen the data –
which Apple doesn’t disclose — said sales “closely track Billboard.
It’s a hits business. The data tend to refute ‘The Long Tail.’ ”

“Long tail” effect may not really be true; and its author seems to back away from his claims–see story in today’s Wall Street Journal’s Lee Gomes

Filed under: Economics and cybenetics — jimmoore @ 12:27 am

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PORTALS

By LEE GOMES

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