The Long Tail 15 – Coda

This is the final part of my critical reader’s companion to The Long Tail, and it discusses the Coda. Part 0 is here. You can find a complete list of the Long Tail pieces here.


"Coda" is the very last section of the Long Tail, and this is the very last section of my critique of the book.

The book’s "Coda" is a two page piece that talks about 3D printers, which may enable all kinds of other goods to become digital – just as documents and music and photos and videos have all moved from being solid things to being digital – "materialized" where you download them.

And the lesson of 3D printing is that we’ll see "the explosion of variety we’ve seen in our culture thanks to digital efficiencies" [226] extended to other areas of our lives.

The coda summarizes some of the things I find so frustrating about this book, and why I’ve spent so much time on it. It’s not just that it’s a bad book – although I do believe it is – but that it is a bad book about some really important changes; changes with the potential to do great good and great harm. Reading Chris Kenny’s reflective commentary emphasized this for me. Anderson holds up a picture that is very attractive – greater diversity, a broadening of voices in public discussion, a chance for people without connections to have a say, and so on – and he says he’s all for it. And he’s all against stodgy old "institutions". So the book attracts people who are doing interesting things, and thinking along admirable lines.

But then he betrays us. Because when it comes down to it, he’s on the side of multi-millionaires and billionaires, and the "institutions" he feels so rebellious about are small publishers, small bookshops, and so on. Not that he’d put it that way, but that’s the effect of his arguments. He argues that we should celebrate Netflix, Amazon and a handful of others, and trust them to be the custodians of our culture because they’ll deliver variety. It’s a dangerous argument, predicated on the fact that these are somehow different companies – a kinder capitalism. And it’s wrong, of course.

To review, here’s what I see as the main flaws that run throughout the book:

Flimsy Foundations – Despite the talk of openness, the empirical core of the book is a set of numbers vouched for only by the CEO’s of companies who stand to benefit from their association with radical new ideas. Netflix, Amazon, iTunes and Rhapsody let him see their figures under strict conditions. There is, in the end, little to demonstrate that some of these companies are delivering on the promise of the Long Tail. The evidence that iTunes is a "Long Tail aggregator", for example, is non-existent.

Protean Perspectives – The Long Tail is sometimes a set of rules for how to build a profitable business, sometimes an assertion about economic and technological forces, and sometimes a claim about cultural change. The book tries to shove Wikipedia, blogs, Netflix, and more into a single tent – and it doesn’t hold. I’ve no problem with using a single name for multiple related ideas, but Anderson shifts from one meaning to another to another throughout the book, and the result is a form of misdirection as he invokes whichever is needed to make the point he wants to make. It makes criticism difficult, but in the end consistency matters, and the book lacks it. Instead of each part of the story strengthening the others, the whole edifice turns out to be built on nothing.

Failure to Follow the Money – As Bertoldt Brecht said "Amongst the highly placed it is considered low to talk about food. The fact is: they have already eaten." Of course the CEOs of new technology businesses aren’t interested in talking about something as mundane as money, but we must, and Anderson doesn’t. This matters for two reasons.

First, the book conflates non-commercial and commercial initiatives – Amazon’s recommendation engine and Wikipedia, for example – as if they are not different. But they are. There is much talk of community on the web, but corporate-sponsored "communities", while they do have their place, are not communities in any significant sense. On the other hand, an effort like Indymedia is a real community. These are different things. I have worried that by emphasizing how different the phenomena of the web are that I’m missing the big picture – but I’m pretty confident that’s not the case. The Long Tail big picture is a mirage: the closer you get to it, the less tangible it is.

Second, there is a political effect that we’ve seen with successful aggregators. A single iTunes, coupled with Wal-Mart, drives many independent businesses out of existence. The result is the opposite of the democratization Anderson claims to be promoting. The emergence of iTunes is a centralization of influence within the music industry, not a decentralization. Amazon is not a proletarian revolt against the tyranny of elitist bookshops, it’s the driving out of many small businesses by one big business. Money is flowing through these new organizations, and it is flowing towards fewer people than ever, not more. To ignore the impact of technology on inequality is to take a political stance, and it’s not a progressive one.

Selective Vision – We see this in the comparison of the "old world" to the "new world". By comparing Rhapsody music to Wal-Mart, Anderson is stacking the deck – something he does throughout the entire book. What’s more, he’s mistaking the dynamic that is at work in the world of business. While Anderson sees online commerce as challenging the Wal-Marts of the world, it too often complements them. If I had these posts to write over again I’d start off at the beginning by pointing out that technological forces are creating, not a Long Tail, but a technological vice. On one jaw is the big box store, stocking a few titles at cheap prices. On the other jaw is the online store, stocking everything (but not necessarily selling a whole lot of everything). This is not the way to produce a culture of variety. My prediction: as these enterprises realise how complementary they are, we’ll start to see more in the way of mergers between the two worlds.

Selective vision is also at work in his perception of the new companies. While the book celebrates the open sides of their business models, he completely ignores the other side. Google, Amazon, Netflix are all secretive when they want to be. They all pursue patents with vigour in order to close down the possibility of competition. Netflix even patented its "mailing and response envelope" – this is not "radical transparency" as Anderson has taken to calling it. We the consumers are let inside the walls to play, but in  a carefully controlled playroom. And we’re kept out away from the valuables.

Finally, in his enthusiasm to celebrate variety he bundles pseudo-variety (wall-of-toothpaste variety) with real variety. Is there no distinction? Of course there is, but Mr. Anderson is blind to it.

The end result of all this selection is a muddled and distorted picture. It sounds great at first reading, as Anderson runs through examples of new variety at breakneck speed, but stop a minute and you realise he’s only telling one half of the story – and half the story can never give the whole picture, no matter how many examples he finds. And even then he’s not telling it straight.

So what do I think? Do I think the Internet is a force for good or
bad? Yes. Is it a force for increased decentralization or increased
centralization? Absolutely. Is new technology a source of increased
variety or increased homogeneity? No doubt about it.

The Internet and related technologies are going to have a huge effect
on our society. Or rather, many huge effects. And which ones win out –
the good or the bad – will be determined by people actively struggling
to ensure that their vision of it prevails, not by trusting to the
market to solve it for us. Part of the appeal of The Long Tail is that
it talks of the "democratization of production". Innovative cultural
ideas (as opposed to technical ideas) will often be found at the
margins; in Jane Jacobs wonderful phrase "new ideas need old
buildings", and this means they need to be done on the cheap, often
subsidized through non-market routes, and nourished. While Internet
technologies are one more path that cultural innovators can follow, it
is a big mistake to trust commercial enterprises, be it Amazon or
Netflix, to act as custodians of the public space that is variety. With
his heart, I suspect, in the right place, Anderson is leading us down a
dangerous road, and that’s why I’ve spent so many hours showing what’s
wrong with his book.

For anyone who has made it to the end, let me finish by pointing you to a posting on the Long Tail blog, where Chris Anderson walks through the major objections to his book. Here are his "top five mistakes" with a one sentence answer from Anderson (there’s more on his blog):

X was a hit! See? Hits aren’t dead. – "I never said they were"
I’ve done an analysis of this dataset and, in percentage terms, it shows that sales are become more concentrated in the head, not less – "Hah! This is the percentage mistake."
I’m in the Long Tail and I’m not rich yet – the theory clearly doesn’t work. – "The big money in the Long Tail is in aggregation"
You said that 57% of Amazon sales are Long Tail. No way. – "I know. That part .. has been revised to 25%"
You call Blockbuster and Barnes & Noble the Short Head. But what about Blockbuster.com and BN.com? They’ve got every bit as big an inventory as Netflix and Amazon. – "Sigh. Please understand the definitions. Short Head = inventory in the typical store of the largest bricks and mortar retailer in a market.

None of these objections is a significant part of what I’ve presented here, except for number 3 – and I still think it is true that a "theory" unaffected by a 100% change in a major piece of data is a theory that needs a more empirical basis and a little less enthusiasm. My objections are on other grounds entirely. I suspect they come too late to slow down the passage of "Long Tail" into the conventional wisdom of technological/business discussions but hey, you do what you can. Thanks for sticking with me.

The Long Tail 14 – Long Tail Rules

This is another part of my critical reader’s companion to The Long Tail, and it discusses Chapter 14 – Long Tail Rules. Part 0 is here. You can find a complete list of the Long Tail pieces here.


I’m getting tired, and need to get to the end of this book quickly. Then I can write a wrap-up post and be done. This final chapter (almost! there is a "coda") contains nine rules for building "a Consumer Paradise" [217], grouped under three headings. Here we go.

Lower Your Costs [217-219]
Rule 1: Move inventory to the edge – The advice is to transfer your costs to your suppliers: keep a virtual inventory. For example, Amazon Marketplace products are "held at the very edge of the network by thousands of small merchants. Cost to Amazon: zero" [218].
Rule 2: Let customers do the work – He calls this "crowdsourcing" [219]. Let customer reviews rank your books, write your content, and so on, because "collectively, customers have virtually unlimited time and energy" [219].

As I’ve said repeatedly, the benefits of being an aggregator are that you profit from being a natural monopoly, or at least part of a natural oligopoly. Once you can establish yourself as the place to be, vendors will want to – have little choice but to – sell their stuff on your site. Once you become the bookstore of choice, customers may add their reviews to your site. But of course there is one place where the Long Tail does not really eliminate scarcity – and that’s in the supply of aggregators. When inventory is stored at the edge someone is still paying the cost of stocking it – it’s just not Amazon. The Long Tail slides back and forth between talking about zero-cost (total) and zero-cost (someone-else’s cost) – but never says which one is which. These are different things.

One of the changes we’ve seen in both sides of the technological vice (online stores + big-box stores) is that power has shifted away from manufacturers and to retail outlets. Amazon can sell goods without paying for them first. Wal-Mart is trying to introduce systems that will pay suppliers only when someone actually buys a product, so that their own shelf space becomes free (to them). It’s a power shift leading to a transfer of costs, not a cutting of costs – and power matters.

Think Niche [219-221]
Rule 3 – One distribution method doesn’t fit all
Rule 4 – One product doesn’t fit all
Rule 5 – One price doesn’t fit all.
As with much of the book, this section contains unsubstantiated claims: Rhapsody is "experimenting with track prices from $0.79 to $0.49 and finding that cutting the price in half roughly triples sales" [221]. Really? How often? All of them? We need more than this. And if the experiment was so successful, then we may wonder why the current (April 2007) Rhapsody web site says this:

Can I download tracks with Rhapsody?
Yes. You can purchase music from Rhapsody for $0.99/track, or $0.89/track with a membership.

No mention of variable pricing beyond encouraging membership.

Lose Control [221-224]
Rule 6 – Share information. Well, up to a point. One of the most pervasive ironies of the whole book is that it keeps going on about sharing information, but the very facts that are at the core of the book are hidden behind some of the thickest walls around. Actual Netflix sales distributions? Actual sales of Amazon books? Actual sales of iTunes music? None of it is here. Quite why Anderson thinks we are in a new age of openness is beyond me.
Rule 7 – Think ‘And’, not ‘Or’
Rule 8 – Trust the market to do your job – His advice is to "throw everything out there and let the market sort it out", which is really a restatement of his Rule 2 – Let customers do the work. As I’ve said before, there is a big difference between what works for aggregators and what works for producing actual variety.

As just one example that I haven’t mentioned before, Anderson keeps on about how referrals allow customers to move from the head to the tail of the distribution. But what happens if you start at the tail? No One Makes You Shop at Wal-Mart is currently (April 6) ranked 381374. The recommended books that appear on the page have the following rankings: 475137, 18675, 201, DVD #569, and 90396. That is, if you start off in the tail, the recommendation system pushes you back up towards the head of the distribution. Hence Amazon can profit by stocking all books, even if it doesn’t sell much of them, because the reference system is a way of promoting other, better selling books. Now I don’t know what the net effect is, but neither does Mr. Anderson.
Rule 9 – Understand the power of free is an argument for combining premium pricing and a free version of what you provide (fair enough), and for an advertising-supported revenue model. Well if one thing is becoming ubiquitous, it’s advertising. Is this a move to a niche nation or a numb nation? I for one do not welcome our new advertising-sponsored overlords. Consumer paradise? I think not.

Wikinomics – or Et Tu, Rabble.ca

I’m just finishing with The Long Tail. Do I have to do it all again with Wikinomics ? Am I doomed to be a perpetual curmudgeon? If rabble.ca’s newest venture is anything to go by, the answer is yes.

rabble.ca is a news site that I generally like. It describes itself this way:

rabble.ca was built on the efforts of progressive journalists, writers, artists and activists across the country. We launched rabble on April 18, 2001, just before the protests against the Summit of the Americas in Quebec City, and leapt onto the Net with the kind of coverage you could only get from the point of view of the rabble. We have covered events and issues in ways you’d be hard pressed to find anywhere else ever since.

And I’d often agree – they reprint pieces by Rick Salutin, Linda MacQuaig, Thomas Walkom, Jim Stanford, Scott Piatkowski and other smart and left-wing journalists and commentators. It was founded by Judy Rebick. (For those of you outside Canada, there’s a lot of Canadian lefty cred in the names in this paragraph.)

So why oh why are they giving a whole lot of space to Wikinomics, the web 2.0, long-tail-like wealth-of-networks, wisdom-of-crowds  book by Don Tapscott and Anthony D. Williams. They’re even holding a virtual event in Second Life.

rabble.ca must think there is something about the book that is "progressive". But what it is defeats me entirely. Could it be the front-cover blurb by the CEO of Procter & Gamble? The praise by executives from ATT, the World Economic Forum, OgilvyOne, IBM, and Roche Diagnostics, Socialtext, Royal Bank of Canada, Walt Disney, MetLife, Google, and Cisco? Is it this week’s Business Week Special?

I’ve read chapter 1 (available here) and it’s Long Tail all over again. Breathless prose ("we are entering a new age… liberate people to participate in innovation and wealth creation within every sector of the economy… a world where knowledge, power, and productive capability will be more dispersed than at any time in our history… harness the new collaboration or perish… – and that’s just in the first dozen pages). Promises of democracy, empowerment of regular people (that’s you and me, squire), the breaking down of old hierarchies. It sounds great. But…

I hate to say it, but in these tech-utopian books why does no one follow the money? If we’re all so empowered and trust our peers, how come they get CEOs to blurb their book? If we’re all so productive, how come inequality is increasing – and nowhere more so than in high tech industries?

And just like the Long Tail, the word-pictures the authors sketch are massively selective in their portrayal of the past and the future. The past is all rigid hierarchy, the future (left to technology and markets, apparently) is all explosive growth and innovative open source. IBM is promoted as "embracing open source" but they don’t mention how it just set a record for the number of patents in a year. Isn’t this at least part of the picture?

I feel like I’ve read the book already. For those who have been following my Long Tail grumbles, doesn’t the following paragraph read just like Mr. Anderson?

For individuals and small producers, this may be the birth of a new era, perhaps even a golden one, on par with the Italian renaissance or the rise of Athenian democracy. Mass collaboration across borders, disciplines, and cultures is at once economical and enjoyable… A new economic democracy is emerging in which we all have a lead role.

Come on rabble.ca: just because the new executives  don’t wear ties, business is still about the money. Technology is fine, but politics still exists. You disappoint me.

But wait! It so happens I know a thing or two about chemistry, and Wikinomics
has something just for me, right there in Chapter 1. Maybe this will save the book for me.

"Or perhaps your
thing is chemistry. Indeed, if you’re a retired, unemployed, or
aspiring chemist, Procter & Gamble needs your help… Now you can
work for P&G without being on their payroll".

Is this some kind of joke? Sorry for being materialistic, but I think I’ll give that opportunity a miss.

 

Eggs of Victory

Wisdom of Crowds? Hah! The problem was just not having someone expert enough.

Total number of Laura Secord chocolate eggs in the jar at their Kitchener store: 948
Total number guessed by yours truly: 947

Victory is mine, along with the eggs and a two-foot-high chocolate rabbit.

Eat your heart out, James Surowiecki.

Radical Transparency? Not so much

In the middle of another fine piece from Nicholas Carr, here is Radical Transparency at work.

Asked how it uses water and electricity at its sites, Google executive Rhett Weiss said, "We’re in a highly competitive industry and, frankly, one or two little pieces of information like that in the hands of our competitors can do us considerable damage. So we can’t discuss it."

Link: Rough Type: Nicholas Carr’s Blog: The real Web 2.0.

The Long Tail 13 – Beyond Entertainment

This is another part of my critical reader’s companion to The Long Tail, and it discusses Chapter 13 – Beyond Entertainment. Part 0 is here. You can find a complete list of the Long Tail pieces here.


This penultimate chapter of the book describes "five examples of the Long Tail at work outside of media and entertainment" [201]. These examples are eBay, KitchenAid, Lego, Salesforce.com, and Google. There is another side to each of these stories.

eBay [201-203] has been hugely successful at being a marketplace for all kinds of odds and ends. Is it a Long Tail success?

The other side of the story. Let’s remember that a Long Tail business is one that provides both the "head" and the "tail" of products. As Anderson writes, MP3.com was a music aggregation site, but it failed. The "problem with MP3.com was that it was only Long Tail" [149]. Meanwhile, iTunes focused more on the head, and makes all its money from it, then apparently builds on the familiarity it provides to use smart software to help people expand their tastes. Its growth came from being a marketplace for junk; Anderson’s story of its growth implicitly admits this by saying that it "now does far more than clear the nation’s attics" [202]. eBay is a broker ("facilitator" [202]) that matches buyers and sellers.

eBay breaks a second rule for Long Tail businesses. Because it does not stand between the buyers and sellers (unlike Alibris and Amazon Marketplace, as we saw in Chapter 6, who ensure that they are the hub of all transactions and so collect all the information from both buyer and seller), eBay "can’t offer many of the powerful filter technologies, such as recommendation engines, that drive demand so effectively at other Long Tail retailers" [203]. Putting aside yet again the question of how successful they are in reality as opposed to imagination, this "one size fits all" model he has in his head leads Anderson to suggest that eBay has a "vulnerability" [203] because of its reluctance to collect information about all the trades going on under its virtual roof.

What Anderson doesn’t point out is that the eBay model gives the small vendor who is selling through eBay a bigger say in the sale. I find the eBay model more "democratic" to use one of the book’s favourite words, in that it actually shares information with the vendors rather than hiding information from them as Alibris and, apparently, Amazon Marketplace do.

eBay is a huge success, an important story, but not a Long Tail one in all but the most crude sense. Yes, it sells a lot of many things, but as Anderson says when he wants to spin things in that direction, that’s not the force behind the Long Tail story.

KitchenAid [203-205] is a little anecdote about how the maker of small kitchen appliances sells lots of colours ("over 50") online, compared to only a handful in the stores it supplies.

The other side. Whoop-de-do: this is nothing that can’t be done in a catalogue. It’s a neat thing for KitchenAid to do, but there’s nothing fundamental here.

Lego [205-207] is building an online community of enthusiasts, who design and share their own constructions ("peer production" [206]) and can order the pieces to provide them. Is this the "Long Tail of plastic bricks" [207]?

The other side. Lego may like openness and they are trying some interesting things (Mindstorms for example), but there is another part to this story. Lego is as interested in fixed ownership as ever: it has been fighting the loss of its patents for years. With the effort to extend its patent on the blocks themselves failing, it is nevertheless continuing to extend their patents and prevent other companies from making inroads in the world of blocks.

Salesforce.com [207-210] is an innovative company that is succeeding in a big way. It provides "hosted software" to companies (mainly small companies) to carry out "customer relationship management" tasks (CRM). Now it wants to become a one-stop shop: an aggregator for business applications, in the same way that Amazon is an aggregator for books. Salesforce has set up a platform called AppExchange that would "allow hundreds of smaller developers, many of them in low-cost places such as India, to reach those same customers" [208].

AppExchange may succeed in its goal. It’s as close as Anderson comes to a legitimate Long Tail story here. In addition, Salesforce.com has just hired Peter Coffee, an industry journalist who has long been one of the smartest technical commentators on software, to handle part of its platform.

The other side. This is a story in its early days. There are two sides to the move to aggregation and platforms: the owner of the winning platform in a particular area can win big, and Salesforce may become one of those winners unless Google or one of its other competitors beats it. It is less clear how much of its revenue will come from niche providers (no figures yet), and it is even less clear that the providers of goods for those platforms can win significantly. I suspect that many participants in AppExchange will share the opinions of Geoff Merrick, chief architect of Salesforce partner Okere, who says "his company views being on the AppExchange as a way of developing name recognition rather than as a source of revenue". The venture is new, and the verdict is not yet in. Let’s see.

Google [210-216] is included here on the basis of extending the advertising market into the Long Tail with its Adwords and AdSense programs. Traditional advertising, Anderson says, "is a classic, hit-centric industry where high costs enforce a focus on the biggest sellers and buyers" [210]. Now, with customizable search engines (maps, images, etc), and the fact that most search terms are different (no surprise there) Anderson claims that Google is "barreling down the Long Tail of everything" [206].

The other side: The portrayal of "traditional advertising" is a straw man, like so many of the setups for the stories in this book. Traditional advertising is not just car companies advertising on prime-time television, it includes classifieds, Yellow Pages ads, flyers inserted in local newpapers, and so on. And does the Google money come from nowhere, or is this a shift of advertising budgets for small players from these local-focused efforts onto the Internet? There is nothing here to tell us. If advertising is shifting from local papers to Google Adsense, you can’t just close one eye and say "I see a Long Tail". Well, you can, but it doesn’t mean much.

Even as a story of business success, there are no figures here. How much of Google’s revenue comes from its "Long Tail" of advertising? He doesn’t say. Somehow the vaunted openness that the book is so keen on always stops one step short of actual revenue breakdowns, whether its Netflix or Google. Anderson does admit that "Although most of its [Google’s] revenues come from the head of the curve, most of its customers are somewhere in the tail" [215], which makes you wonder what the revenue pattern is for Google. At the time of its $1B investment in AOL just over a year ago, the BBC reported that "AOL is currently Google’s biggest customer. During the first nine months of this year [2005], it accounted for about $429m, or 10% of Google’s revenue."

Sometimes I feel like I’m nipping round the edges of the ideas in this book, but the lack of substance and lack of solid figures continues to irritate. Big Picture thinking is one thing, but this hyper-optimistic selective vision is another.

Let’s just be clear here – I’m sure that there will be many success stories in the coming years of companies who build aggregation platforms for various kinds of content, and who make a LOT of money doing so. I’m just not convinced that most of their revenue will come from "the Tail" of their content. Despite the talk of "democracy" I’m not convinced that the residents of the Tail will benefit much; and I’m definitely not convinced the net effect on our culture is one of increased real variety and diversity.