Does The Long Tail Exist?

Chris has a post detailing methodological issues around the LT - new methodologies revise the LT downwards.

OK. This is a nice example of where and when to use intuition to make assumptions in strategic analysis, and why a lot of analysts who rely on total data end up in paralysis (not Chris, but the many discussions that are happening now about whether the LT really exists).

I think it's safe to assume that The Long Tail does exist. Simple economics gives us pretty strong intuition and anecdotal evidence should provide more than enough evidence to confirm. For example, my old prof Gary Hamel called it the shift from distribution to search economies in 1999 - and he had tons of examples even then (Amazon, eBay, blah, blah). Whatever we wanna call it, the basic economic insight should be what you focus on: that cheap information shifts the tail of the media curve up. This is essentially an income effect.

This should be intuitive; the more people save in search costs, the more they can consume. As I point out in my media ppt, the demand curve should shift up by roughly the value of search costs saved.

So, I think at this stage to ask whether the LT exists is the wrong question, which strategists shouldn't be looking for huge amounts of data to answer. If you buy the above relationship, you'll ask the right question - if you buy that cheap info shifts the demand curve outward, you'll ask how to create cheap info; not busy measuring your marginal LT.

This will lead to you to things like coordination economies and distributed economies of scale - leveraging communities to create liquid markets for preference and expectation information. Smart players are going in this direction (but not far enough, IMHO).

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