Inside the 'New Economy'
The music business is ground zero for the long tail. Record labels have struggled tremendously to adapt to a world where people just don't need them as much. We have a whole generation now that has never gone into a record store. People get music from MySpace. I'm not even sure what a label means anymore. ... It could be a single band putting out its own music. The question for record labels is what can they offer artists that artists can't do for themselves.
What's an example of a traditional company that has benefited from the long tail?
An example I like a lot is Lego. I have four kids--the oldest is 9--so I'm slightly obsessed with Lego. They sell a few dozen mainstream products in stores. But on their website, they have more than 7,000 products--for enthusiasts, train sets that just don't sell in stores. Best of all, they let you design your own Lego kit, and they ship it to you in a box that you also design, and then other people can buy your design.
KitchenAid is another one. In a typical store, KitchenAid products only come in a couple of colors. But on their website or on Amazon, there's a drop-down menu that lets you pick from dozens of colors. At the beginning of every season, retailers always try to guess what the popular color is going to be. And there's always one they miss. Last year it was tangerine. Nobody knows why, but it was tangerine. The way KitchenAid does it, you don't have to guess. You just put it out there and see what sells.
Are some products or industries resistant to the long tail?
Certainly. I looked at the car companies, where the obvious implication is mass customization. But it turns out that in cars, the most important thing is quality. When you start adding variations at the factory, it tends to lower quality. That doesn't work for the car companies.
So if you were an entrepreneur hoping to take advantage of long-tail economics to start a new business and make a lot of money, what would you do?
That's what all my buddies want to know. It's too hard to answer. I'm going to take a pass on that one.
A review of The Long Tail and an excerpt are at www.usnews.com/longtail
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