Mr Anderson

By Vincent Heeringa, November 20, 2006 @ 2 am

Chris Anderson’s story about niche markets, ‘The Long Tail’, is Wired’s most popular article ever. He followed that up with a blog and now a book. His argument isn’t just about bits and bytes—it’s rugby, lamb and dairy too, he says—but is Anderson just seeing the world through ‘long tail’ glasses?

Idealog November/December 2006, page 26

You’ve got 60 seconds on The Long Tail, starting now …

It’s about life beyond the blockbuster. It’s what happens when we shift from mass markets to millions of niche markets.

Very specifically the ‘long tail’ refers to the long portion of the sales curve, which is a ski slope starting high at the top with a few bestsellers and then falls off as things sell less and less. Normally we cut it off eventually because, you know, shelf space is expensive, and you have limited screens, and channels, and stations. You have to be discriminating about what you stock. But now we have niche markets, most of them online, with infinite shelf space.

At the long tail end of the market you can offer everything and measure the demand for those small sellers, those millions of niche products that didn’t make it through the old distribution model but are now making it out there. We’re finding that collectively they add up to a big market that, in many cases, is more than a third of the overall demand. 

People have been making money in niches for centuries. What’s new?

The book starts in 1896 with the catalogue retailers who used the Internet of their time: the railroad network. This combined centralised inventory and big warehouses with distributed distribution. And they were able to offer orders of magnitude, more variety and choice to farmers anywhere. The phenomenon that I’m describing in the book is an Internet-enabled phenomenon which started probably in about 1995 with Amazon.

So the phenomenon is restricted to bits rather than atoms?

No, the book talks about two dimensions. Digitised music is a perfect example. You can have unlimited shelf space because the marginal cost of distribution is effectively zero. So that’s obviously the strongest case. But the second area is what I call hybrid markets, where you have digital catalogues of physical goods. Amazon is a good example of that.

New Zealand still makes most money from sheep, beef and milk. Is there a long tail in agriculture?

Yes, we’ve seen a lot of it in the US. The trends of the last few decades have mostly been around industrialisation of agriculture—big farms and processing plants and big box retailers. But it’s sparked demand for an alternative, organic or fresh food, that has a story behind it: there was an actual farmer who had a farm and there was the notion of a kind of narrative, called ‘food lit’. This has become a national chain called Whole Foods. The amazing finale to the story is that grassroots pressure became so strong even Wal-Mart rolled out a section of organic food.

Once you put the Long Tail glasses on you can see it everywhere!

A little, I guess. One has to be somewhat crisp in the definition. Basically what The Long Tail boils down to is that any time you can lower the cost of distribution, you can offer more stuff.

I was surprised that you write in a coherent way on your blog about cricket in India.

I’m actually British by birth so I’m aware that cricket is sadly underplayed here in the US. The All Blacks deserve an audience in the US, they just aren’t broadcast here.

Let’s run with this—tell us about rugby and the long tail.

Oh no, I’m way out of my depth. Right, here’s the notion. One country’s hit is another country’s niche. The economics of broadcast require us to only show what’s popular in geographic concentrations. Once you go to distributed audiences, say, the rugby diaspora, it doesn’t fit the broadcast model. So right now the global market for New Zealand rugby is not exploited.

So why did you write, er, a book?

Well it started as a kind of a blog diary of my research, then a conversation between me and my blog readers, then it became an article in Wired and then the book. The answer is that it’s not ‘either/or’, it’s ‘and/and’. Books are fantastic. They’re portable, they have excellent battery life, they have a great user interface.

How is Wired going? It struggled for a while.

I took over in 2001 and the reason I was willing to leave The Economist, which is a fantastic place and very hard to leave, was that Wired had largely blown my mind in 1993 when it came out. Condé Nast, which bought Wired in the interim, called me in 2001 when the dot-com bubble had burst. The Internet was being written off as hype and maybe even as fraud. I had to make a decision: do I think this is a mirage or is it real?

My view was that there was difference between the Internet and the Nasdaq. The Nasdaq had clearly lost its way, but the Internet was here to stay.

Fortunately Condé Nast takes a long-term view. Things picked up again in late 2003 and early 2004, we were well positioned to take advantage of it. And in 2004, 2005 and now 2006, it’s just been a complete rocket ride.

You’re selling loads again?

Yeah, we’re now the biggest we’ve ever been: 625,000 is our rate base. Advertising is back up to dot-com bubble levels. Web traffic is at an all-time high. We just won the national magazine award for general excellence. I got Editor of the Year. I’m liking the long tail.