Why both The Long Tail and The Wall Street Journal are right

Lee Gomes at the Wall Street Journal today writes that Chris Anderson's Long Tail effect isn't as big as he claims.

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.

Chris as refuted the article's statistics on his blog. However, I think there is actually some value to Lee's observations because of what I call the excess choice rule:

Long Tail effects are directly proportional to how much help the user gets in overcoming the tyranny of too much choice.

This makes perfect sense if we think about the challenge of finding what we want in Amazon's 1.5 million book selection. No one is going to browse through that collection in any meaningful way -- there are just too many choices. That's why even small book shops have displays and end caps to promote various books; they help direct readers to books they want to promote. It makes choice easier.

So what does Amazon do to avoid tyranny of too much effects? It uses several tools. One is promoting books on its home page. But another is its powerful collaborative filter recommendation engine that links up related books right on the shopping page. And it hits consumers again with recommendations based upon their shopping carts. Those recommendations drive long-tail consumption.

So why isn't Rhapsody seeing these types of effects? Take a look at its home page, and it's easy to see why. Most of the space on the home page is hits-based. Top artists, top radio picks, most popular lists dominate the space. Guess what -- they see a hits-based distribution. And by the way, iTunes isn't much better in this regard, so I would expect a fairly hits-based distribution there as well. In fact, it is only this year that iTunes introduced its own collaborative filtering system to recommend songs based upon what you've bought.

So is the Long Tail true or not? Just as with many technologies, it depends on how well it is marketed to its users. Companies that use technology to drive long-tail consumption will reap long-tail profits. Those that pretend a big catalog is just fodder for a top 10 or top 100-based list won't. Even in a long tail world, the key is helping consumers cope with a tyranny of too much choice. And whether you use technology or top 40 lists, that's marketing.

Technorati Tags: Amazon, Business, Consumers, iTunes, Marketing, Music, Rhapsody, The Long Tail