PRS-Backed Study On File Sharing At Pains To Deliver The Wanted Conclusions

from the head-scratching dept

A new study on file sharing has been released by the PRS, the British music licensing body -- you know, the one whose "investigators" are actually sales people -- and its conclusions are a little bizarre, to say the least. In general, the conclusion seems to be that the Long Tail theory doesn't hold, because the most popular music on file-sharing networks is also the most popular music in the charts. Maybe we've been misunderstanding this Long Tail thing all along, but a big part of it is acknowledging the hits. You don't ignore them, rather you also pay attention to the long tail of less popular items. It makes sense that the file-sharing download charts parallel music sales charts, since they're largely tracking the same market; this also reinforces the point that the music industry's claims about the impact of piracy on sales are overblown (after all, if so many people are downloading certain tracks, one wouldn't expect them to sell so well).

The study also says the Long Tail fails because "there is too much choice on file-sharing sites" and it's difficult for people to find new music. Again, this reinforces, rather than undermines the Long Tail, which requires a strong recommendation system to succeed. But the file-sharing services themselves aren't recommendation systems, nor are they intended to be. The recommendation systems are blogs, net radio, word of mouth, and other sources; the file-sharing networks are just the distribution network. It sounds like this study actually does more to assert the validity of the Long Tail than refute it, and it also does very little to help make the case that file-sharing is destroying the music business. But that, of course, wouldn't be the message the PRS wants to deliver -- so it sets up the straw man that if the Long Tail is wrong, then file sharing must be bad. Only problem is it doesn't even do that well.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Long Tail Not Dead Yet: eMusic Says It's Alive And Well

from the premature-death dept

There have been a series of criticisms to Chris Anderson's concept of "The Long Tail" lately. While most don't hold up under scrutiny, a few have made some good points that don't actually go against the long tail concept, but may adjust some of how people understand it. Of course, people love to jump and declare something completely dead, so there have been a few stories making the rounds claiming that the long tail era has been disproved. Somehow, however, when evidence to the contrary shows up, it doesn't get nearly as much attention. eMusic has published a report noting that, indeed, their own sales show a pretty clear long tail distribution, with at least 75% of all of the music they stocked being sold at least once in 2008. Once again, though, it comes down to the filters. eMusic has some good features (they could be better, honestly) to help people find new and obscure music -- and that helps spread interest to new acts. So, once again, it appears that the long tail is still very much alive, but it does still depend on the filters being used.

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The Long Tail Is Only As Good As The Recommendation System

from the that's-how-it's-supposed-to-work dept

It's been amusing to watch folks like Andrew Orlowski continue to misinterpret Chris Anderson's slight admission that things in "the long tail" aren't exactly they way he'd predicted them to be. Of course, Orlowski entirely misses the point by assuming incorrectly (as many others have done) that the discussion of the long tail meant the death of "the blockbuster." That's not at all true. The idea of the long tail was that it both enabled more content to be produced by opening up more shelf space and then made it easier to find that content.

But, the fact remains that the finding of that content is entirely dependent on the filtering and recommendation systems, which is highlighted in the recent NY Times piece by Clive Thompson about attempts to improve Netflix's recommendation engine (and, yes, this is the second post I've written on that article, but this is discussing an entirely different issue than the first, so it seemed worthwhile). In the article, Thompson notes:

Cinematch has, in fact, become a video-store roboclerk: its suggestions now drive a surprising 60 percent of Netflix’s rentals. It also often steers a customer’s attention away from big-grossing hits toward smaller, independent movies. Traditional video stores depend on hits; just-out-of-the-theaters blockbusters account for 80 percent of what they rent. At Netflix, by contrast, 70 percent of what it sends out is from the backlist — older movies or small, independent ones. A good recommendation system, in other words, does not merely help people find new stuff. As Netflix has discovered, it also spurs them to consume more stuff.

Basically, that entire paragraph explains the issue. A good recommendation system does two things: it gets people to consumer more -- and it introduces them to stuff they might not have heard about otherwise. But, that second part is not necessarily the same as the first part. Many people assumed, incorrectly, that the greatness of such "long tail filters" was that it would drive people to consumer more down the tail -- but as Netflix is seeing, the good recommendation engine drives people to consume more content in both the head and the tail.

And, when you think about it, that makes an awful lot of sense. Popular stuff often is popular for a reason. While some may disagree, things are often popular because they really do appeal to a lot of people, so it should be no surprise that a good recommendation system would increase consumption in the head: it's accurately noting that an awful lot of people will like that content. But that doesn't exclude promoting some of the content from the tail. Since the recommendation system is driving more consumption overall, it's "lifting all boats" as they say, even if (as is likely) it lifts the boats in the head more than in the tail. In the past, that content in the tail wouldn't get any business at all, but these days it can at least make some money, if not a huge amount.

So, no the concept of the long tail is hardly dead or even in trouble (or, as Orlowski notes, downgraded). Instead, it's just being understood better.

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Blockbuster CEO Is Still Confused By The Long Tail

from the have-you-taken-a-look-at-your-competitors? dept

In 2004, Chris Anderson wrote his feature article for Wired Magazine in which he coined the term "the long tail" to describe the business possibilities made possible by digital distribution. Four years and one best-selling book later, the CEO of Blockbuster is still confused by the concept that has been utilized by Netflix to wreak havoc on his business model. Yet, in a recent interview, the head of Blockbuster, Jim Reyes, misses the entire point of the long tail.

In response to a question regarding the small catalog of Movielink, Blockbuster's digital download service, Reyes responded, "When was the last time you watched 10,000 movies, you know? I don't care how many movies are available to me. As my personal taste as a customer, I want to watch the new stuff so whether we have 10,000 movies or 200 movies it doesn't matter if I don't want to see any of the movies that we have." The point of the long tail is not to ignore the hits, but to make available more. While Reyes's quixotic opinion may appease viewers with very limited tastes, when distribution and content creation is exceedingly cheap, it makes no sense to limit content. In his original article on the concept, Anderson noted that one-fifth of Netflix rentals are outside the top 3,000 movies. Clearly, a sizable minority of movie-watchers want to see films outside Movielink's inventory that "is heavily weighted toward newer releases and mainstream staple titles."

Kevin Donovan is an expert at the Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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Selling To The Long Tail Doesn't Mean You Ignore The Hits

from the understanding-business-models dept

There's an interesting new article in the Harvard Business Review that looks to challenge Chris Anderson's well-known theory of "the long tail." In it, a Harvard professor, Anita Elberse, talks about how hits still make a lot of money, and the idea that all the money is now over in the long tail doesn't seem supported by reality. Chris himself makes some very good points in response, noting that some of this depends very much on where you "draw the line" between the hits and the tail. Since there's a sort of "fat middle," small changes in where you draw the line of what counts in which category can have a big impact. Chris makes a compelling argument that Elberse chose to draw the line in the wrong spot. He uses the inventory of various brick-and-mortar stores to determine where the line should be drawn, rather than at the somewhat arbitrary 10% and 1% lines that Elberse used.

However, I'd like to argue from a different angle as to why the HBR piece is missing the point. I don't think that anyone ever said that you completely ignore the hits. Perhaps it's a problem of the name "the long tail" but it starts to make people focus all the way at the end of the tail -- the part that is the least profitable. It's the point where only one copy of something is sold every so often. The companies that suddenly announced they were going to focus on the long tail seemed to think that you focus only on that tip at the end. That was not the point at all. You don't ignore the hits -- you just recognize that with infinite shelf space, you can now supply much more beyond the hits -- and that aggregate amount can add up to a substantial sum that no store with limited shelf-space can match. So, Elberse is completely correct in suggesting that companies don't just focus on the tail end of the tail -- but anyone who did so in the first place was misinterpreting the point of the long tail concept.

Even more to the point is that the concept of the long tail changes the shape of the market. When shelf space was limited, it made it that much more difficult to even get a creative work produced at all. You had to be able to convince someone that your work would make it into the "hits" category, and then get them to finance the creation of the work. And, anything that didn't actually become a hit fell off the chart completely. You basically had a bimodal distribution of content: the hits that sold, and the crap that didn't and was no longer available. But there was a hidden third category that most people didn't think of: the stuff that didn't get created at all because it wouldn't sell enough alone to justify it.

Yet, with the combination of cheaper tools for content creation, combined with cheaper distribution tools and infinite shelf space, that third "hidden" category started to exist in the open, where it was invisible before. And, on top of that, many of the works that fell into the "crap" end of the old model, could migrate into the long tail and make enough sales to be decent. But the point remains that it spread out the distribution, made it possible for much more content to both be created and sold -- and there are plenty of companies capitalizing on that. That doesn't mean that the hits go away or that the long tail concept doesn't make sense. It just means that you don't focus on the long tail by only focusing on the crap end of the long tail -- but on the entire distribution.

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Microsoft Apparently Still Confused About The Long Tail Concept

from the there's-no-shelf-space dept

The concept of "The Long Tail" seems so common to be almost a cliche these days. While it used to be a part of nearly every startup's VC pitch, it's long passed the point where VCs now roll their eyes when they hear about a "long tail" company. However, it appears that plenty of folks are still unfamiliar with the concept. For example, Microsoft seems to be killing off Xbox Live games that aren't performing well, even if they have some audience. Microsoft claims that it's because it's too confusing to find games, but as Chris Kohler points out in the link above, that's a problem of Microsoft's Xbox Live interface -- not the fact that there are too many games. Cutting off the games doesn't make much sense. It doesn't "cost" Microsoft much to keep them on the shelves, and these unwanted games can bring in plenty of revenue in the aggregate. The real problem is that Microsoft needs to fix its UI.

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Is NBC Built For Failure In The Digital Age?

from the can't-retrofit-a-community-model dept

If you haven't yet read John Hockenberry's fascinating piece in the current issue of Technology Review, you ought to. Hockenberry was a longtime correspondent for Dateline NBC and went from there to the MIT Media Lab. It's hard to think of anyone more qualified to assess the news industry's relationship to new technology. And although the article does eventually devolve into (juicy) carping about his former employer, prior to that point Hockenberry's analysis of the media's failure to meaningfully embrace online technology is incisive.

But Hockenberry also makes this more general point:

Networks are built on the assumption that audience size is what matters most. Content is secondary; it exists to attract passive viewers who will sit still for advertisements. For a while, that assumption served the industry well. But the TV news business has been blind to the revolution that made the viewer blink: the digital organization of communities that are anything but passive. Traditional market-driven media always attempt to treat devices, audiences, and content as bulk commodities, while users instead view all three as ways of creating and maintaining smaller-scale communities. As users acquire the means of producing and distributing content, the authority and profit potential of large traditional networks are directly challenged.

By now everyone is familiar with the "Long Tail" concept, which, among other things, points out that information technology makes niche communities and products viable at a much more specialized scale than was previously possible. It's fairly well accepted that this focus on niche products may decrease the profitability of the mainstream hits found to the left of the long tail (see here for a good example).

But Hockenberry's observation makes obvious a point that's often neglected: that the shift in cultural attention that comes with the long tail may be closer to zero sum than we might imagine. It's not just that the network allows niche communities to proliferate; people also value those precisely-targeted communities more than they value media experiences designed for a general audience.

With this in mind it's a little easier to excuse the lame online efforts cited by Hockenberry. A broadcast network like NBC is fundamentally designed to produce at most a handful of signals, each as broadly appealing as possible. There's just no way to retrofit such a system into something that can compete with the endlessly precise intimacy of online communities. Sure, NBC may have missed some opportunities. But it's hard to believe that any of them would have stopped the inevitable diminution of mass media's importance to the average person.

Tom Lee is an expert at the Insight Community. To get insight and analysis from Tom Lee and other experts on challenges your company faces, click here.

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No, The Blockbuster Movie Isn't Dead

from the it's-got-plenty-of-life dept

Cory Doctorow, who can often write and speak quite convincingly concerning copyright issues, has written a new article for The Guardian in the UK that is unfortunately unconvincing. The discussion surrounds the question that has been asked of me in the past when discussing copyrights and movies: if there were no copyrights, how does the $200 million blockbuster movie get made? Cory's answer is that it doesn't get made... and that's okay. His argument is, effectively, that there's a tradeoff. And, instead of a few $300 million blockbusters (inflation, apparently, has driven up the price), we'll get many more smaller, independent films or amateur creators creating their own works. In other words, the long tail takes over and the "short head" disappears. He has some well known company, by the way. As we've mentioned, George Lucas seems to believe the era of the $200 million blockbuster is over. To Cory (and to many others, I'm sure) the idea that there would be more, cheaper indie films and less Hollywood blockbusters, seems like a worthy tradeoff. I have no opinion on whether one scenario is better than the other or if it's a worthwhile tradeoff. I don't think there's really any tradeoff to deal with at all. In fact, from everything I've seen, the blockbusters can still stick around without freakishly worrying about copyright -- and you'll still get more of the quirky independent films. In other words, everyone wins (and yet, I'm quite sure the big movie industry folks who frequent this site will insist what I'm describing means the death of their films).

First of all, it's important to separate out the $200 million (or $300 million) part from the "blockbuster" part. I have a problem with anyone phrasing the question in terms of the requirements on the cost side. First of all, studies have shown that while the biggest costs for most of those blockbuster movies is the fees paid out to the name-brand stars, those stars don't help a movie do any better. In other words, movie makers are overpaying for stars. That shouldn't be a surprise, actually. When you come from a world where "$200 million" is automatically attached to "blockbuster" there's little reason to think about ways to make a movie more efficiently. You just think about driving up the budget so that the movie is considered a blockbuster because of how much is spent. This doesn't mean, by the way, that you don't hire stars. You just figure out ways to pay them more reasonable rates. At the same time, in just about every other part of the creativity world, the cost of making content is decreasing. Better tools and technologies are making it much cheaper to make much higher quality movies every day. So really what we have is a situation where adding a little competition to the market doesn't mean that the blockbuster, super high quality flicks go away -- but that perhaps they get a little more dollar conscious on the spend side, allowing them to make movies more intelligently to save money. We had hoped that with Wall Street's new found interest in investing in films, that perhaps they would force some of this to happen.

At the same time, there are still plenty of ways for big, expensive movies to make a ton of money -- even if the focus isn't on copyright. It just requires a shift in thinking. We've been saying it for years, for example, but the movie industry has never really relied on the sale of its content to make money before. It thinks it has, but it's always been selling a combined service with the theaters. It's been selling the "experience" of going out to the theater and having a good time with dates, friends or family and getting to watch a new flick on a big screen in comfy seats and a great sound system. It's only more recently, with much of the industry being confused about what they're actually selling, that the movie going experience has declined -- which is a hurting the industry much more than a few downloads ever will. So even if you were in a world without any copyright, there would still be demand for people to go out to watch movies in the theaters -- and the movie industry can continue to make an awful lot of money that way. The restaurant business isn't suffering from the fact that people can cook much cheaper food at home. People like to go out and have a good time -- and they're willing to pay for it.

Furthermore, there are a ton of interesting business models that you can start to build on top of this. These include doing things like selling a DVD with a bunch of extras of the movie people just saw as they leave the theater. That's the point at which they're going to be most interested (assuming they liked the movie) and if the DVD comes with a ton of extras in a useful format and a convenient interface, that's going to be worth buying -- even if they could download the content for free online. Or you could start to include other incentives. Since sequels are so popular these days, why not offer a discount on admission to folks who have the movie stub from the first movie in the series? Or offering a contest where a ticketstub or DVD purchase receipt gets you entered into a raffle to be an extra on another film? These are small examples, but it doesn't take long to come up with a hundred more examples, where the focus is on providing additional value that people will pay for -- even if the content itself is available for free. When you start to look at those models, and start to put a few of them together, you begin to realize that there are more ways than ever to make a lot of money in the movie business, even if copyrights are not an issue at all.

Finally, long tail markets don't exist in a vacuum. They follow the power law curve, meaning that there will remain blockbusters -- it's just that the bottom part of the market does open up for many more producers to enter with more niche-focused content. However, demand will still remain for blockbusters, and that's great. With the demand there, smart business people will start to adopt the business models that allow those people to be satisfied with the next big blockbuster flick. And, don't underestimate other sources of funding films as well. BMW realized that it made sense to make short films a few years back, without worrying too much about monetizing those films directly. Don't think they (or others) couldn't do the same for much larger films as well. So, yes, blockbusters will remain -- though the business models to support them may start to look a little different.

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The Internet Is Good For Classical Music

from the mozart.com dept

Back in 2005, the BBC made all nine of Beethoven's symphonies available for free download -- a move that made classical record label executives absolutely livid. We thought that their fear was short sighted, considering that the BBC was helping the classical music genre gain millions of listeners for free. A few years have passed now, and it looks like those record executives may finally be realizing that the Internet is, in fact, good for them. The classical music industry, struggling prior to 2000, is now on a huge rebound due largely to the Internet. Classical music labels are seeing record sales this year, now that the Internet allows music buyers access to their complete libraries of music, which would be completely impractical in a brick-and-mortar store. Classical music benefits more from the "long tail" since not only are there centuries of music from which to draw -- each piece is likely to have multiple recordings, resulting in a vast catalog. Furthermore, the Internet affords users with much richer music discovery process -- through blogs, YouTube, and sites like Michael Tilson Thomas' Keeping Score, where the San Francisco conductor leads a series of educational broadcasts, intended to educate listeners about classical music. It's nice to see that after initially being freaked out by change, the classical music world is now embracing these new technologies -- in the end, everyone benefits, listeners gain access to more music, and musicians and composers are able to expose their music to more people, oh, and yes, the labels do end up building a better business.

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