I’ve been meaning to post a followup to my Develop keynote on digital distribution, and was reminded to do so by Raph, who lately has been speaking his mind about the realities of the Long Tail (good stuff — worth a read.) Raph also highlighted a report that Zynga is spending millions of dollars advertising its games and wisely predicted that new digital ecosystems will eventually be “much more hit-driven” as marketing and development budgets escalate. Raph’s right, as he frequently is, but I have one minor correction to make: the new digital ecosystems already are remarkably hit-driven! Put more bluntly: the people who thought the Long Tail would promise the end of hit-driven market dynamics were completely wrong (both about the nature of digital distribution and about the companies that digital distribution benefits.)
With rare exception (see my comments on niche markets at the end of this article) the Long Tail primarily benefits platform holders and the creators of hit content, not the broader creative community. Of course, I’m talking about financial benefit here; one could easily argue that the social benefits of digital distribution touch a far greater number of creators and consumers, and the social benefits are what make digital distribution truly wonderful. But that’s a story for another blog post.
It turns out that the hits get *bigger*
As many prominent journalists, analysts and scholars have recently argued, it turns out that hits are no less important in the new Long Tail world. Lee Gomes noted in the Wall Street Journal that in 2006, Amazon.com still derived 75% of its book sales from just 2.7% of its titles. True, 2.7% of 3.7 million books is nearly 100 thousand books — a great deal more than the total offered by any brick and mortar store — but that doesn’t change the financial situation for the authors of the other 3.6 million! Gomes also noted that, wherever he looked, hits remained vitally important to a given ecosystem (or in his words, “iTunes looks like Billboard, not some paradise of niches.”) And research by Anita Elberse, a professor at Harvard Business School, has shown that in some “Long Tail markets,” success has begun to concentrate in progressively fewer best-selling titles, and worse, that independent artists have actually lost share to major labels. And via Raph, another recent research study with similar findings: of the 13m songs for sale online last year, 10m never found a single buyer, and 80% of all revenue was generated by less than half of one percent (.004) of all songs.
