May 1, 2009 12:00 PM, By Blair Jackson

WIRED EDITOR'S BOOK THE LONG TAIL SHEDS LIGHT ON THE CHANGING MUSIC BUSINESS MODEL

Chris Anderson

Chris Anderson has become famous for coining the term “long tail” to describe a recent economic model in which, even though we live in a culture obsessed with and dominated by the blockbuster movies, music and books that account for around 80 percent of all sales in those categories, there is also big money to be made these days from the staggeringly large number of niche and “failed” products that come out every year. Yes, Walmart has become the largest seller of music and DVDs in the world, but it carries only about 10,000 or fewer CD titles at any given time — just the hits, really, of today and yesterday — because the space they have available in their retail stores is so limited. But Anderson uses the example of such modern businesses as Amazon.com, eBay, Rhapsody and iTunes to show that when the storage of physical items is no longer an issue — for Amazon and eBay because they are aggregators; for Rhapsody and iTunes because their product is digital information — then almost everything, in theory, can potentially be made available for sale, and it turns out there is a market for just about everything, no matter how obscure. A given book or album or song at the long end of the “tail” (in Anderson's model) might sell only a few copies a year, but when you multiply that by the huge number of titles along the “tail,” it adds up to a significant number.

ONLINE EXTRAS

WATCH:
"Video of Chris Anderson of the Future of Free

Anderson first outlined his hypothesis in an October 2004 article in Wired, and expanded upon it in his thought-provoking 2006 best-seller called The Long Tail: Why the Future of Business Is Selling Less of More. In the book, he offers a cogent and detailed analysis of how the tremendous global growth of the Internet and the concomitant rise in digitization of music, movies and books are changing economic assumptions and democratizing both information and commerce. We are no longer limited by the tyranny of the brick-and-mortar sellers, who make their buying choices based on whatever is most popular; now, with a few mouse-clicks, we can hunt down just about anything we want, read multiple, unfiltered opinions about whatever it is online and, in the case of downloads, have it immediately.

And then there is free. Between YouTube, MySpace, media Websites and untold numbers of peer-to-peer music “sharing” sites, there are hundreds of thousands of hours of music and videos available at no cost on the Internet. This has, of course, had a tremendous impact on all media — from the traditional music business to newspapers — and we are just beginning to understand the ramifications of this development. It has spelled doom for many businesses — but will it also be an opportunity for others, just as the “long tail” has been? Chris Anderson is on top of this trend, too: In 2008, he wrote a fascinating cover story for Wired titled “Free! Why $0.00 is the Future of Business,” and that is also becoming a book due for release this summer.

In mid-March, we talked with Anderson about some of the issues in The Long Tail and Free and how they relate to the music business. I wish I could say he had encouraging words for music industry pros, but that is not the case.

If there continues to be a decline in income for both artists and studios because of file sharing and a general devaluation of recorded music — and making records becomes just a loss-leader for bands to make money performing live — what will be the incentive for crafting a great studio album?

That's a rhetorical question, I presume. Obviously, if the studio album is viewed as a promotional sampler, a taste of what you do musically, which will monetize or not monetize some other way, then obviously you want that taste to be as good as possible.

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