Blog: Study Refutes Niche Theory Spawned By the Web; the "Long Tail" economy may not be surfacing

Study Refutes Niche Theory Spawned By the Web
Wall Street Journal (07/02/08) P. B5; Gomes, Lee

In his 2006 book "The Long Tail," Wired magazine editor Chris Anderson outlined a theory that society is "increasingly shifting away from a focus on a relatively small number of 'hits' [mainstream products and markets] at the head of the demand curve and toward a huge number of niches in the tail" as a result of the vast number of choices facilitated by the Web, but a new study published in the Harvard Business Review counters that assumption, writes Lee Gomes. An analysis of data for online video rentals and song purchases has led Harvard marketing professor Anita Elberse to conclude that online and offline shopping patterns are essentially the same. She says the importance online shoppers ascribe to hits and blockbusters is growing rather than shrinking thanks to the Web. Elberse also cites qualitative social research implying that Anderson's theory may have incorrectly characterized consumers as being eager to escape the limitations of physical inventories so that they can enjoy a wider variety of niche products. She notes that there is a major element of social conformity in cultural consumption, in that consumers tend to want to experience the same things others are experiencing. Gomes acknowledges that patterns of cultural consumption are definitely being reshaped by the Web, but says these changes do not appear to be having the kind of dramatic leveling effect on demand curves as forecast by the Long Tail. "While whole new cultural categories--YouTube videos, for example--are indeed emerging, they seem to quickly settle into the same winner-take-all dynamic experienced in the pre-Google age," Gomes concludes.
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