Google's success with targeting ads online is one illustration of "the long tail," where a focus on many successful niche markets can produce revenue that equals or surpasses that of a mass-market pitch. Chris Anderson, editor-in-chief of Wired magazine, coined the phrase in his book of the same title. He talks with NPR.org about television and the long tail.
First, let's start with an overview of the long tail concept. Can you describe it briefly?
It's about life beyond the blockbuster: what happens to our culture and our economy as we shift from mass to niche markets. Click here to read a fuller explanation at Anderson's Web site.
How do you see this playing out in the television industry?
TV is a classic example of [the] incredibly powerful economics of broadcast, where you can reach many for the same price of a few, [but it] has come with a cost: You can only do it with a small number of shows.
[Television is] a one-to-many distribution mechanism. You have to settle for the content that suits lots of people. You end up with classic formulas that touch on the commonality of taste, and that's lowbrow sitcoms and other relatively generic fare. That's not any reflection of the tastes of the programmer; it's what TV requires.
The economics of Internet distribution are just the opposite. In that model, the opportunity is to do the sort of things that don't necessarily correspond with the taste of a concentrated audience, but [rather] a distributed audience. You don't have to adhere to formulas or commercial standards or formats. Because the costs are so low, the costs of experimentation are very low.
The long tail concept seems to make sense for retail sales. But how narrow can you get in a medium that depends on advertising to a certain number of eyes for its revenue?
First of all, as Google has proven, you can make a lot of money as an ad network around niche content. Those ads are highly targeted ads, running on very specific searches or on blog content... You can absolutely make ad money off content. [But in this case] a lot of that money is going to Google.
So does the Internet represent a viable revenue source for networks and content producers?
It's a business. Nobody knows. YouTube is a fantastic cultural phenomenon, but... you don't have network-sized revenues. That is the big question: We know that the television audience is shifting to the Web, [but] we have not figured out how to shift the business model. It will come, though. It's just a matter of time.
How great is the potential for failure in networks trying to capitalize on this?
I'm not sure [the long-tail strategy] is appropriate for networks. Not everybody should have a long-tail strategy. Major broadcasters are the head, and YouTube is the tail. They can use these channels to promote their stuff, but I wouldn't suggest networks try to commission video bloggers [for example]... It used to be one market for television, [and] now there's two markets. It's turning out that second market is not replacing the first, but it's emerging as a market of significant size... I think networks should continue doing what they do best.
Another aspect of this that we haven't been talking about is the long tail of time... There's a huge potential in the archives of television, which the networks can participate in. But that's another dimension entirely.