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It’s taken me six weeks, shamefully enough, but I have finally read Chris Anderson’s The Long Tail. Here’s a very quick precis of the main idea for anyone just released from a Chinese prison:

The internet makes it possible for retailers to increase their available stock almost indefinitely. For example, Amazon stocks 3.7mn titles whereas the largest traditional book stores keep 100,000. The same proportions are true for iTunes, netflix, Rhapsody, cafe press and other online retailers.

This increased variety has an interesting effect. The products that aren’t big hits still sell. Amazon is believed to sell 98% of the books it stocks over any quarter. 98% of Rhapsody’s tunes are sold over the same period. When people have access to more variety, they develop a taste for it. And the accumulated value of all those little sales can add up. 25% of Amazon’s sales are books not available in any book shop. 40% of tracks played through Rhapsody are not available in offline record stores.

These less popular products that are not available offline, but which sell nonetheless when the opportunity is given are the Long Tail. Anderson argues that internet businesses are therefore wrong to concentrate solely on the bestsellers, since offering more choice creates an endless supply of sales at no significant added cost to the retailer. The same sort of model can be applied to other areas. There’s a Long Tail of websites, for example, that don’t have a lot of traffic, but are still enjoyed by the people who do go there. There’s a Long Tail of games, cheeses and beers and lots of other things.

Is the book any good? Yes, it is. Economics is not a subject I am naturally attracted to (ask my bank manager) but I found it a very compelling read. Anderson is a very good story teller and has dozens of great examples. He’s also very good at avoiding jargon, which must be tricky when your subject is economics and technology.

I do have some reservations, of course. Otherwise I could have just posted a link to the essay in Wired that started it all. “Read this … book if you want to get a look at the future of business” says Google’s Eric Schmidt on the cover. Well, maybe. But the main examples are all businesses that already exist and are doing things that are fairly common sense. If you are an online book retailer and you haven’t realised that you’d generate more sales if you stocked more titles, then you might want to reconsider your line of business. If your future business idea is an online store selling, err, books and CDs, then you might be in for a surprise.

Also, the rewards of catering to the Long Tail might not be quite as considerable as you’d hope. If you sell cars on the internet, for example, keeping 10,000 models in stock is going to cost you a lot of money compared to keeping the 100 most popular models. Will selling (say) 25% more cars as a consequence compensate for the increased costs? Not for a long time.

For a Long Tail business to succeed you need negligible storage and acquisition costs for your products. Digital media is good for this. Small things like CDs, software and books also work. Things that are very quickly made to order, like printed T-shirts and computers, are also good.

For anything that requires warehouse space or has a life-expectancy, you also need a large volume and speed of sales overall. If you sell 20 tractors a year from 5 models, expanding your range to 500 models stored in 40 warehouses and then selling another five tractors a year won’t help your business much. An online cheesemonger that stocks 1000 cheeses needs to shift them pretty quickly. Otherwise, that portion of Sacrebleu du Merde sitting at the end of the Tail might be pretty whiffy by the time it gets sold.

Amazon also sells sewing machines. Four models. Why don’t they adopt a Long Tail approach there and stock a thousand different models, creating “unlimited demand”? Because they cost some money to store, source and administer. And I presume they don’t sell very many of the four they do stock: 25% extra on top of not very much is still not that much.

Good book, though. Great food for thought and very much recommended reading.