The Long Tail is about how information technologies are transforming many markets, and about the true shape and character of market these technologies reveal.

Information technologies are transforming many markets, notably media and consumer goods.  The technologies are:

• efficient inventory storage and retrieval, providing vast, near infinite inventory
• search and filtering technologies to navigate these huge inventories
• increased availability of production tools for the population

Such markets include:

• books ( Amazon )
• music ( iTunes, Rhapsody )
• movies ( Netflix, YouTube )
• consumer goods ( Amazon, eBay )

For example, let’s take books and Amazon:

• Amazon has huge centralized warehouses where it stores all the goods it sells.  It must be able to receive and ship orders quickly.  Also, through it’s Marketplace program, resellers use their storefront, but have their own warehouses and shipment systems.  Thus, Amazon doesn’t even store these items.  Thus, Amazon can store millions of items.  The largest brick&mortar super-bookstore can only have about 175,000 books.  With 6.1 million books available in the world, and 100,000 being published per year in recent history, traditional stores cannot cater to everyone’s desires.  Amazon can offer nearly 350 times the variety.
• Amazon tracks user’s ratings, stores useful customer reviews, tracks what other customers have bought, based on usage history, and utilize this information to help you search and filter the vast catalogue to your current interest.  Traditional stores can only choose one presentation of their goods, and every person must search within that specific constraint.  You will find things through the Amazon website that you’d never know about in a normal store.
• While not specific to Amazon’s operations, book publications have sky-rocketed, as tools for production, such as desktop publishing software and reduced costs of printing, such as print-on-demand services, mean that more of the populous can produce books.  This increases the number of books to catalogue, search and recommend.

The shape of markets, when sorting items based on popularity, follow a “power-law” long-tail distribution.  In short, this means that, while the popularity of any one item out on the tail is small, there is just so-much in the tail that, if made available to customers, it would comprise a significant part of one’s business.  For example, 90% of the products on Rhapsody or Netflix is not available in any stores, but this 90% make up roughly 25% of their profits.

Another interesting feature of long-tailed markets is that, as one moves into the tail, one is more satisfied with the goods, compared to the the goods at the head of the tail.  A few factors here are:

• everything in the head has broad appear to the whole audience.  Therefore, it is a bit mediocre compared to each individual’s tastes.
• everything in the tail has very specific niche audiences.  A gem item for one individual will be utter rubbish to 10,000 others.

To capitalize on the tail, one must connect each user with the content they value.

There any many more points in the book than I can outline here.  Many transformative businesses and websites are discussed, such as Google, Wikipedia, etc.

For anyone who’s exerienced these technologies and recognizes something fundamentally different’s going on, this is a great read.  For anyone who’s heard about the buzz, but doesn’t feel they understand it, this should be a great exposee.  And for anyone who works in any IT industry, you should really read how our world is transforming many aspects of human business and activity.

4 of 4 possible stars, without hesitation.

The main tenant of the book is that human psychology causes us to create meaning and find patterns in what well be randomness, noise, unpredictability, or natural complexity.  He uses the markets as his main analogy, but cites a few philosophers and psychologists work.

Additionally, he also points out that the human mind is not very good at scientific / mathematical thinking.  Simple probability is easily misunderstood.  He also addresses the inability of us consider alternative histories or do Monte-Carlo runs on future possibilities.

Things I found of note were his approach to this subject, which is that of a non-serious, philosophical skeptic.  I find it refreshing.

Reading a bit on Amazon’s review of this book, I see allot of chiding remarks.  Nassim uses many known financial professionals as examples in his book, and it’s apparent that some did not take kindly to it.  However, the auther makes his intentions, those of non-serious dialogue and argument from simple logic deduction, clear in the prologue to the book.  Any who didn’t read that far may well have earned their disappointment.

3 out of 4 possible stars.