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Tuesday, September 16, 2008,10:23 PM
Why Blockbusters Still Rule The World
By Steve Maich

We like the idea of endless choice, but most of us don't venture past the bestsellers

In October 2004, Wired magazine editor-in-chief Chris Anderson published an article entitled "The Long Tail," in which he argued a novel hypothesis: the Internet had forever altered the way that businesses operate. Tiny niche audiences could now be serviced as efficiently as mass markets, and could generate prodigious profits.

The title referred to the normal distribution of sales on a graph: a short tall head (where a very few products generate the bulk of sales) that quickly drops away to a long and narrow tail of thousands of products that barely sell at all. Anderson argued that thanks to the Internet, with its limitless choice and easy searchability, people will start flocking into the long tail. Millions of consumers who used to opt for the most popular products, artists, films and brands will now be free to search out the obscure little gems that they always really wanted. The head gets shorter and the tail gets fatter.

The implications for business were potentially enormous. It meant that an online bookstore, for example, could do just as well by offering 10,000 books -- all of which sell just five copies -- as a traditional store selling 1,000 books 50 times each. In practical terms, Anderson argued, it meant that the age of blockbusters is over. Henceforth, he said, smart businesses would stop trying to build one or two massive hits in hopes of catching the hurricane wind of mass popularity. Instead, they would produce a broad range of products to exploit the widest possible array of niche interests and the limitless shelf space available on the Web. When Anderson expanded his article into a book in 2006, he summed it up in the subtitle: "The future of business is selling less of more."

Ironically (or is it paradoxically?), Anderson's book became one of the biggest blockbusters in business publishing. The author became a minor celebrity as a Web guru and a hot ticket on the speaking circuit. The book's title entered the modern business lexicon, casually slipped into conversation by everyone from CEOs on down. The mainstream is dying, they said. Ain't it cool?

Well, as you may have noticed, the era of the blockbuster has stubbornly refused to play along. Last weekend, The Dark Knight, a heavily promoted, big-studio blockbuster, smashed records with the biggest opening weekend for any movie, ever. A few days ago it became the fastest movie ever to break the US$200-million barrier in ticket sales, and it now seems certain that it will eventually haul in more than US$1 billion worldwide. That would make it only the fourth movie ever to do so -- and two of them have come in the past three years. In fact, of the 10 biggest opening movie weekends of all time, nine of them have come in the four years since The Long Tail put blockbusters on death watch.

But anecdotal evidence only gets you so far. To truly evaluate the usefulness of the theory you have to dive into the numbers, and recently Anita Elberse, associate professor of business administration at Harvard, did just that. Elberse pored over data from two services: Rhapsody, the online music store cited by Anderson in his book, and Quickflix online movie rentals. Turns out The Long Tail isn't flattered by close scrutiny.

Elberse found that although sales of obscure titles have risen, there are far more titles in the library that never sell at all. So, rather than the long tail getting fatter, it is getting longer and skinnier. More importantly, sales of those obscure movies and songs aren't coming at the expense of hits. In fact, more money is being channelled into the select few mega-blockbusters. As Elberse says: "The importance of individual bestsellers is not diminishing over time, it is growing."

It's also important to know a bit about who is buying those obscure movies and albums. They are a niche unto themselves -- people who watch a lot of films and listen to a ton of music. Elberse's study shows that if you're watching obscure movies, you are almost certainly a huge movie buff. You aren't watching art house films instead of Iron Man. You're watching those movies because you've already seen the blockbusters. Perhaps most surprisingly, those heavy users tended to rate the blockbusters highest. The more low-budget art films you watch, it seems, the more you appreciate The Dark Knight.

Frankly, Elberse's research feels like common sense to most consumers. Sure we all have a few unknown bands in our iPod, but by and large, things are popular because they're better than the alternatives. The explosion of options and choice doesn't change that. In fact, Elberse's conclusions wouldn't even be noteworthy if not for the enormous popularity of The Long Tail.

So why did Anderson's thesis take off like wildfire? First, because it promised a radical shift. We're attracted to any compelling argument that promises a fundamental change in the way we view the world, and history is littered with examples of revolutionary ideas that turned out to be wrong.

But perhaps most importantly, it pandered to our egos. It appealed to our inner snob -- the one that believes we're above the banal mainstream, and that the Internet will set us free to indulge our unique and sophisticated tastes. The truth is less flattering. We like to think we are, at heart, connoisseurs of Ingmar Bergman films. But most of us never get around to watching Smiles of a Summer Night because we were busy seeing Pirates of the Caribbean for the fourth time.

We all wanted to believe in The Long Tail, but we couldn't stay away from the blockbusters. While we all like the idea of endless choice, most of us are never going to venture far beyond the bestsellers list. Contrary to Anderson's advice, the future of business is doing pretty much what you've always done. But the emergence of the Web means there may be a way to wring a few bucks from the flops you previously wrote off as useless.

In Anderson's defence, that probably would not have fit on a book jacket.

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