Change Agent: Long Tail's Tribe

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The long tail has its intellectual roots in economic ideas that date back a century. In 1906, Italian philosopher Vilfredo Pareto noted that 80% of the property in Italy is owned by 20% of the population, a formula that, much later, became known as the 80/20 rule. It has forever influenced brand management, customer service and even personnel development. Focus your attention and resources on that top 20%, which is where the best returns on investment can be found.

More recently, though, in a 2003 academic paper that Anderson says influenced his theory, three management professors looked at the 80/20 rule in reverse. They upended the belief that the Internet's main benefit to consumers would be lower prices. Instead, they suggested that greater value online came from consumers having access to a wider selection of products and services. The key for businesses hoping to capitalize on the long tail, says Carnegie Mellon's Michael D. Smith, one of the paper's authors, is to cater to "significant heterogeneity in taste." Even though a majority of us may like U2 on our MP3 players, for example, there are enough of us who enjoy string quartets or British ska to make it profitable for those who sell them all.

Most online entrepreneurs, particularly the smaller players, are living the long-tail way of life. "Savvy Web marketers already know the value and the power of the long tail," says Sharon Housley at NotePage, a Massachusetts-based firm that makes wireless-messaging software for hospitals, banks and the military. By using less popular, more focused search terms, for example, NotePage is targeting small businesses as well as FORTUNE 500 companies.

Large corporations are sliding down the tail. Television networks, for example, are having mixed success in making the long tail work in a business that revolves around discovering the next Seinfeld. They found a place for reruns of long-forgotten television shows, on cable channels like the Game Show Network and SoapNet. But they have not yet figured out whether they should consider YouTube, the massively popular online-video site, as their worst enemy or new best friend.

Not every big company is convinced, however, that the long tail is relevant for business. Microsoft, which relies on monster software hits like Office, "is clearly a short-tail development house," says the company's corporate standards director, Jason Matusow. He rejects the idea that the long tail--in this case, open-source software developers--poses a threat. "People say the long tail is the perfect way to look at open-source software and understand how it's going to save the world," Matusow says. "But with 400 million users, we're enabling the long tail."

Then again, the view from the long tail depends on which end of it your product resides. Take Stephen Downes, a senior officer of Canada's National Research Council, whose arcane, overlooked blog is a classic long-tail story. "I live in the long tail," Downes said at a blogging event in Vancouver last year. And not necessarily by choice. "[Bloggers] who are in the long tail would probably rather not be part of it," he said. "They simply want to be read." As an earlier catchphrase put it, if the tail were smarter, it would wag the dog.