In 1988, a British mountain climber named Joe Simpson wrote a book called Touching the Void, a harrowing account of near death in the Peruvian Andes. It got good reviews but, only a modest success, it was soon forgotten. Then, a decade later, a strange thing happened. Jon Krakauer wrote Into Thin Air, another book about a mountain-climbing tragedy, which became a publishing sensation. Suddenly Touching the Void started to sell again.
Random House rushed out a new edition to keep up with demand. Booksellers began to promote it next to their Into Thin Air displays, and sales rose further. A revised paperback edition, which came out in January , spent 14 weeks on the New York Times bestseller list. That same month, IFC Films released a docudrama of the story to critical acclaim. Now Touching the Void outsells Into Thin Air more than two to one.
What happened? In short, Amazon.com recommendations. The online bookseller’s software noted patterns in buying behavior and suggested that readers who liked Into Thin Air would also like Touching the Void. People took the suggestion, agreed wholeheartedly, wrote rhapsodic reviews. More sales, more algorithm-fueled recommendations, and the positive feedback loop kicked in.
Particularly notable is that when Krakauer’s book hit shelves, Simpson’s was nearly out of print. A few years ago, readers of Krakauer would never even have learned about Simpson’s book — and if they had, they wouldn’t have been able to find it. Amazon changed that. It created the Touching the Void phenomenon by combining infinite shelf space with real-time information about buying trends and public opinion. The result: rising demand for an obscure book.
This is not just a virtue of online booksellers; it is an example of an entirely new economic model for the media and entertainment industries, one that is just beginning to show its power. Unlimited selection is revealing truths about what consumers want and how they want to get it in service after service, from DVDs at Netflix to music videos on Yahoo! Launch to songs in the iTunes Music Store and Rhapsody. People are going deep into the catalog, down the long, long list of available titles, far past what’s available at Blockbuster Video, Tower Records, and Barnes & Noble. And the more they find, the more they like. As they wander further from the beaten path, they discover their taste is not as mainstream as they thought (or as they had been led to believe by marketing, a lack of alternatives, and a hit-driven culture).
An analysis of the sales data and trends from these services and others like them shows that the emerging digital entertainment economy is going to be radically different from today’s mass market. If the 20th- century entertainment industry was about hits, the 21st will be equally about misses.
For too long we’ve been suffering the tyranny of lowest-common-denominator fare, subjected to brain-dead summer blockbusters and manufactured pop. Why? Economics. Many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching — a market response to inefficient distribution.
The main problem, if that’s the word, is that we live in the physical world and, until recently, most of our entertainment media did, too. But that world puts two dramatic limitations on our entertainment.
The first is the need to find local audiences. An average movie theater will not show a film unless it can attract at least 1,500 people over a two-week run; that’s essentially the rent for a screen. An average record store needs to sell at least two copies of a CD per year to make it worth carrying; that’s the rent for a half inch of shelf space. And so on for DVD rental shops, videogame stores, booksellers, and newsstands.
In each case, retailers will carry only content that can generate sufficient demand to earn its keep. But each can pull only from a limited local population — perhaps a 10-mile radius for a typical movie theater, less than that for music and bookstores, and even less (just a mile or two) for video rental shops. It’s not enough for a great documentary to have a potential national audience of half a million; what matters is how many it has in the northern part of Rockville, Maryland, and among the mall shoppers of Walnut Creek, California.
There is plenty of great entertainment with potentially large, even rapturous, national audiences that cannot clear that bar. For instance, The Triplets of Belleville, a critically acclaimed film that was nominated for the best animated feature Oscar [in 2004], opened on just six screens nationwide. An even more striking example is the plight of Bollywood in America. Each year, India’s film industry puts out more than 800 feature films. There are an estimated 1.7 million Indians in the US. Yet the top-rated (according to Amazon’s Internet Movie Database) Hindi-language film, Lagaan: Once Upon a Time in India, opened on just two screens, and it was one of only a handful of Indian films to get any US distribution at all. In the tyranny of physical space, an audience too thinly spread is the same as no audience at all.
The other constraint of the physical world is physics itself. The radio spectrum can carry only so many stations, and a coaxial cable so many TV channels. And, of course, there are only 24 hours a day of programming. The curse of broadcast technologies is that they are profligate users of limited resources. The result is yet another instance of having to aggregate large audiences in one geographic area — another high bar, above which only a fraction of potential content rises.
The past century of entertainment has offered an easy solution to these constraints. Hits fill theaters, fly off shelves, and keep listeners and viewers from touching their dials and remotes. Nothing wrong with that; indeed, sociologists will tell you that hits are hardwired into human psychology, the combinatorial effect of conformity and word of mouth. And to be sure, a healthy share of hits earn their place: Great songs, movies, and books attract big, broad audiences.
But most of us want more than just hits. Everyone’s taste departs from the mainstream somewhere, and the more we explore alternatives, the more we’re drawn to them. Unfortunately, in recent decades such alternatives have been pushed to the fringes by pumped-up marketing vehicles built to order by industries that desperately need them.
Hit-driven economics is a creation of an age without enough room to carry everything for everybody. Not enough shelf space for all the CDs, DVDs, and games produced. Not enough screens to show all the available movies. Not enough channels to broadcast all the TV programs, not enough radio waves to play all the music created, and not enough hours in the day to squeeze everything out through either of those sets of slots.
This is the world of scarcity. Now, with online distribution and retail, we are entering a world of abundance. And the differences are profound.
Chris Andersonfor The Daily Reckoning
Ed. Note: If you’re wondering why we’d feature an essay from nearly 10 years ago, you’re obviously not receiving the Tomorrow in Review email. In our free email edition, we explain in detail how Mr. Anderson’s accurate predictions back in 2004 all but confirm the windfall profits for a few forward thinking investors. If you’re not getting the Tomorrow in Review email edition, you’re not getting the full story or the full investment opportunity. Click here now to sign up for free.
Here is a miracle of our time, a brilliant example of how technological progress isn’t really about machines and efficiency, but about the quality and vibrancy of human life itself.
Chris Anderson is an American author and entrepreneur. He was with The Economist for seven years, then joined WIRED magazine in 2001 where he was the editor-in-chief until 2012. He is known for his 2004 article entitled The Long Tail, which he later expanded into the 2006 book, The Long Tail: Why the Future of Business Is Selling Less of More. His most recent book, Makers: The New Industrial Revolution, is now available from Laissez-Faire Books. He is currently the cofounder and CEO of 3DRobotics, a drone manufacturing company.
This is so true. However, touching the void makes for a poor name. I much prefer another book title such as into thin air. Well, there we go.
When it comes to central bankers and the global economy, you might say the inmates are running the asylum. Today, Addison Wiggin sits down with Jim Rickards to discuss the ever-changing world of finance, the likelihood of hyperinflation hitting the U.S., and the massive economic experiment being conducted by the world's central bankers. Read on...
ISIS is a radical terrorist organization wreaking havoc across Northern Iraq. But its members come from all over the world - including many from Western Countries. The question no one's asking is why... Why are foreigners flocking to the Middle East to fight alongside ISIS? And how far does Obama really want to go? Chris Campbell explores...
When it comes to the stock market, October gets a bad rap. It's true, there have been some major crashes in October (ahem... Black Monday, Black Tuesday, etc.) but on a shorter timeline this month hasn't been nearly as bad as you might think. Today, Greg Guenthner offers an optimistic look at the month investors love to hate. Read on...
Big government doesn't come cheap. And right now the U.S. government is one of the biggest in history. So far the budget writers have been able to move money around to keep the machine moving. But as Byron King points out, that will soon become much more difficult. Read on for the full story...
In the late '90s, financial TV personalities like Jim Cramer became mega stars - often drawing more ratings the ESPN. But that was over 15 years ago... That couldn't happen again, could it? Today, Wayne Mulligan details the new flock of personalities that are set to cash-in on a different kind of investment boom. Read on...