Stung by the Long Tail: Google Shows Limits of the Economics of Abundance

December 21st, 2006

Chris Anderson, Editor of Wired Magazine and author of The Long Tail, gave a talk about a theme in his book called the “Economics of Abundance“. The long tail theory is that in the digital world, distribution costs are lowered so vastly that essentially any content and any product will find its audience, no matter how dispersed the audience members may be. The economy of abundance flows from that, and says that if the audience is out there, fewer reasons exist not to develop the product.

The idea has a lot of merit, but I think it can easily be overstated. It is true that scarcity is much less of an issue with digital products than with physical ones (think Amazon vs. just about any brick-and-mortar bookstore); there is no need to make tough decisions about shelf space when one can make everything available. Server storage, processor and bandwidth costs are low and dropping all the time, which should make it easier and easier to offer a wider variety of products. Shelf space is governed by the “economics of scarcity”, a zero-sum game. The economics of abundance let users/consumers choose, a seeming win-win for producers, sellers, and consumers.

On the flip side, abundance means more choices, which means more decisions about what to focus on. Scarcity is reduced from the producer/distributor/retailer side, but on the consumer end we still only have so many hours in the day to allocate. Abundant choices could even make our time resource more scarce after we spend time weeding through the abundance to find the material that interests us. Businesses run up against the risk of pushing themselves too far out on the long tail. Stop worrying about how your users will perceive the product and you may find that you have only a handful of customers. Stop worrying about how your users will find your product and you may not even have that many.

Google strikes me as a good example of this. There are few better-recognized brands on the Internet, but the company still struggles to make its products known to and understood by potential users. Earlier this year Google announced an effort to scale back its new product rollout and focus on “features, not products”, in Sergey Brin’s words.

Google seemed to have adopted the long tail theory in its engineering departments, implicitly at least, by allowing engineers to spend one day per week on products of their own imagining. The result follows Anderson’s long tail beautifully- Google has a huge number of products, but almost none other than search have significant traction in the market. Hitwise shows that Google is the clear leader in search, but time I checked Gmail had something like 5% of email market share. Google Video’s distant place in the video space led to its decision to acquire YouTube, Blogger watched its competition continually improve their products, yet limped along for two years or so without a significant overhaul until just recently, etc.

When I put all this together, I come to the conclusion that product success may follow its own long tail principle: the products that get the most attention have the greater likelihood of success. Products stuck out on a company’s development tail are more likely to lag.

So it seems as though Google has run on the long tail/abundance principle- throw out lots of stuff and see what sticks- but has found that it doesn’t have the resources or the wherewithal to follow up and make sure all its products get sufficient marketing and technical support in the market. And of course, if Google can’t do it, how much harder is it for “regular” companies trying to get by with “regular” amounts of cash?

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