Less is More

Lagaan shows the amazing economies of scale in a world of infinite choice

IN 2004, CHRIS ANDERSON writes in The Long Tail, Lagaan opened on just two screens in the US. And yet, there were 1.7 million Indians living in the US, a large enough market to justify bigger exposure. But these 1.7 million Indians were thinly spread out in terms of geography, and there were few places which had enough of them around for a theatre to justify showing Lagaan. That8217;s the economics of scarcity in play; and yet, as Anderson ex-plains in his seminal book, our world is gradu-ally becoming a 8220;world of abundance8221;.

The Long Tail has its genesis in an essay An-derson wrote in Wired Magazine, which he ed-its, in 2004, in which he described how the shape of business is changing fundamentally because of new ways of doing business, en-abled by technology. His basic insight deals with the removal of the biggest limitation of traditional business, the 8221;tyranny of physical space8221;. Consider places that retail music, for example. Even the largest megastores have a limit on how many albums they can display, and the result is an industry focussed on cre-ating and pushing hits, and not looking much beyond. Anderson informs us, for ex-ample, that 90 per cent of the music sales of Wal-Mart, America8217;s largest music retailer, comes from just 200 albums.

But all that has changed, and the Internet is responsible. Anderson tells us, 8220;ITunes of-fers nearly forty times as much selection as Wal-Mart. Netflix a DVD rental store on the net has eighteen times as many DVDs as Blockbuster and would have even more if there were DVDs to be had. Amazon has al-most forty times as many books as a Borders superstore.8221; The result, in Anderson8217;s words, is the 8220;largest explosion of variety in history8221;.

Now, you8217;d imagine that most of this, as Sturgeon8217;s Law would have it, is crud, and pro-bably doesn8217;t sell. Not true. Anderson found that across businesses, the demand curve never drops to zero, and almost every piece of inventory sells something or the other. This Long Tail can often amount to substantially large business. 8220;The market for books that are not even sold in the average bookstore is al-ready a thirdthe size of the existing market,8221; he says, and cites Kevin Laws8217; pithy observation, 8220;The biggest money is in the smallest sales.8221; The Long Tail is fed, essentially, by two phe-nomena.

One, the tools of production have been democratised, and the costs of recording a song or publishing your thoughts have be-come negligible. Two, the means of distribu-tion have expanded, and the costs of storing and transmitting bytes are next to nothing compared with the physical costs of getting a CD to a consumer through a regular store.

This upturns conventional wisdom about the tastes of consumers. What we want has so far been circumscribed by what is available, and, as Anderson puts it, 8220;the true shape of de-mand is revealed only when customers are offe-red infinite choice.8221; The choices available, and the means of navigating those choices, empo-wer individuals by helping them find content and products to fit their specific needs and de-sires.

8220;We now treat culture not as one big blan-ket,8221; Anderson writes at one point, 8220;but as the superposition of many interwoven threads.8221; These are fascinating times we live in, and The Long Tail helps us understand it just a lit-tle bit better.