Market failure on the long tail

October 6, 2004

In this month's Wired Magazine, editor in chief Chris Anderson suggests that digital distribution makes this kind of market failure, the out-of-print album obsolete: The Long Tail. Anderson the creative products which are not popular enough to have shelf space but still are in demand:

What's really amazing about the Long Tail is the sheer size of it. Combine enough nonhits on the Long Tail and you've got a market bigger than the hits. Take books: The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon's book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are (see "Anatomy of the Long Tail"). In other words, the potential book market may be twice as big as it appears to be, if only we can get over the economics of scarcity.

The "economics of scarcity" are not over yet.

Previously on AndrewRaff.com, I discussed the brilliance of The Amazing Race (My Ox is Broken) and lamented the fact that prior installments are unavailable anywhere. CBS broadcast the episodes (as long as three years ago) and since then, those episodes have sat on a shelf in a vault somewhere, while I (and presumably any other latecomers to the show) would be willing to buy or rent copies of the show on DVD.

Although it makes for a catchy title, this is not actually a case of market failure. The cost to produce the DVDs, package and market the discs is something greater than zero. The producers perceive insufficient demand to recoup the cost of producing and promoting such a set, since the price for a DVD release is generally inelastic.

The best DVD releases add special features, like the full-length commentaries on The Simpsons and Futurama discs. Anderson suggests that long tail movie releases should be "huge chunks of the archive onto bare-bones DVDs, without any extras or marketing." Although basic releases may not sell nearly as well as a DVD which adds more value, a basic release will sell better than no release. The Internet Archive's Brewster Kahle said in a speech at Web 2.0, "Universal access to all knowledge is possible, and it's not a non-profit goal."

In order to release these works which are trapped in archives, Anderson calls this "one of those rare moments where the world needs more lawyers, not fewer."

Currently, enough demand for TAR episodes, without extra content, exists to create a black market. A quick Google search for "'Amazing Race' Torrent" was all it took for me to find BitTorrent downloads of the episodes. I have all of TAR 1 and 2 as well as part of TAR 4 sitting on my hard drive at this point. The season 1 episodes are of a uniform high quality at 512x384 resolution. Although the other episodes are lower resolution, they still play well enough on my television.

These files are all encoded with the DivX and Xvid codecs. In order to play Xvid and DivX files on Mac OS X (or any other platform), VLC is probably the best bet. Another option is the combination of DivX, Xvid Delegate and Quicktime Pro.

Posted by Andrew Raff at October 6, 2004 11:56 PM