Welcome to Niche Nation

Long Tail author and Wired editor Chris Anderson on infinite markets, the death of the Top 40, and the birth of personalized politics.

When Chris Anderson became the editor-in-chief of Wired in 2001, he took over an eight-year-old San Francisco–based magazine that had not only redefined print journalism in the 1990s but proved an invaluable guide to the exotic new worlds of mass personalized computing, cyberspace, digital culture, and much more that we now take for granted. If Wired's cutting edge seemed somewhat dulled after the ouster of founders Louis Rossetto and Jane Metcalfe, the title's sale to New York publishing giant Condé Nast, and the bursting of the tech bubble, Anderson has made the magazine matter once again. In 2003, the first year that the Chicago Trib-une ran its annual list of "The 50 Best Magazines," Wired didn't even make the cut. A year later, it topped the same list, with the Trib enthusing, "even the 'Letters' page crackles with energy." In 2005 Wired took home an award for General Excellence at the National Magazine Awards, the in-dustry's top honor, and Anderson was named "editor of the year" by Ad-vertising Age.

More important than industry accolades, people were once again reading Wired to learn about the next big technoculture thing. "Technology is the ability to empower individuals to change the world," says Anderson, who joined Wired after stints at The Economist, Nature, and Science. Com-puter and related technologies, he argues, foster the "rise of individuals, often at the cost of institutions." Anderson's visionary streak was on full display in his October 2004 Wired story "The Long Tail," which quickly became the most cited article in the magazine's history. An expanded book-length version—The Long Tail: Why the Future of Business Is Selling Less of More—is now climbing the upper reaches of the New York Times bestseller list and has already provided a ubiquitous cultural catch phrase to rival "the tipping point." (The October reason includes a story about the rise of microbrew beer called "The Longneck Tail.") Anderson also maintains a lively blog called The Long Tail.

Anderson's title comes from the conventional demand curve for most goods: At the "head" of the curve in a given market, a small number of "hit" products (books, movies, whatever) typically accounts for most sales. As you move rightward along the curve, the number of products sold slopes down, eventually forming a "tail." The result is a "hit-driven economy" and a "hit-driven culture" in which producers seek to make money by pushing a few blockbuster items on consumers. Producers focus on the head and try to keep the tail short because it's too costly to make things that will appeal only to the few.

Yet in "an era without the constraints of physical shelf space and other bottlenecks of distribution," writes Anderson, "narrowly targeted goods and services can become as economically attractive as mainstream fare." The typical Wal-Mart store stocks about 55,000 music tracks—mostly big sellers—while the online download service Rhapsody carries 1.5 million tracks. Fully 40 percent of Rhapsody's sales come from tracks that are not available in offline retail stores, suggesting there's gold in aggregating those relatively unpopular songs.

In Long Tail markets, which are most clearly observed in online retail-ing but also apply to more traditional bricks-and-mortar businesses, the head of the demand curve is getting shorter, and the tail—made up of an ever-growing array of smaller-selling items—is getting fatter and longer. When the costs of carrying inventory are relatively low, says Anderson, "the incentive is to carry everything." We are turning "from a mass market," he argues, "into a niche nation" in which we can find exactly what we want in clothes, art, music, and food. And, quite possibly, politics, personal identity, lifestyle, and more.

Anderson's biography is as eclectic as the markets he describes in his book. Born in England in 1961 to two journalist parents (his father covered the Soviet trial of U-2 pilot Francis Gary Powers and, later, the Middle East during Henry Kissinger's heyday), he went to high school in the suburbs of Washington, D.C., where he was, in his own words, "a complete fuck-up" who graduated late due to missing credits.

He proceeded to flunk out of the University of Maryland—"with a 0.0 G.P.A."—before eventually getting a degree from George Washington University and doing graduate work in physics at Berkeley and research at the Los Alamos National Laboratory. By the late 1980s, as large-scale funding for the sort of physics work he was interested in dried up, he turned his attentions to journalism.

His longstanding interest in technology—"I spent my childhood at Radio Shack," he confesses—may have something to do with the fact that his grandfather invented the automatic sprinkler. Or his interest in punk and new wave music and the "do it yourself" ethic of those subcultures: As a teenager and young adult, he played in several rock bands, including one called R.E.M. (Not that R.E.M., alas, as will become clear below.) "

Self-described as a "small-L libertarian," Anderson generally eschews politics ("I hate politics," he says) but is proud to note that his great-grandfather, Joseph Labadie, was one of the founders of the American anarchist movement. Yet he maintains a personal affection for former Vice President Al Gore, whom he first encountered while covering technology issues for The Economist and other publications in Washington in the late 1980s and early '90s. Ander-son laments that national politics has yet to become part of the Long Tail. "I wish the system would put forward politicians that I could vote for," he says.

Anderson lives in Berkeley, California, with his wife and their four children. In August, he talked with reason Editor-in-Chief Nick Gillespie about the economic, cultural, and political implications of the Long Tail. Responses can be sent to [e-mail].

reason: What's the quick version of The Long Tail?

Chris Anderson: It's about life after the blockbuster. It's what happens to our culture and economy as we shift from mass markets to millions of niche markets.

The best example of the phenomenon is the transformation of music from a Top 40, major-label phenomenon to one with an infinite number of mi-cro-genres that are scattering the audience to the wind.

reason: The Top 40 lives on as a statistical artifact, but it really is a kind of social nullity, right?

Anderson: Exactly. Even in Long Tail markets, you always have hits, but the dominance of the hit is now greatly reduced. Those hits now share the stage with literally millions of nonhits.

reason: You talk about how Rhapsody, the online music service, which gets about 40 percent of its sales from— >

Anderson: —from music not available in Wal-Mart. The typical Wal-Mart store carries about 4,200 albums, which nominally turns into 55,000 total tracks. And if you do the math right, and realize that not all tracks are equally popular, Wal-Mart effectively stocks about 25,000 popular tracks.

reason: Similar trends are easy to find. In the television market, for in-stance, people watch more TV than ever before, but there are more TV channels and more TV shows. The supply isn't unlimited, but the typical household gets dozens more channels than it did even 20 years ago. How do the audiences for top-rated shows like Seinfeld or E.R. compare to early ratings champs?

Anderson: Take The Cosby Show. That was the 1980s, and it had an average share of about 35 [meaning 35 percent of households with televisions tuned in]. In the '60s, The Beverly Hillbillies was a 40. Seinfeld was about a 23. I Love Lucy was almost a 70. Today, CSI is around a 10.

reason: What is driving the Long Tail?

Anderson: It's an economic shift driven by a technological shift. The formula is really easy. When you lower the cost of distribution, you can carry more stuff. You lower the cost of shelf space, you can put more on it. The Internet effectively lowers the cost of distribution and frees up the shelf space.

If you only have room for 10 things on your shelf, you will find that the marketplace as you measure it will choose from among those 10 things. If you have room for 10,000 things, you'll find that those 10 things may still be the most popular 10 things, but they're not 100 percent of the market.

As with water being poured into a bathtub, audiences distribute when given the chance. We've been measuring our culture through the lens of sales and hits. That's what we thought we wanted, but what we find is that limited choice was really what the distribution networks wanted, what the retail channel wanted. It was an artifact of scarcity, an artifact of bottlenecks in the marketplace. We basically had a limited menu, which resulted in limited expressed choice.

reason: Who knew people wanted computers in any color other than putty when that's all they came in?

Anderson: Exactly.

reason: Will there be a case where the tail is actually worth more in terms of sales than the head? If so, when and where is that likely to happen?

Anderson: I predict music. You have to be very careful about definitions. If you define the tail as music not available in Wal-Mart, the tail will be larger than the head in the digital music services in less than a decade. For Rhapsody, the trend suggests that it will happen in the next five years.

I should say that the theory of the Long Tail is nowhere predicated on the tail being less than half the market. The point is that the tail is significant in size, that it's a new market and a growing market. What its ultimate size is depends on the specific industry. From industry to industry it'll be different sizes.

reason: You''ve been in a bit of a pissing match with Lee Gomes of the Wall Street Journal over The Long Tail. He says that you're actually overblowing a minor phenomenon. That in terms of retail, even at Amazon.com, retailing is still largely based on hits. He wrote that 25 percent of Amazon's revenue comes from its tail—defined as everything past the 100,000 best-selling titles. He argues that's just another way of saying 2.7 percent of its titles represent 75 percent of its sales. What's wrong with his analysis?

Anderson: I struggled a little bit with some of those statistics in my first week of researching this, too, but fortunately, I had time to actually do the math and the problem is in percentages. Amazon has an inventory of about 3.7 million. One percent of that is 37,000, more titles than most book stores have at all—and about half the inventory, or nearly half the inventory, of even a book superstore, so it sounds like a tiny little bit. But in absolute numbers, it's a huge amount. So the problem with the percent-age approach is that if the denominator can grow infinitely large, what you find is that actually in percentage terms, these markets look more and more hit centered. That's just a statistical error. The right way to do it is in absolute numbers and that's why I keep the definition of a hit consistent at the inventory available in a bricks and mortar marketplace.

reason: What are the social implications of having an audience that can distribute as widely as the choice available to it?

Anderson: Many people worry about the loss of our common culture, a decline in the water cooler effect, when you can''t assume that everyone in your office has seen the same show.

But I think in general that the common culture reflected pretty superficial connections between us. The fact that you and I both watched American Idol last night probably doesn't define us, whereas our niche interests really do. We go deep and find people who share our affinities, which represent much tighter connections between us. So my suspicion is that we're going to have fewer loose connections with lots of people but tighter connections with fewer people.

reason: Some social critics, such as Barry Schwartz, author of The Paradox of Choice, talk about the paralyzing effects of too many options. They argue that people become alienated, even depressed, by the proliferation of possibilities in a Long Tail world. Are they right?

Anderson: Barry's a smart guy, and what he describes is a real effect. However, in the real world, we don't actually have the situation that he describes very often. What he describes is a situation where you have sort of an overabundance of choice and really no idea how to begin to make a decision. The famous example he talks about is where you offer people six kinds of jam. [They respond more positively than when they have 30 kinds to choose from.]

The problem is not that there's too much choice but that there's not enough help in making that choice. This simple act of helping people to choose, of ordering the marketplace in ways that make sense, turns choice from a chore into a pleasure. Think of the Internet before Google: It was a random overabundance of crappy pages; you'd get lost and you wouldn't find anything. Google has the effect of snapping a disordered marketplace into order. The first-page results are usually relevant, and you pretty much ignore the 4 million other pages that it didn't show you on the first page.

And on the Internet, you've got what other people do. If nothing else, the ability to measure, to be able to tap the collective intelligence of people who've come before you—-which is what Google does in the form of links, what Amazon does in the form of ranking by top sales, and what Netflix does in its collaborative filtering—is huge.

The answer to the paradox of choice is help.

reason: Is there a Long Tail for people as much as for products?

Anderson: There is absolutely a Long Tail for people. I talk a lot about the Long Tail for talent and I usually start by quoting [media bigwig] Barry Diller at the 2005 Web 2.0 conference saying, "People with talent won't be displaced by 18 million people producing stuff they think will have appeal."

Is there any better description of MySpace than that? Is there any better description of YouTube than that? Is there any better description of the blogosphere than exactly that? Eighteen million people producing stuff they think will have appeal. What we're realizing is that talent and expertise and knowledge and writing ability is much more broadly distributed than our previous forms of identifying it re-vealed. The old model was if you want to make a movie, you had to get your foot in the door in Hollywood. If you want an audience for your music, you've got to get signed by a label. If you want to write a book, you've got to have a publisher.

The old model said: We control the factory, and you have to go through us. Now everyone's got a factory, and we find that there are more people who have talent and, more important, they're making things that our filters haven't previously recognized as having appeal. They're making stuff because they want to make stuff and because they can. Most of it's crap, but a surprising amount of it is not crap, and you're getting these grassroots, bottoms-up hits that are resonating with subcultures that we traditional gatekeepers would never have bothered with.

reason: What's your favorite example of that?

Anderson: YouTube is the phenomenon of the moment. Look at the viral videos there; look at the things that are competing with television for attention and viewing time. It's Chinese kids lip-syncing Backstreet Boys songs. Flash animation, snowboarding stunts, things like that. This is sort of America's Funniest Home Video on steroids. What's amazing about it is that there are 100 million streams a day, something like 65,000 videos submitted every week. The mob has completely stormed the gates.

reason: What are the political implications of that sort of storm-the-gates dynamic—and of the Long Tail generally?

Anderson: Political sentiment in this country is more diverse than just two poles; a two-party system is a reductionist simplification of the diversity of views actually out there. There are probably as many views as there are people, on some level. And it suggests that in a marketplace of opinion where there are ways to have political actions that don't involve conform-ing to the two-party system, you would see more diversity and more variety in both politicians and policies.

Does that mean that the Long Tail of political opinion that we can see in the blogosphere might some day result in things like an independent party or a third party? I don't know. Hope springs eternal. But we're seeing a clear Long Tail in the political conversation.

reason: Though whether that can be translated into political action is open to question. Simply because of the first-past-the-post electoral system in the U.S., which doesn't reward small parties or coalitions, there may be structural limits on the number of choices we'll ever have in terms of major parties. What did Henry Ford say about cars? You can have any color you want, as long as it's black.

Anderson: We have a scarcity effect in our ability to act on the political system.

reason: How do you define yourself politically?

Anderson: I call myself a small-l libertarian.

reason: What does that mean for you?

Anderson: It means I''m free market. I''m socially liberal. I hate labels, and I'm sure you do as well. I''m socially liberal and fiscally conservative. What does fiscally conservative mean? It means I believe in markets.

Markets harness collective intelligence. No one of us has the answers, and all of us together will not necessarily come up with a right answer every time. But we will come up with a better answer together than any one of us. Not every time, but statistically, over time.

reason: Who'd you vote for in 2004?

Anderson: Oh, God, do we really need to talk about that? I hate politics.

reason: It's always interesting.

Anderson: I didn't vote.

reason: OK. What about 2000? Wired has been conducting something of a love affair with Al Gore of late; he was your May 2006 cover boy. You must have voted for Gore, a bete noire of most libertarians, in 2000, right?

Anderson: But I'm not proud of this. I wish the system would put forward politicians that I could vote for.

reason: Why are you uninterested in politics?

Anderson: I'm not. I'm interested. I'm de-focused.

reason: In what sense? You don't see anybody up there who would represent your worldview?

Anderson: I think the process by which people are nominated by the two parties is so compromising that they end up taking positions that I can't support. I think in fact they don't believe it.

reason: So what is it that you like about Al Gore?

Anderson: I have a personal admiration for the man.

When I was in Washington, covering science in those early days [the late '80s], I was an intern. Al Gore was the chairman of, I think, the Senate Science and Technology Subcommittee, and I was at those early hearings when he was talking about what was then called high-performance com-puting. He was having the people from the NCSA [National Center for Supercomputing Applications] at the University of Illinois come in to talk about this thing, and he'd have these guys showing these incredible technologies. They were generating unbelievable graphics and setting up work stations, and they were connected—and none of the other committee members bothered to show up. No one was there in the crowd. He'd come down and just sit there at the witness table and geek out over these things.

He had Larry Smarr, [the NCSA's director and "the godfather of the Internet,"] talk. Remember, this was a time when a kid named Marc Andreessen was back in Larry's labs dreaming up something that would later become Net-scape. So Al really was instrumental in recognizing the potential of the Internet and helping it along. He didn't invent it, but he had a really important role in advancing it.

Most importantly, actually, those models, those computational models that they were doing, were climate models that were trying to quantify the extent of global warming and climate change at the time. So I guess I've seen Al Gore as smart and technical and passionate, funny, and I've seen him at his best.

reason: Sen. Gore also brought K. Eric Drexler, the nanotechnology visionary, to D.C. to talk to the Senate.

Anderson: Absolutely.

reason: Is there a contradiction between Gore's interests in something like, say, the Internet, which is decentralized and founded upon distributed intelligence, and his support for things like the Communications Decency Act, a Clinton administration law that would have extended federal regulation over much speech on the Internet? Or the Kyoto Protocol? Kyoto is very much an old-style, command-and-control regulatory policy.

Anderson: One thing about Kyoto, although I'm not in favor of all its aspects, is that it would have at least set up a market-based system for trading carbon emissions. That's something I can get behind.

You know, Gore's a complicated character. His interest in superhighways is very much inspired by his father's interest in the national highway system, which was both a distributive network and a command-and-control infrastructure. I think he understands that there's a place for government-created infrastructure if it enables individuals to do their own thing, which is very much what the highway system does.

Do I agree with him 100 percent on everything? No. I think his recognition of climate change as a problem turned out to be prescient and right.

reason: What about other political figures? Republicans, Democrats, it doesn't really matter to you?

Anderson: I guess I like individuals. I like Mayor Mike Bloomberg of New York. I like California Gov. Arnold Schwarzenegger in many ways.

reason: What do you like about them? Bloomberg is socially tolerant when it comes to race issues and gays, but he's really draconian when it comes to things like smoking, isn't he?

Anderson: Yeah. So I don't agree with him 100 percent. I like that he's able to reconcile somewhat liberal social views with quite enlightened market views. That's all. Schwarzenegger as well. Basically, these guys are all socially liberal and fiscally market-oriented. I hate to say "conservative" because it just doesn't seem right. They try to enable markets wherever possible and there's not a kind of default inclination toward regulation. It's a mind-set that doesn't look to government first for answers but looks to government last for answers.

reason: Since taking over Wired in 2001, you've had fantastic success at building the franchise back into what it was. What are you most proud of during your stint at Wired?

Anderson: There are industry accolades that we're proud of, things like the [National Magazine Award] for general excellence, [Ad Age's] editor of the year. I'm proud of our circulation growth, our advertising growth, and all this kind of stuff.

I guess what I'm most proud of is that we made our very optimistic mes-sage about how technology can change the world [matter again] after many people had written that off after the dot-com bust. I'm very proud that we stuck to our mission and that that message resonates [again]. I don't think we caused it to resonate, but when the world recognized what sort of felt obvious to those of us who live in this world, I was very proud that we were still leading that.

reason: You're the parent of four children, aged four to nine. How has that affected your politics, your journalism, your worldview?

Anderson: I'll tell you what being a parent has done for me, and this may not be the answer you were expecting or even want. I think it's made me a better boss—and I had a lot of room for improvement. I think what I now understand is as a parent, you understand very clearly what your kids need. Your kids need clarity. They need consistency. They need sup-port. They need encouragement. I'm the classic geek and I don't have a strong empathy gene. I've actually been able to people through my children in a sense. Of course, all people need clarity, support, firm rules, consistency, etc. So I think that in many ways because the kids are such a kind of a raw version of people and because you have such a clear duty and obligation to get it right and you think about it all the time, that just thinking about how to be a better parent has helped me think about being a better guide to everybody.

reason: Let's end with a final anecdote that relates back to the Long Tail. Back in the 1980s, you were in a little band that some people know as R.E.M., right?

Anderson: I'm not sure that anybody knows us as anything!

reason: But you were in a band called R.E.M. that morphed into a group called Egoslavia. How did that happen?

Anderson: Coincidentally, there was another band called R.E.M. from a Nowheresville, hick town called Athens, Georgia, wherever that is. We were later to find out. We were preparing to release an album, and a concert promoter thought it would be funny to have a battle of the R.E.M.s, with the winning band getting to rename the loser.

reason: Where did the battle of the bands take place?

Anderson: It was the 9:30 Club, the legendary 9:30 Club in Washington, D.C.

reason: Obviously you did not win the battle of the bands, did you?

Anderson: I would say we lost resoundingly.

I think the first song they played was "Radio Free Europe." It was clear from the first chord what the outcome of that decision was going to be.

reason: And the winner got to rename the loser, right?

Anderson: In the aftermath of this resounding defeat and with a lot of fear involved, we emerged named Egoslavia.

reason: Is there any chance that the former Egoslavia will tour again?

Anderson: It may. I hope for their sake they can find a better bass player than me.

reason: Will the Long Tail ever be fat enough where there will be an audience for Egoslavia?

Anderson: Guess what? Our album is available on eBay now. Parts of it are now in circulation. Tracks have been sampled. People have gotten back in touch with a lot of other [obscure] '80s bands, and they're all coming out again, you know? Some of them through amateur efforts, and some of them are actually being rereleased professionally.