I’ve been reading The Long Tail, the 2006 blockbuster extolling the unlimited consumer choice made possible by the internet. The book was written by Chris Anderson, editor of Wired magazine. Its title is now part of the marketing lexicon, and aptly captures the author’s thesis: there’s a lot of money to be made by offering goods beyond the top sellers. Niche products individually don’t account for much revenue, but cumulatively they add up to a lot of profit.

How well do Anderson’s observations stand up four years later? Better than most predictions, I’d say. Anderson’s examples are derived largely from the behemoths of internet retailing. He documents success stories that continue in 2010, such as Amazon, eBay, and Netflix. He’s at his most prescient when writing about the entertainment industry. Anderson once worked in the music business and correctly predicts the increasing demand for lesser known artists at the expense of major labels and mass marketing. His description of the new generation of consumers rings truer today than ever. Younger people are accustomed to scanning the internet and picking things that establish their identities and individualities from this universe. Traditional methods of broadcasting and controlling content are hopelessly outdated for this audience.

The Long Tail doesn’t claim to be a crystal ball, so it’s a bit unfair to critique it for omissions. Nevertheless, it gave scant notice to a a few emerging trends. The most obvious is the connection between social media and internet video. Anderson pictured internet video as a means of selling old TV episodes, but didn’t mention self-production, distribution, and promotion using this avenue. At the time of publication, Google hadn’t yet purchased Youtube. Yet, it’s interesting that Anderson failed to see how the same “democratization” he describes in the recording industry would also apply to video.

Anderson also takes a cursory look at the economics of software-as-a-service (SaaS) companies. Although he illustrates the success of Salesforce.com and how this model creates a secondary market of platform developers to customize it, he doesn’t deal with competition and survival – how these new services will supplant old software, change the consulting business, and whether these spaces will inevitably consolidate as they mature or remain fragmented.

The Long Tail is written for the mass market, but it’s not a how-to book. It won’t tell a start-up or small retailer how to compete with big businesses that have already mastered the distribution system of the internet economy and its virtual warehouses. It’s still highly applicable to e-commerce today, and recommended reading for refreshment and inspiration. There’s likely demand out there for whatever you offer, if you can find a way to connect with it.

The Long Tail: Why the Future of Business is Selling Less of More, by Chris Anderson, Hyperion July 11, 2006, ISBN-10: 1401302378, ISBN-13: 978-1401302375