Nov 17, 2008 12:00 PM,

The long tail and other business myths

By Rich Karpinski

The "less of more" approach has recently come under fire, as critics question its practicality.

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“In general, at companies [such as telecom service providers] where a lot of resources are deployed to attract subscribers using [average-revenue-per-user]-proven business models, you have to be careful not to venture too far into the experimental,” said Jonathan Hurd, director of strategy consulting firm Altman Vilandrie & Co., noting that with an estimated $200 million in annual revenue, YouTube is still a “blip” in the larger video delivery industry.

That's not to say carriers can afford to ignore the long tail — especially in the mobile area, where the influence of the Web is becoming strong, Anderson said. “For mobile offerings that bypass the carriers, such as iPhone and Android, I think we will see something closer to Web-based long-tail effects kick in,” he said. “The iTunes and Android app stores are a glimpse of that.”

That said, service providers must be careful to differentiate between a long-tail approach that leverages a large “creator base” to uncover hits, versus one that simply creates endless amounts of user-generated content available over networks with limited bandwidth resources and expensive content storage costs. Such limits are of particular concern in a down economy like today's — a reality facing many Web companies that now are scrambling to find a way to squeeze new revenue from big but largely non-monetized audiences.

“Oftentimes, chasing the long tail is making a virtue out of a necessity,” said Roger Entner, analyst with Nielsen IAG. “If you have a choice, always go for the fat tail. For all the guys that are runners-up for the fat tail, you chase the long tail.”