By Jim McCarthy Jul 13, 2009 0 comments

“The Long Tail” in Live Entertainment

The discussion of the Celebrity Marketing Guru Deathmatch happening between Chris Anderson and Malcolm Gladwell has made me think of something that I wanted to put out there.

(For a recap of this, check out my recent post which more or less explains it all.)

Let’s talk abou the Long Tail for our industry, live entertainment.

The Long Tail is the nearly unlimited catalog of small-demand items that, when delivered cheaply enough, can be a viable business model.  The best example of this is probably iTunes.

In the old days, even a big record store like Tower would stock somewhere around the 2000 most popular albums.  That seemed like a huge selection, but with the advent of the Internet, there almost literally became no limit to how many titles of books or CDs or whatever could be stocked.

On iTunes, specifically, the cost of ‘holding’ something in inventory is, well, pretty close to zero, and the cost of ‘delivering’ one mp3 to a paying customer is also pretty close to zero.    That means that even if you sell just one copy of a given mp3 per month, it’s still profitable to have it in inventory, and if that happens across countless songs, well, it adds up to something good.

Now, I’m personally not privy to the iTunes data, but I’ve seen enough sales distribution reports to suspect that the top 2000 or 5000 or even 10,000 artists in the iTunes catalog outsell the rest combined and probably by a multiple of something.  LIke I said, I’m not privy to that, but I’ve been to a few e-commerce rodeos in my time, so you can take or leave my intuition about iTunes.

What I can tell you, however, is that the Long Tail in live events is not nearly as long.  There are three simple reasons:

1.  Well, I just know it’s not.  I do have the data on that, and while there’s robust demand for thousands and thousands of events, that’s all it is.  Thousands.  Maybe a ten of thousands or two.  Not millions.  Not even hundreds of thousands.

2. The ‘holding’ costs of inventory are high.  In other words, you can’t just keep a show on hold until one person wants it.  You have to perform it at a given time and place, and it precipitates fixed costs.

3. A single instance of demand is not enough.  Not unless you have a very expensive ticket. :)

I do believe very strongly in the ‘medium-sized’ tail, though, which is to say that most people see live entertainment as a handful of concerts, pro sports, and maybe  a Broadway show.  But it’s much broader than that.  In fact, it’s an ecosystem of very healthy niches, to which I wish more and more live entertainment entrepreneurs would apply their creativity and hard work.

Think of it this way: TV’s very business model is in question.  Revenues are threatened, and the industry is in trouble.  Music, too, so all the creative folks pouring their souls into those industries should consider live entertainment.

We need your drive and creativity.  We need your vision, too because as great as live entertainment is, in order for it to fulfill its potential for truly leading the entertainment business, it needs to be better.

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