bahag economics

I just finished reading Chris Anderson's The Long Tail. I picked it up after hearing about how Google CEO Eric Schmidt described his company's mission as "serving the long tail." The thesis of the book, in the words of Wikipedia, is that the Internet has made it possible for "products that are in low demand or have low sales volume [to] collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters, if the store or distribution channel is large enough."

In yesterday's Jescom workshop on film, Nick Deocampo stressed the need for Pinoy film makers to focus on the distribution of works, echoing a theme in the book. The Long Tail, Anderson says,

is the culmination of a string of business innovations that date back more than a century- advancements in the ways we make, find, distribute, and sell goods. Think about all the non-Internet elements that enable, for instance, an Amazon purchase: FedEx, standard ISBN numbers, credit cards, relational databases, even bar codes.

It took decades for these innovations to emerge and evolve. What the Internet has done is allow businesses to weave together those types of improvements in a way that amplifies their power and extends their reach. In other words, the Web simply unified the elements of a supply-chain revolution that had been brewing for decades.

Indeed the true roots of the Long Tail and unlimited shelf space go back to the late nineteenth century and the first giant centralized warehouses- cavernous buildings erected on industrial lots near the junctions of railway lines in the American Midwest, starting in Chicago. Under their immese steel roofs, the era of massive choice and availability arose on towers of wooden pallets, built with the bulk purchasing afforded by then-new mass production. Railway cars delivered this new variety on a network of iron tracks that were transforming the country's economy and culture.

Among the innovations that paved the way for the Long Tail were:

• the 1897 Wish Book of Sears and Roebuck, "786 pages of everything under the sun at prices that can hardly be believed," made possible by volume buying, railroads and the post office, and later rural free delivery and parcel post;
  
• the supermarket, which first appeared in 1930 and proliferated in the 1950s and 1960s- it "helped create the Middle Class. Its low prices freed up substantial funds for families to spend on cars, homes, education and other needs and amenities of life;"
• toll-free 800 numbers, which enabled an increasingly affluent suburban generation of the 1970s to shop from the home using credit cards
• the Internet, which enabled the rise of e-commerce by "offering a catalog to everyone- with no printing and no mailing required."

In the Philippines, we see the Long Tail (what I also call the Long Bahag) in the sunrise industries of online schools (the Long Bahag of education) and global sharing or outsourcing (the Long Bahag of services).

One movement that seeks to ensure that the Philippines benefits from the Long Tail is the online signature campaign for Paypal to expand its services in the Philippines. Paypal is an e-commerce business that allows payments and money transfers to be made through the Internet. Show your support here.