BLOG STARTUPS, VENTURE AND THE TECH BUSINESS

November 12 2010
by Todd Hixon

Italy And The Long Tail

A recent trip to Italy made me think about the “Long Tail”, the name Chris Anderson of Wired coined for the many small, specialized producers in a market, who he argues benefit greatly from the Internet (original article here).  Chris’ essay speaks mostly about media (movies, music, books), however, this idea has since been applied to many categories.

Italy has a Long Tail economy; it excels in specialized, high-value add products and services:  fashion, leather goods, textiles, food and wine, inns and restaurants.  There are few big, global companies.  An Italian friend explained:  “Our country is chaotic at the national level, so we focus on small, local business that we can manage.”

And, it’s a modern country (built on top of a museum).  Every hotel had Internet.  Tickets to the Vatican museum can be bought on the web (but never on Sunday, it seemed).  So, how has Italian business done in the Internet era?

Tourism is thriving, and the value of the Internet for planning a trip to Italy is impressive.  Friends told me: hire a guide in Rome; without one you are overwhelmed.  There are dozens of small, local companies in Rome offering guided tours.  Trip Advisor provides rich information on many of them, and helped us find EasyItalTours.com, who are excellent.  Our guide, Fabio (pictured below, right in St. Peter’s Basilica), is one of five owners of the company.  He says that maintaining quality is the key in his business.  When he sees a guide with a customer he can tell from the customer’s face if s/he is satisfied (and I infer he does not keep guides who disappoint).  The Internet makes this value visible, allowing a small business to compete for customers from around the world. The same went for hotels and restaurants.  None of the places we liked were famous (and one that is famous we did not like).  We found many of the good ones from customer ratings on the Internet.

Ceramics also appear to thrive:  small producers in the Amalfi region make beautiful products with a variety of distinctive looks, have their own shops, and sell directly to visitors (the picture below is part of one company’s offering).  The media products that Chris analyzed are similar: unique and directly experienced by customers.

I was struck by Italians’ vocal criticism of China, even more than I hear in the U.S. The Chinese are the world’s nouveau riche, so scorch marks in tourist destinations are predictable. There are also serious economic wounds:  the major Italian fashion brands have long been “knocked-off” (imitated) or counterfeited by Asian producers.  And, Italian producers of high quality intermediate goods (e.g., woolen cloth) feel increasing pressure from Asian competition (see The Economist).

My conclusion: Italy validates the Long Tail hypothesis, with a caveat:  it works best with products that are unique/custom, or when there is a direct, rich, “intimate” relationship between producer and consumer. If you move very far from that, beware of the knock-offs.

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