By: Adaeze & Michelle

The Long Tail

HOW ENDLESS CHOICE IS CREATING UNLIMITED DEMAND

• Wired Magazine definition of the long tail. It’s the myriad of the niche products whose collective market share can rival the blockbusters.

• The long tail is when selling less of more can be just as profitable as selling more of less

The Long Tail: Why the Future of Business Is Selling Less of More

What the long tail looks like

• Before the Industrial Revolution, most culture was local. There was an earlier era of niche culture defined by geography.

• Culture was fragmented because of the lack of rapid transportation and communication and the limited cultural mixing, new ideas and trends.

• The early 19th era of modern industry and the growth of the railroad system led to massive waves of urbanization.

The Rise of the Hit

• Hubs of transportation mixed people like never before – creating a powerful engine of new culture all that was needed was mass media

• In mid 19th century several technologies emerged. These technologies led to the first great wave of popular culture.

• As technology grew so did the ability for culture, ideas and trends to reach further places, creating a greater demand for popular culture

MAKE IT, GET IT OUT THERE AND HELP ME FIND IT

• Our culture and economy are increasingly shifting away from a focus of a relatively small number of hits at the head of the demand curve, but moving towards a huge number of niches in the tail.

• In an era without the constraints of physical shelf space, narrowly targeted goods and services can be as economically attractive as mainstream fare.

• The true shape of demand is revealed only when consumers are offered infinite choice.

The Three Forces of the Long Tail

Force 1: Democratizing the tools of production• giving everyone the capacity to create = More stuff which

lengthens the tail.

Force 2: Cutting the cost of consumption by democratizing distribution• The fact that anyone can make content is only meaningful if

others can enjoy it. the Internet that made everyone a distinguisher = More access to niches, which flattens the tail

Force 3: Connecting supply and demand• Introducing customers to these new and newly available goods

and driving demand down the tail = Drives businesses from hits to niches

• There are far more niche goods than hits and this ratio is growing larger.

• The cost of reaching those niches is now falling dramatically allowing the possibility to offer a massively expanded variety of products.

• All those new niches add up. Although none sell in huge numbers, there are so many niche products that collectively they can comprise a market rivalling the hits.

• Once all of this is in place the natural shape of demand is revealed.

Rule 1: Move inventory way in…or way out• To offer even more variety, company’s E.g. Amazon have

expanded to “virtual inventory”• Digital inventory E.g. ITunes the cheapest. The switch

from shipping plastic discs to streaming megabits.

Rule 2: Let customers do the work• The work is being done by the people who care about it,

and know there own needs.• What users happily do for free what companies would

otherwise pay employees to do.

Rule 3: One distribution method doesn’t fit all• If you focus on distributing to just one customer group,

you risk losing the others.• The best long tail market transcends time and space

Long Tail Rules

Rule 4: One product doesn’t fit all • Once upon a time there was just one way to buy music.

However, “microchunking” a strategy that separates content into its component parts.

• This is so people can consume the product which ever way they feel.

Rule 5: One price doesn’t fit all• Different people are willing to pay different prices for

any number of reasons.• Markets with room for abundant variety, variable

pricing can be a powerful technique.

Rule 6: Share information • All the data of the product already exists; the question

is how best to share it with customers.

Rule 7: Think “and,” not “or”• There is a mistake in thinking that everything is a

either/or choice. • In markets with infinity capacity, the right strategy is to

almost always offer it all.

Rule 8: Trust the market to do your job• In scarce markets, you’ve got to guess at what will sell.• In abundant markets, you can simply throw everything

out there and see what happens, letting the market sort it out.

• The lesson: don’t predict; measure and respond.

Rule 9: Understand the power of free • One of the most powerful features of digital markets is

that they put free within reach; because their costs are near zero. E.g. Skype.

• Availability of a product is also important in distinguishing long tail.

• For example when researching if Fifa 06 – a 5 year old game was available on Amazon we found that the game was very much available.

• However, when we searched for Fifa 06 on HMV it was unavailable.

• This is because Amazon is able to provide dated products as it has the means to. It establishes a long tail system whereas, HMV more likely will provide mainstream in demand products.

Availability

• American History X is a movie that came out in 1998 when searching for the DVD on HMV online and at the store it wasn’t available.

• However, Harry Potter and the Philosophers Stone (2001); the first of the harry potter films to come out 10 years ago was available online and at the store.

• Casablanca (1942) is arguably one of the best films of all time and although an old movie that would most likely have a niche target market the DVD was available at HMV. This is because of its worldwide appeal.

DVDS

• Britney Spears is a worldwide global name and it would be of no surprise that her first album titled Hit me baby one more time released in 1999 is still available on HMV even though it may not necessarily be a big seller.

• Vanessa Williams has released 8 studio albums, her first album The Right Stuff (1988) was not available. Even one of her more recent albums Everlasting Love released in 2005 was not available online on HMV.

• However, all her albums were available to buy on Amazon.

Music

The mass of niche

Online vs. Store

The power of the customer

The end of inventory

• Thus the economic efficiencies of dealing only in bites wouldn’t just be extended in the long tail but also improving the economics of the head, where there are far more pounds at stake.

• This is needless to say a powerful attraction and will only accelerate the adoption of the technology.

The conclusion of the long tail