The Long Tail: Why the Future of Business is Selling Less of Moreby Chris Anderson
In The Long Tail: Why the Future of Business is Selling Less of More, author Chris Anderson examines the changing landscape of media and entertainment industries. He explains how the traditional system of hits ruling the market is being replaced by a fragmented market of countless niches, and how the Internet and other technologies are affecting the way people consume media. This book provides readers with a better understanding of the new market and how to capitalize on it.
The Long Tail: Unlocking Profits in Niche Markets
In the past, the entertainment industry relied on big hits to make money and attract large audiences. Popular songs, movies, and books were everywhere, and people naturally gravitated towards what was popular. However, not everyone wants to stick to mainstream choices. We all have unique tastes, and sometimes we prefer niche products that cater to our specific interests. Unfortunately, in recent years, these niche alternatives were overshadowed by industries chasing quick profits.
But things are changing now with the internet. It's easier to find and access niche products, and more people are demanding them. Companies have realized the importance of creating products for specific groups instead of just going after big hits. Even if these niche products aren't as popular, they can still be successful by meeting the needs of their target audience.
This shift from hits to niche markets is known as the Long Tail theory. It says that a large number of less popular products can collectively compete with a small number of extremely popular ones. Businesses can thrive by offering a diverse range of products that cater to different interests, tapping into the Long Tail of consumer demand.
For example, let's look at an online music-streaming service like Rhapsody. They have millions of songs in their library. Even if a song isn't in the top charts, it still gets streamed at least once a month. And since every song generates the same profit, it doesn't matter if a lot of people buy the same song or if everyone buys different songs they like.
This example shows that the Long Tail theory has an important implication: even though some products may have low individual demand, when you combine them within a large store or distribution channel, their collective sales can compete with or even surpass the current bestsellers and blockbusters. In other words, the wide variety of niche products available in the Long Tail can together create a market share that rivals the success of popular hits.
Actions to take
Capitalize on Niche Products with the Long Tail Model
The Long Tail is a business strategy that takes advantage of the availability of niche products. Technology has changed mass markets into millions of smaller markets, and the traditional entertainment industry is being replaced by the digital entertainment economy. Companies like Rhapsody have a seemingly endless selection of tracks, with each of their top 600,000 tracks being streamed at least once a month. This includes back catalogs, live tracks, B-sides, remixes, covers, foreign bands, and obscure bands. Companies like Google, eBay, Netflix, Amazon, and Rhapsody have been able to capitalize on the Long Tail by overcoming the limitations of geography and scale. The Long Tail business model is based on the idea that a very large number of products multiplied by a relatively small number of sales still equals a very large number. This is possible because of the low cost of connecting supply and demand, which creates a positive feedback loop that will transform entire industries and the culture.
Actions to take
The Three Forces of the Long Tail
Chris Anderson's Long Tail theory states that our culture and economy are transitioning away from a focus on a few popular items and towards a huge variety of niche products. To make the Long Tail meaningful, consumers must have access to an infinite selection of products and the collective sales of all those people in the newly available niches will turn the massive expansion of choice into an economic and cultural force.
The Long Tail is not only measured by the variety of products available, but also by the people who are attracted to them. In most markets, there are far more niche goods than hits and this ratio is increasing rapidly as the tools of production become more accessible and affordable. The cost of reaching those niches is decreasing significantly due to digital distribution, powerful search technologies, and a large number of people with access to broadband.
Technology has made it easier for consumers to find niche content and reduce their search costs. Companies like Netflix and Google use the collective wisdom of millions of consumers to create relevant search results or recommendations. Consumers also act as guides when they post user reviews or blog about their likes and dislikes. This makes it easier to find what one wants at the price they want, which encourages them to search farther outside the world they already know. Anderson's theory suggests that this encourages consumers to search farther outside the world they already know.