The Long TailWhy the Future of Business is Selling Less of MorebyChris Anderson

Lecture byMelih Arat

Vilfredo Pareto

%80 of the results are influenced by %20 of reasons

Reasons

20%

Reasons

80%

Results

80%

Results

20%

What’s a 'Long Tail'?

• Thanks to the Internet, the concept of limited supply has begun to become obsolete.

• most of us want more than just what is popular; • everyone's taste is non-mainstream at some point. • The problem is-- or used to be --finding the products to satisfy one's

non-mainstream demands.• New technologies have made it ever more possible for retailers on the

net to stock a variety of goods

Six Themes of the Long Tail Age

1. In just about all markets, there are far more niche goods than hits.

2. The cost of reaching these niches is falling dramatically,

3. Potential customers, however, have to be helped to find these niches;

4. When the variety has been expanded and the filters are in place, the demand curve flattens – the hits are less popular and the niches more so.

5. All the niches add up; there are so many niche products that as a group they can rival the hits.

6. There is no shelf space and the distribution bottlenecks of the past.

1. The tools of production have to become democratized. • The personal computer is of course the best possible example.

Millions of people can now do what only professional filmmakers or writers, for example, could do just a few years ago. The result is that the available variety of content is growing faster than ever before.

1. The costs of consumption have to be cut by democratizing distribution.

• The first force is only really meaningful if others can enjoy it – if they can reach it or find it. The Internet, for instance, makes it easy to reach more people – democratized distribution par excellance.

1. Supply and demand have to be connected. • Consumers must find out about these newly available goods in

order for the whole system to work. Demand must be driven down the tail.

• Move inventory way in… Or way out. • Either use digital inventory, or store your goods in partners’

warehouses – this will lower costs and simplify operations immensely.

• Let customers do the work.• Let them take care of coming up with reviews for your goods (this is

termed as ‘crowdsourcing’). Customers can usually do a better job; reviews submitted by users are often well-informed, articulate and, very importantly, trusted by other users.

• One distribution method doesn’t fit all.• Some people prefer to shop online, others from the privacy and

comfort of their own homes. Some want their goods immediately, others prefer to wait. If retailers focus on just one group they risk losing the others. Multiple distribution channels are the only way to reach the biggest potential markets.

Long Tail Rules

• One product doesn’t fit all, either. • The winning strategy now is to separate content into its separate

parts – to ‘microchunk’ it – so that people can consume it however they want to, as well as remix it to create something new. Newspapers, for instance, are microchunked into individual articles, which are used by other sites to concoct more focused product out of this content.

• One price doesn’t fit all. • In markets with room for abundant variety, variable pricing can be a

powerful technique to maximize a product’s value and the market’s size. iTunes, for instance, which sells songs for $0.99, will sell music at a lower price if an entire album is purchased.

• Share information. • The availability of information is what can make or break an entire

operation. Of course it needs to be presented in a way that helps order choice, not confuse customers.

Long Tail Rules

• Think ‘and,’ not ‘or.’ • One of the symptoms of scarcity thinking is assuming

that markets are zero-sum – that everything is an either/or choice. In markets with infinite capacity, however, the strategy is to offer it all.

• Trust the market to do your job. • In abundant markets you can simply throw everything

out there and let the market sort it all out. Measure and respond – don’t predict.

• Understand the power of free. • One of the most powerful features of digital markets is

that they put ‘free’ within reach – their costs are near zero, and their prices can be this way too.

Long Tail Rules