The Long Tail
How endless choice is creating unlimited demand
Chris Anderson
Buy the book, India Only
Strength of broadcast vs unicasting
The great thing about broadcast is that it can bring one show to millions of people with unmatchable efficiency. But it can't do the opposite – bring a million shows to one person each. Yet that is exactly what the Internet does so well. The economics of broadcast era required hit shows – big buckets – to catch huge audiences. Serving the same stream to millions of people at the same time is hugely expensive and wasteful for a distribution network optimized for point-to-point communications.
Increasingly, the mass market is turning into a mass of niches.
Observation of Long Tail
The three main observations:
- the tail of available variety is far longer than we realize
- it's now within the reach economically
- all those niches, when aggregated, can make up a significant market – seemed indisputable, especially backed up with heretofore unseen data.
Weakness of broadcasting
The curse of broadcast technologies is that they are profligate users of limited resources. The result is yet another instance of having to aggregate large audiences in one geographic area – another high bar above which only a fraction of potential content rises.
Observations of Long Tail in real life
In fact, as these companies offered more and more (simply because they could), they found that demand actually followed supply. The act of vastly increasing the choice seemed to unlock demand for that choice. Whether it was latent demand for niche goods that was already there or the creation of new demand, we don't yet know. But what we do know is that with the companies for which we had the most complete data – Netflix, Amazon and Rhapsody – sales of products offered by their bricks-and-mortar competitors amounted to between a quarter and nearly half of total revenus – and that percentage is rising each year. In other words, the fastest-growing part of their business is sales of products that aren't available in traditional physical retail stores at all.
When you can dramatically lower costs of connecting supply and demand, it changes not just the numbers, but the entire nature of the market. This is not just a quantitative change, but a qualitative one, too. Brining niches within reach reveals latent demand for non-commercial content. Then, as demand shifts toward the niches, the economics of providing them improve further, and so on, creating a positive feedback loop that will transform entire industries – and the culture – for decades to come.
Young people don't want to rely on Godlike figure from above to tell them what's important. They want control over their media, instead of being controlled by it. (Rupert Murdoch)
Response rates as low as 1 percent could still be profitable.
Assumptions for the Long Tail:
1. There are far more niche goods than hits
2. The cost of reaching those niches is now falling dramatically
3. Simply offering more variety, however does not shift demand by itself. Consumers must be given ways to find niches that suit their particular needs and interests. These 'filters' can drive demand down the tail.
4. Once there's massively expanded variety and the filters to sort through it, the demand curve flattens
5. All those niches add up – so collectively they can comprise a market rivaling the hits
6. Once all this is in shape the natural shape of the demand is revealed.
Significance of blogs and social media like sites
Consumers also act as guides individually when they post user reviews or blogs about their likes and dislikes. Because it's now so easy to tap this grassroots information when you're looking for something new, you're more likely to find what you want faster than ever. That has the economic effect of encouraging you to search further outside the world you already know, which drives down into the niches.
There will always remain a division of labor between professionally and amateurs. But it may be more difficult to tell the two groups apart in the future.
Once upon a time, a talent eventually made its way to the tools of production; now it's the other way around.
From filmmakers to bloggers, producers of all sorts that start in the Tail with few expectations of commercial success can afford to take chances. They're willing to take more risks, because they have less to lose. There's no need for permission, a business plan, or even capital. The tools of creativity are now cheap, and talent is more widely distributed than we know. Seen this way, the Long Tail promises to become the crucible of creativity, a place where ideas form and grow before evolving into commercial form.
That's the root calculus of the Long Tail: The lower the costs of selling, the more you can sell. As such, aggregators are a manifestation of the second force, democratizing distribution. They all lower the barrier to market entry, allowing more and more things to cross that bar and get out there to find the audience.
Like the chain retailers, Amazon also connects centralized supply with scattered demand, but the genius of its model is that the store and customer don't have to be in the same place. Ironically, this makes it more likely that the supply and demand will actually connect. Regardless, even if they don't Amazon bears none of the cost – the surplus stock simply depreciates on the shelves of a third party.
Peers trust peers. Top-down messaging is losing traction, while bottom-up buzz is gaining power.
For a generation of customers used to doing their buying research via search engine, a company's brand is not what the company says it i, but what Google says it is. The new tastemakers are us. Word of mouth is now a public conversation, carried in blog comments and customer reviews, exhaustively collated and measured. The ants have megaphones.
In world of infinite choice, context, not the content is the king.
The advantage of probabilistic systems is that they benefit from the wisdom of the crowd and as a result can scale nicely both in breadth and depth. But because they do this by sacrificing absolute certainty on the microscale, you need to take any single source with a grain of salt. Wikipedia should be the first source of information, not the last. It should be a site for information exploration, not the definitive source of facts.
The same is true for blogs, no single one of which is authoritative. Blogs are a Long Tail, and it is always a mistake to generalize about the quality or nature of content in the Long Tail – it is, by definition variable and diverse. But collectively blogs are proving more than an equal to mainstram media. You just need to read more than one of them before making up your own mind.
The point is not that every Wikipedia entry is probabilistic, but that the entire encylcopedia behaves probabilistically. Your odds of getting a substantive, up-to-date, and accurate entry for any given subject are excelled on Wikipedia, even if every individual entry isn't excellent.
With probabilistic systems, though, there is only a statistical level of quality, which is to say: Some things will be great, some things will be medicore, and some things will be absolutely crappy. That's just the nature of the beast. The mistake of many of the critics is to expect otherwise.
On why Long Tail is a non-zero sum game
On a store shelf or in any other limited means of distribution, the ratio of good to bad matters because it’s a zero sum game: Space for one eliminates space for the other. Prominence of one obscures the other….
But when you have unlimited shelf space, it’s a non-zero sum game… Inventory is “non-rivolrous” on the Web and the ratio of good to bad is simply a signal-to-noise problem, solvable with information tools. Which is to say it’s not much of a problem at all. You just need better filters. In other words, the noise is still out there, but Google allows you to effectively ignore it. Filters rule!
You can think of the Long Tail starting as a traditional monetary economy at the head and ending in a non-monetary economy in the tail. In between the two, it's mixture of both.
On mass markets
The compromises necessary to make something appeal to everyone mean that it will almost certainly not appeal perfectly to anyone – that’s why they call it lowest common denominator.
Why Long Tail changes Pareto rules- You can offer many more products
- Because it is so much easier to find these products (thanks to recommendations and other filters), sales are spread more evenly between hits and niches.
- Because of the economics of niches is roughly the same as his, there are profits to be found at all levels of popularity.
Whether people will pay for niche content
So bottom line: Human attention is more expendable than money. The primary effect of the Long Tail is to shift our taste toward niches, but to the extent we’re more satisfied by what we’re finding, we may well consume more of it. We just won’t necessarily pay a lot more for the privilege.
If you think about it, today’s hit is tomorrow’s niche.
About how a article can be accessible even when it is not the latest
What’s particularly interesting about time and the Long Tail is that Google appears to be changing the rules of the game. For online media, like media anywhere, there is a tyranny of the new. Yesterday’s news is fishwrap, and once content falls off the front page of a Web site, its popularity plummets. But as sites find more and more of their traffic coming from Google, they’re seeing this rule break.
On Infinite Shelf space
But we are entering the era of infinite shelf space. Two of the main scarcity functions of traditional economics – the marginal costs of manufacturing and distribution – are trending to zero in Long Tail markets of digital goods, where bits can be copied and transmitted at almost no cost at all.
Social media
In short, we’re seeing a shift from mass culture to massively parallel culture. Whether we think of it this way or not, each of us belongs to many different tribes simultaneously, often overlapping, often not. We share some interest with our colleagues, some with our families, but not all of our interests. Increasingly, we have other people to share them with, people we have never met or even think of as individuals (e.g. blog authors or playlist creators).
Effectiveness of blogs
What really sticks in the craw of conventional journalists is that although individual blogs have no warrant of accuracy, the blogosphere as a whole has a better error-correction machinery than the conventional media do. The rapidity with which vast masses of information are pooled and sifted leaves the conventional media in the dust. Not only are there millions of blogs and thousands of bloggers who specializes, but, what is more, readers post comments that augment the blogs, and the information those comments, as in the blogs themselves, zips around blogland at the speed of electronic transmission.
Effect on news journalists and media
But news and information is clearly no longer the exclusive domain of professionals.
With an estimated 15 million bloggers out there, the odds that a few will have something important and insightful to say are good and getting better. And our filters improve, the odds that we’ll see them are getting better, too. From a mainstream media perspective, this is simply more competition, whatever the source. And some audience will prefer it. Like it or not, fragmentation is inevitable.
On why more information is good then a few “authoritative sources”
Fundamentally, a society that asks questions and has the power to answer them is healthier society than one that simply accepts what it’s told from a narrow range of expers and institutions. If professional affliation is no longer a proxy for authority, we need to develop our own gauges of quality. This encourages us to think for ourselves. Wikipedia is a starting point for exploring a topic, not the last word.
Secret of Long Tail
The secret to creating a thriving Long Tail business can be summarized in two imperitives:
- Make everything available
- Help me find it.
Creating a successful Long tail aggregator
- Move inventory way in… or way out
- Let customers do the work
- One distribution method doesn’t fit all
- One product doesn’t fit all
- Share information
- Think “and” not “or”
- Trust the market to do your job: “In abundant markets, you can simply throw everything out there and see what happens, letting the market sort it out. The difference between “pre-filtering” and “post-filtering” is predicting versus measuring, and the latter is invariably more accurate. Online markets are nothing if not information-rich, it’s relatively easy for people to compare goods, and spread the word about they like”
- Understand the power of free
