Information Economics : The Long Tail
What's powerful about the long tail is the sheer size of it.
Average borders carries around 100,000 titles, yet just more than a quarter of amazon's earnings comes from outside these 100,000 titles. And the thrilling part is this is market is growing - and rapidly!
In fact most successful internet businesses capitalize on the long tail in some way or the other. Google gets most of its revenue from the long tail, so does ebay. The two important aspects they overcome are :
scale geography expaning not only existing markets but creating new ones!
In fact as these companies offered more and more they realized demand followed supply!!
The act of vastly increasing choice seemed to open up demand for that choice.\
These niche markets account for anywhere between 25% to 50% of their total revenues and these are not sold by their mortar and brick competitors!
The essential lesson to learn is:
A very very big number (the tail) multiplied by a very small number (demand) still equals a very big number - which is only increasing.
The advent of new technology increased the distribution channels and the distribution capabilities. This was the case with the church and the bible with the coming of the gutenburg press. So was it with the coming of radio and electromagnetic waves. But still things were local and reaching a natioal audience was not an option. This changed with the beginning of chain or network broadcasting. The formation not only allowed distribution channels but also created a networked culture. This shared culture, the network, the commonality of opinion was what the marketing expolited.
It was almost as if the marketing people could make or break a hit. And for some time they did. However, all this started to end with the onslaught of the p2p networks, and not only because people were getting 'free' music but because there were fundamentally more choices and for once people could actually realize what could music was and what trash they were being served as popular earlier ;)
Average borders carries around 100,000 titles, yet just more than a quarter of amazon's earnings comes from outside these 100,000 titles. And the thrilling part is this is market is growing - and rapidly!
In fact most successful internet businesses capitalize on the long tail in some way or the other. Google gets most of its revenue from the long tail, so does ebay. The two important aspects they overcome are :
scale geography expaning not only existing markets but creating new ones!
In fact as these companies offered more and more they realized demand followed supply!!
The act of vastly increasing choice seemed to open up demand for that choice.\
These niche markets account for anywhere between 25% to 50% of their total revenues and these are not sold by their mortar and brick competitors!
The essential lesson to learn is:
A very very big number (the tail) multiplied by a very small number (demand) still equals a very big number - which is only increasing.
The advent of new technology increased the distribution channels and the distribution capabilities. This was the case with the church and the bible with the coming of the gutenburg press. So was it with the coming of radio and electromagnetic waves. But still things were local and reaching a natioal audience was not an option. This changed with the beginning of chain or network broadcasting. The formation not only allowed distribution channels but also created a networked culture. This shared culture, the network, the commonality of opinion was what the marketing expolited.
It was almost as if the marketing people could make or break a hit. And for some time they did. However, all this started to end with the onslaught of the p2p networks, and not only because people were getting 'free' music but because there were fundamentally more choices and for once people could actually realize what could music was and what trash they were being served as popular earlier ;)
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