Tuesday, September 26, 2006

The Long Tail

I just started reading The Long Tail last night (thanks to an early birthday gift from my friend and former business partner Scott Ensley).

I remember reading portions from Wired magazine and thinking that what's really happening (other than the fact that this Chris Anderson dude is finally articulating what I've been thinking since 1999) is that finally, all the excuses I've had for not launching my own products or ideas are slowly being eliminated by today's technology enabling anyone with a little ambition and a few good ideas, to capitalize on them.

The theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail. As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-target goods and services can be as economically attractive as mainstream fare.

One example of this is the theory's prediction that demand for products not available in traditional bricks and mortar stores is potentially as big as for those that are. But the same is true for video not available on broadcast TV on any given day, and songs not played on radio. In other words, the potential aggregate size of the many small markets in goods that don't individually sell well enough for traditional retail and broadcast distribution may someday rival that of the existing large market in goods that do cross that economic bar.

The term refers specifically to the orange part of the sales chart above, which shows a standard demand curve that could apply to any industry, from entertainment to hard goods. The vertical axis is sales; the horizontal is products. The red part of the curve is the hits, which have dominated our markets and culture for most of the last century. The orange part is the non-hits, or niches, which is where the new growth is coming from now and in the future.


Thanks again for the book Scott!

That's Right!


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