Mknac’s Weblog

Diving into the shallow pool of Web 2.0 and Social Media head first!

“The Long Tail”

I recently read “The Long Tail” by Chris Anderson. In this book Anderson describes an Internet business model that many e-retailers, such as Rhapsody, Itunes, and Amazon, are successfully using. Further the author describes old brick and mortar business models and provides some context and history on the evolution of business models.

I totally agree with Anderson’s ideas. In fact Anderson’s “The Long Tail” explains what I think that I and most others inherently understand about why e-businesses are able to make a profit and provide goods at a lower cost than a brick and mortar store. However there is one key aspect of the long tail I didn’t get until reading “The Long Tail;” volume in the long tail.

The Long TailThe long tail is a statistical curve showing the probability of sales. Rather than looking like a bell shaped curve the long tail is skewed to the left with a declining long tail to the right that never reaches zero. What this means is that although some items aren’t high volume sellers they do sell consistently over time at a low volume. What you lack in individual sales volume you can more than make up for in overall volume of items in the long tail.

If an e-music retailer has hundreds of thousands of songs that sell say 4 times a year that’s significant money as opposed to the current hit of the week. Considering that the digital storage cost of those low purchase songs in the long tail is next to nothing this isa great deal for the e-retailer. A brick and mortar store can’t afford to stock old songs that only sell once a quarter.

The other day, I now realize, I found myself buying a song in the long tail. I was surfing Itunes and came across Frank Sinatra’s “New York, New York.” I thought here’s a great old song so I purchased it. Clearly this song is a niche market in the long tail. Not selling at high volume but selling consistently in the long tail.

The long tail concept can be applied to many other products. I thought that the example of Lulu.com, a book self- publisher, and Amazon’s print-on-demand books intriguing. When somebody buys a book from Lulu or specific Amazon books the digital file is then printed and shipped. The product exists only in digital format until purchased so there are limited storage costs. The company only incurs a cost (printing and distribution to the buyer) when it gains the revenue from the purchase.

I had a long tail epiphany at work today that reading “The Long Tail” made possible. I was looking at trends of my organization’s Intranet site; specifically our newsletter. Our newsletter is a long tail product. When an issue comes out there is heavy consumption of it then it slows off. I did a quick check of past issues out to six months and all had a long tail. Although an issue was old people are still occasionally downloading it.

If you’re reading this there is a good chance that you too have bought or have products in the long tail but just didn’t realize it.

Reference:

Long Tail Graphic: Anderson, C (October 2004) The Long Tail. Retrieved June 12, 2008 from the World Wide Web.

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June 12, 2008 Posted by | Uncategorized | , , , , | Leave a comment