See you on the flipside! - The Long Tail Phenomena

This week's reading will be one of my favourites, Chris Anderson's The Long Tail. I thought it was a really well packed reading touching upon the power of long tail as opposed to the physical states like bookshops and record stores. Just when you thought, Kinokuniya is earning the big bucks, but rather, Amazon is the hot shot player here. Why? Digital VS. Physical. Mass VS. Niche. This is the long tail.


Are you ready?


The long tail is the 21st century of misses!


We have been under the perception that mainstream hits are the best sellers but actually what's surprising is that alternatives are bigger hits! Why? The thing is, we really have been exposed to brain-dead summer blockbusters and manufactured pop. The movies we catch at the cinemas and the music we rocked on through the radio needs local audience that would actually watch or listen to them. Finding large local audience isn't an easy task, everyone's got a life that doesn't revolve movies or the radio and so on.


Hence, what can be published or broadcasted is not colossal. Rather, online services carry more inventory than the traditional, physical retailers. This is b/c a niche audience can be found online when everyone is fragmented and scattered throughout the world! The real big deal comes from the niche fare found online. This demand is called the long tail.


Physical VS. Digital


Examples of companies in the physical and digital (long tail) world:


Physical -

Digital -

The 80-20 Rule


Most people would say that just about 20% of top 10,000 titles will sell at least once a month in online media stores. We also all think only 20% of major works will be hits where only 10% will be profitable. The correct answer for the first section that people got wrong is that, wait for it, 99% of every 10,000 titles are in demand! People would pay their cents and dollars for titles that aren't carried physically, like the jukebox!


Why?

• Hit-driven mindset

We always think that something will only make money if they are hits in the market. But what we didn't know was that the "misses" actually make money as well through services like Amazon, Netflix and Rhapsody. More "misses" = Profit = New market. Now, popularity no longer has a monopoly on profitability.

• Poor taste

We always assume that things that aren't in MPH or Speedy are "misses", we think they are products that people wouldn't pay their money for. We think that these 80% of work surely wouldn't be able to last long in the shelves. Our assumptions are wrong. The 80% does bring in the cold hard cash as well, b/c somewhere in different locations, there's bound to be audience. When there's audience, there's interests, there's your demand. The biggest money is in the smallest sales.

As we can see, long tail is giving an impact to revenues from all walks of life - music, movies, books etc. There's an obvious shift as long tail is slowing flooding to all segments, will companies that runs physically be in jeopardy? Fear not! There are new rules for the new entertainment company!

• Rule #1 - Make everything available!

Embrace niches. Aggregate dispersed audiences. Just like you and me, we have different interests. Multiply you and me to a billions and trillions of people around the world! You'll get a range of anime to documentaries to country and folk to German trance to Dota and so on. Remember, where there's audience, there's the opportunity. The trick is to just release everything. Do not think of evaluating the market or conducting a pilot test. Just release everything online. Think about it, you're saving more costs if you release than to evaluate.

• Rule #2 - Cut the price in half. Then lower it.

Yes, you've heard that right! From a business monger's point of view, 99 cents would be too little! But for the audience, 99 cents is too much! Customers are the King, haven't we heard this before? So how do we go about it? By right b/c everything is digitalized, production costs shouldn't exist now shouldn't it? W/ production costs out of the picture, the cost for a song online should be about 79 cents.  

It's crucial to price our items to digital costs, and not physical ones so customers feel worthy of their purchase.  What would drive customers further to purchase the song would be the fact that when they buy the whole album at one shot, they avoid illegal and virus-prone files. Also, they do not need to go through the hardship to collecting track by track of an album. These are called the psychological value of convenience!

• Rule #3 - Help me find it!

This is where you provide means for audience to dig in deeper into resources! Remember the "If you like Britney, you'll love..." example? How it works is that, Rhapsody has a feature that offers a magic box of similar artists and feels like Britney - Pink, No Doubt and The Selectors. You get the hits and the alternatives. Mainstream and grassroot! This would be a great expansion of the audiences' interest and a good way to breach your revenue!

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So what do you think of long tail now? Impressive isn't it! To think that Kinokuniya is the best bookstore in the world but when long tail comes into the picture, things start to change. The hot shots in various business lose their footing. One can only maintain and increase their revenue and pool of audience is by the 3 golden rules! Making everything available, cutting down the price and  providing resources might just make you the advantage player in your field!

Up until now, I've always thought only about the competition of stores physically. I've never knew that there's another sphere beyond that. It's the tug of war between digital and physical. There's now the obvious difference between push and pull. What we have to consider is that everyone is moving towards Cyberspace. That means the way we buy things will be different in mere years to come. Will it be a good thing? What do you think on this?

To long tail?

Cheers.