Although I’ve been hearing about and occasionally seeing references to a concept called “The Long Tail,” I hadn’t given it much attention until a friend brought it up recently. If you’re in the business of helping your clients promote their products or services I think The Long Tail concept is worth understanding.
Although the principles behind The Long Tail aren’t new, Chris Anderson has popularized these concepts and applied them to business in a fresh way. Companies like eBay, NetFlix, Google, Amazon, and Rhapsody are perfect examples of the economics of The Long Tail. Each of these services exists because low distribution costs enable them to reach and satisfy customers across the entire globe.
Anderson says, “Products that are in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters, if the store or distribution channel is large enough.”
eBay’s distribution channel is large enough and efficient enough to allow them to build the ultimate “long tail” business in which they offer products that perhaps a handful of people in the entire world would be interested in purchasing.
Google allows a business to buy targeted text ads for pennies, whereas other advertising methods like billboards, magazine ads, etc. require some economy of scale.
From Chris Anderson’s article, “The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon’s book sales come from outside its top 130,000 titles.”
“Rhapsody streams more songs each month beyond its top 10,000 than it does its top 10,000. In each case, the market that lies outside the reach of the physical retailer is big and getting bigger.”