The Long Tail summary

One factor determining the relation between supply and demand is the amount of content that’s available. The more content released on the market, the longer the tail will be, and the digital age we live in has made creating and releasing content possible for almost everyone.

Indeed, the ubiquitous PC has enabled most people in the Western world to record and produce their own music, make a film or create an ebook. For example, in 2004–2005, the number of albums released increased by a staggering 36 percent, and more than 300,000 free tracks were uploaded to MySpace.

It doesn’t matter how much content there is in the world; finding what we’re looking for isn’t always easy.

Nowadays, distribution needs aggregators, i.e., companies like Amazon or eBay that have access to a massive amount of goods and can make them easy to find and buy. The more ways there are of searching for and finding niche products, the more of them can be sold.

With today’s superabundance of niche products and content, we need help in finding the content and products that suit our individual tastes.

That’s where filters come in.

Unlike traditional stores, online businesses are able to focus on the long tail because they don’t have to worry about the usual overhead costs of retail – like shelf space.

In fact, shelves carry a lot of hidden costs. The average square foot of shelf space needs to generate between $100 and $150 per month for a company to break even.

Because the internet can provide unlimited “shelf space” and a superabundance of choice, it’s primed to give rise to long-tail economics.

Unlimited virtual shelf space means a business needs a lower profit margin to break even or make money. For instance, movie studios charge companies offering digital subscription services the same acquisition costs per title as they do per DVD in physical rental stores. Yet, unlike those stores, digital subscription services don’t have to pay $22 per year to offer a title so they can continue to offer it indefinitely.

Most of the examples so far have been from the entertainment market. But the long tail as an economic concept, although prevalent in the media and entertainment markets, can be extended to most of the world’s industries – among them, manufacturing and advertising.

First, let’s take a look at the manufacturing industry and, more specifically, at LEGO. LEGO takes advantage of the long tail because it caters to niche markets and encourages users to create their own products. Its online store offers more than one thousand products, 90 percent of which aren’t available for purchase in traditional retail stores.

Now that you’ve discovered the benefits of the long tail, you’re probably wondering how you can incorporate it into your own online business strategy.

To take advantage of the long tail, the first step is to centralize and expand your inventory to reduce the costs of making so many products available.

Long-tail marketing targets niches rather than the largest possible audience. Because of this, it’s able to appeal to potential customers in ways that are specific to those customers.

One such marketing strategy is consumer-generated advertising, which can help to define a brand’s identity and stimulate a dialog around it.

The key message in this book:

The future of culture and commerce is in niche products with a small but specific demand. In short, the future is in the long tail of the demand curve. Focusing on the long tail is a strategy that the most successful companies of the last decade all have in common. The monopoly of the hit – the wildly popular product with the broadest audience – is a thing of the past.