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The Long Tail

Why the Future of Business is Selling Less of More

By Chris Anderson
16-minute read
Audio available
The Long Tail: Why the Future of Business is Selling Less of More by Chris Anderson

The Long Tail challenges existing notions of the market and the entertainment industry by looking at the massive influence of the internet on the economy. Due to new modes of content creation and distribution, it can be more profitable to offer a large number and wide variety of products that appeal to niche consumer groups rather than one certain “hit,” e.g., a blockbuster or bestselling book.

 

  • Anyone who deals with online sales
  • Anyone interested in alternative economic theories
  • Anyone working in the media or entertainment industries

Chris Anderson is an author and entrepreneur. Previously, he was the Business Editor at The Economist and Chief Executive Editor at Wired magazine. In addition to The Long Tail, Anderson has also published Free: The Future of a Radical Price and Makers: The New Industrial Revolution.

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The Long Tail

Why the Future of Business is Selling Less of More

By Chris Anderson
  • Read in 16 minutes
  • Audio & text available
  • Contains 10 key ideas
The Long Tail: Why the Future of Business is Selling Less of More by Chris Anderson
Synopsis

The Long Tail challenges existing notions of the market and the entertainment industry by looking at the massive influence of the internet on the economy. Due to new modes of content creation and distribution, it can be more profitable to offer a large number and wide variety of products that appeal to niche consumer groups rather than one certain “hit,” e.g., a blockbuster or bestselling book.

 

Key idea 1 of 10

In the world of online entertainment, a market of niche goods in small but steady demand rivals a market of hits.

There’s an established demand curve in any industry: the most-valued products generate the highest demand (the head of the curve) and the least-valued generate the smallest (the tail).

We’re inclined to think of bestselling books and blockbuster movies – goods at the head of the curve – as the prime sources of profit. But, in the present economy, businesses can thrive by offering a large selection of goods that appeal to many small groups of people.

In other words, nowadays businesses can succeed by using the strategy of the “long tail.”

The fact is, when it comes to total sales in an online market, a sufficient number of niche titles can compete with the best sellers.

For example, Amazon’s Jeff Bezos recognized the potential of the internet to offer an unprecedented selection of books. Amazon offers approximately five million books on its website, whereas the largest superstores can only carry around 175,000. In fact, Amazon’s statistics reveal that books that aren’t available in the average bookstore make up over 30 percent of the existing market.

Why?

In short, popularity is no longer necessary for profitability. In the online market, to sell a niche product is just as valuable as selling a “hit.”

Consider the online music-streaming service Rhapsody. It offers more than 4.5 million songs and each track – regardless of whether it’s one of their top 900,000 – gets streamed at least once per month. Since every track costs the same price and generates the same profit, it doesn’t matter to them whether 20,000 people buy the same track or whether each member purchases whatever tracks they like.

And, like Amazon, a huge number of Rhapsody’s total sales (45 percent) come from tracks that aren’t also sold in traditional offline retail – suggesting that there’s a demand for a bigger selection.

That’s the essence of the “long tail” concept: a huge number of relatively unpopular products can rival a small number of very popular ones.

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