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The Long Tail (note the capitalisation) is a way of looking at the shifts in how we perceive success in business, originating with the film and book industries. Chris Anderson, in an analysis of sales of books and movies, noted an interesting phenomena. Niche markets, the shallow end of the bitstream, were becoming more popular and more noticable and thus, potentially more profitable overall. He demonstrated this recently in a blog post about a research paper which shows the shift in rentals from Netflix as it increased its selection from 4500 to 18000.
The Long Tail (note the capitalisation) is a way of looking at the shifts in how we perceive success in business, originating with the film and book industries. Chris Anderson, in an analysis of sales of books and movies, noted an interesting phenomena. Niche markets, the shallow end of the bitstream, were becoming more popular and more noticable and thus, potentially more profitable overall. He demonstrated this recently in a blog post about a research paper which shows the shift in rentals from Netflix as it increased its selection from 4500 to 18000.
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For simplicity’s sake, we can liken this to the Pareto Principle which states that 80% of events are due to 20% of causes, for instance, 80% of profits may come from 20% of your inventory. Together, these principles – Pareto and The Long Tail – lead us to question how to deal with changes in the marketplace. Some of these shifts are demonstrated in the following video (click this to watch).
For simplicity’s sake, we can liken this to the Pareto Principle which states that 80% of events are due to 20% of causes, for instance, 80% of profits may come from 20% of your inventory. Together, these principles – Pareto and The Long Tail – lead us to question how to deal with changes in the marketplace. Some of these shifts are demonstrated in the following video (click this to watch).6
Differences in popularity, scarcity and abundance lead to the way we perceive demand. When things are scarce, they become more desirable and often lead to a ‘hit’. Abundant resources may not experience such success, because they are easily acquired. This leads to a position where we realise that even low volumes in sales may collectively have a huge impact. Part of this is due to disintermediation which is a short way of saying ‘cutting out the middle man’. Once we start to desegment the market, to allow people from anywhere to buy our products, we open up new markets. Copyright is part of a process of segmentation of the market, particularly with respect to who can buy particular products. This creates an artificial scarcity of copyrighted works and is the fundamental purpose of copyright, but one which becomes problematic when consumers see one market and business see multiple markets.
Differences in popularity, scarcity and abundance lead to the way we perceive demand. When things are scarce, they become more desirable and often lead to a ‘hit’. Abundant resources may not experience such success, because they are easily acquired. This leads to a position where we realise that even low volumes in sales may collectively have a huge impact. Part of this is due to disintermediation which is a short way of saying ‘cutting out the middle man’. Once we start to desegment the market, to allow people from anywhere to buy our products, we open up new markets. Copyright is part of a process of segmentation of the market, particularly with respect to who can buy particular products. This creates an artificial scarcity of copyrighted works and is the fundamental purpose of copyright, but one which becomes problematic when consumers see one market and business see multiple markets.8
Much of the shift we are seeing is the result of participation of many more people in the production of media (for instance, blogs, videos, podcasts, images etc). This production allows more critiquing and shifting of perceptions of what a ‘hit’ is. Ideas have become the mainstay of the marketplace. The following video demonstrates some of the shifts that have taken place by juxtaposing traditional media views against new media. Click here to watch this video.
Much of the shift we are seeing is the result of participation of many more people in the production of media (for instance, blogs, videos, podcasts, images etc). This production allows more critiquing and shifting of perceptions of what a ‘hit’ is. Ideas have become the mainstay of the marketplace. The following video demonstrates some of the shifts that have taken place by juxtaposing traditional media views against new media. Click here to watch this video.9
Ironically, becoming a ‘paid professional thinker‘ is one of the objectives of undertaking university studies. But which corner do you feel you fit?
Ironically, becoming a ‘paid professional thinker‘ is one of the objectives of undertaking university studies. But which corner do you feel you fit?11
There are many new business models some of them based on becoming a ‘hit’ with a smaller group of people. One good example is the idea behind Apple Computer’s model. This video demonstrates both the participatory remixing practices behind new media and the process of selling to your market.
There are many new business models some of them based on becoming a ‘hit’ with a smaller group of people. One good example is the idea behind Apple Computer’s model. This video demonstrates both the participatory remixing practices behind new media and the process of selling to your market.12
Apple focuses on its share of the market and does it well, which results in ‘customers’ also participating in marketing their products.
Apple focuses on its share of the market and does it well, which results in ‘customers’ also participating in marketing their products.14
The Freemium model is based on the idea of combining a free option and a premium (paid) option. People can sign up to your service for free, but can also pay for higher quality, more bandwidth, greater range or some other ‘top up’ to the basic service. Examples of Freemium services are Flickr (100 photos hosted for free, unlimited for a small cost) and Skype (Internet calls for free, connection to land lines for a small cost).
The Freemium model is based on the idea of combining a free option and a premium (paid) option. People can sign up to your service for free, but can also pay for higher quality, more bandwidth, greater range or some other ‘top up’ to the basic service. Examples of Freemium services are Flickr (100 photos hosted for free, unlimited for a small cost) and Skype (Internet calls for free, connection to land lines for a small cost).16
Magnatune’s business model is based on the idea that people like to listen to music in the background. It provides a free radio station for people to listen to while working (or anytime around the computer). There is also an option to can download albumbs for a price determined by you (range between US$5 and US$18). One of the selling points of a service like Magnatune is that it provides 50% of revenue straight to artists.
Magnatune’s business model is based on the idea that people like to listen to music in the background. It provides a free radio station for people to listen to while working (or anytime around the computer). There is also an option to can download albumbs for a price determined by you (range between US$5 and US$18). One of the selling points of a service like Magnatune is that it provides 50% of revenue straight to artists.18
Janis Ian allows you to download a few songs from different albums before you decide whether to buy the album. This is in direct contrast to many of the major labels who have been milking every opportunity to make money on any aspect of music.
Janis Ian allows you to download a few songs from different albums before you decide whether to buy the album. This is in direct contrast to many of the major labels who have been milking every opportunity to make money on any aspect of music.19
On a side note, Janis Ian also has a great essay on the impact of the Internet on music and book sales.
On a side note, Janis Ian also has a great essay on the impact of the Internet on music and book sales.21
A one-time computer programmer gave up his day job to become a musician. He now travels the world performing. His business model was to connect with those people who really wanted to hear him live. He even lets you decide where he will perform! This model is closely related to what Mike Masnick of Techdirt calls Connect with Fans + Reason to Buy = $$$.
A one-time computer programmer gave up his day job to become a musician. He now travels the world performing. His business model was to connect with those people who really wanted to hear him live. He even lets you decide where he will perform! This model is closely related to what Mike Masnick of Techdirt calls Connect with Fans + Reason to Buy = $$$.23
Places like CafePress allow us to use The make your own shop model, while eBay gives us the make your own market model.
Places like CafePress allow us to use The make your own shop model, while eBay gives us the make your own market model.