Written By Chris Anderson
Book Precis
The Big Idea
It has been an accepted fact for decades now that 'hits rule'. Popular culture today is consumed by hits-- people can't help but talk about them, select them, and in general try to understand them. Executives from many different industries constantly rack their brains trying to come up with the next big seller. Yet at the rate things are going, hits are beginning to rule less. Number one may still be number one, but the number ones don't sell as much as they used to.
The main difference between then and now is that consumers of today have far more choices than ever before. This incredible amount of choice is resonating in a very big way with modern-day consumers; they increasingly favor markets that provide the most choice. A new market is coming to fruition-- a market of multitudes and niche products that, thanks to the Internet and other such sources, is easier and cheaper to reach than ever before.
This book is about that market. It takes a look at niches, which are emerging as the new big market alongside the hits.
Why You Need This Book
The expertise gained from decades of experience in creating, picking and promoting hits no longer exists. A new set of resources, one that explains not only how to deal with this situation but to prosper, is vital.
This book is one such resource. In a nutshell, it provides readers with a history of the hit, a definition and short history of the so-called 'Long Tail', a look at the new units of today-- the new market, producers, tastemakers-- as well as a prediction of how tomorrow's Tail might look like.
What's a 'Long Tail'?
Thanks to the Internet, the concept of limited supply has begun to become obsolete. Just about every product sold on the Internet has almost zero packaging cost and consumers have nearly instant access to them; this runs counter to the old model in which a limited amount of storage or shelf space, airtime or other such factors makes it sensible for retailers to fill them with the titles that might just sell best. This is the era of "unlimited selection."
When the hard data was graphed, it started out resembling any other demand curve, with a few hits being downloaded a relatively huge number of times at the head of the curve, and with the curve falling off steeply with less popular tracks. But the fascinating thing was that the curve itself never fell to zero. It might approach it near the end of the graph itself, but it would never be exactly zero. Such a curve has a 'tail' section that is very long relative to the head, and is called, as a consequence, a 'long-tailed distribution'. Thus the title of an article based on these findings-- which was later used as a basis for this book.
Scarcity vs. abundance
Unlimited selection is beginning to reveal truths about what consumers want and how they want to get it. Plus, the more they find, the more they like - many of them discover that their taste is not as mainstream as they thought (or were lead to believe) by a hit-obsessed culture, by hit-centric marketing, and/or a plain lack of alternatives.
The problem of traditional retail is what is termed as the "tyranny of locality." We live in the physical world, and until recently most of our entertainment media was located in it as well-- and was thus saddled with the need to find local audiences. Physics is another physical constraint. Radio frequencies can carry only so many radio stations, and TV frequencies only so many TV channels. So a focus on hits-- what is popular, what might sell-- is understandable in a world of scarcity. However, most of us want more than just what is popular; everyone's taste is non-mainstream at some point. The problem is-- or used to be --finding the products to satisfy one's non-mainstream demands.
Enter, then, the new world of abundance. New technologies have made it ever more possible for retailers on the net to stock a variety of goods that is far, far wider than the amount any traditional retailer could ever hope to stock (and remain competitive in terms of pricing).
Six Themes of the Long Tail Age
Six themes of the Long Tail age can now be determined:
1. In just about all markets, there are far more niche goods than hits.
2. The cost of reaching these niches is falling dramatically, such that it's possible to offer a massively expanded
variety of products.
3. Potential customers, however, have to be helped to find these niches; a range of tools and techniques -
'filters' - can help.
4. When the variety has been expanded and the filters are in place, the demand curve flattens - the hits are less
popular and the niches more so.
5. All the niches add up; there are so many niche products that as a group they can rival the hits.
6. As a result, the natural shape of demand is revealed, without the scarcity of information and shelf space and
the distribution bottlenecks of the past.
The bottom line is that the Long Tail is culture unfiltered by economic scarcity.
Three Forces of the Long Tail
None of the developments discussed in the six themes can take place without a reduction in the cost of reaching a niche. For this to happen, one or more of the following forces have to come into play:
1. The tools of production have to become democratized. The personal computer is of course the best possible
example. Millions of people can now do what only professional filmmakers or writers, for example, could do
just a few years ago. The result is that the available variety of content is growing faster than ever before.
2. The costs of consumption have to be cut by democratizing distribution. The first force is only really meaningful
if others can enjoy it - if they can reach it or find it. The Internet, for instance, makes it easy to reach more
people - democratized distribution par excellance.
3. Supply and demand have to be connected. Consumers must find out about these newly available goods in
order for the whole system to work. Demand must be driven down the tail.
Long Tail Rules
So what's the secret to creating a successful Long Tail business? It can be summarized in two steps:
1. Make everything available.
2. Help me find it.
Here are nine rules of successful Long Tail aggregators:
1. Move inventory way in... Or way out. Either use digital inventory, or store your goods in partners'
warehouses - this will lower costs and simplify operations immensely.
2. Let customers do the work. Let them take care of coming up with reviews for your goods (this is termed as
'crowdsourcing'). Customers can usually do a better job; reviews submitted by users are often well-
informed, articulate and, very importantly, trusted by other users.
3. One distribution method doesn't fit all. Some people prefer to shop online, others from the privacy and comfort
of their own homes. Some want their goods immediately, others prefer to wait. If retailers focus on just one
group they risk losing the others. Multiple distribution channels are the only way to reach the biggest potential
markets.
4. One product doesn't fit all, either. The winning strategy now is to separate content into its separate parts - to
'microchunk' it - so that people can consume it however they want to, as well as remix it to create something
new. Newspapers, for instance, are microchunked into individual articles, which are used by other sites to
concoct more focused product out of this content.
5. One price doesn't fit all. In markets with room for abundant variety, variable pricing can be a powerful
technique to maximize a product's value and the market's size. iTunes, for instance, which sells songs for
$0.99, will sell music at a lower price if an entire album is purchased.
6. Share information. The availability of information is what can make or break an entire operation. Of course it
needs to be presented in a way that helps order choice, not confuse customers.
7. Think 'and,' not 'or.' One of the symptoms of scarcity thinking is assuming that markets are zero-sum - that
everything is an either/or choice. In markets with infinite capacity, however, the strategy is to offer it all.
8. Trust the market to do your job. In abundant markets you can simply throw everything out there and let the
market sort it all out. Measure and respond - don't predict.
Understand the power of free. One of the most powerful features of digital markets is that they put 'free' within reach - their costs are near zero, and their prices can be this way too.
Back to top
Third Wave is proud to announce our 20th year anniversary. We have seen our clients make it through 2 recessions in the past successfully. There is no doubt in my mind if you want to recession proof your business in these times you need Advantage CRM. 
