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The 8 rules of
the short head
n’t think it’s realistic to try and topple ‘Titanic’ off its perch
I don’t think it’s realistic to try and topple ‘Titanic...
Few days later…
James Cameron Avatar comes out and smashes both records of Titanic
18 movies ever have reached 1 billion dollars until today.
13 of them were released in the last 6 years
Rank Title Studio ...
Also most of all times weekend opening records are from
the last several years
The #1 rule of the Short Head:
Hits are now Mega-hits
The #2 rule of the Short Head:
The long tail is dead
1906, Italy
The Pareto principal
80% of your revenues come from 20% of your
customers and from 20% of your products…
Pareto efficiency
Focus on the 20% that are
responsible to the 80%
To me, the 80-20 rule is dead
Tyler Smith, Niche Retail
The long tail
challenged the
Pareto principal
Every one of the 1 million
tracks in iTunes had sold
at least once
For example they said that
So what?
the top 10% songs gets 86% of streams
2.7% of Amazon’s titles produce 75% of its revenues
the top 20% of movies increased from 86% in 2000 to 90% in 2005
10% of the product on iTunes accounts for 90% of the store’s total sales
The #3 rule of the Short Head:
Welcome to the 10/90 principle
The short head of Movies
The big 6 studios are making less films every year
14% of the movies generate 90% of the revenues
In 2002 it was 80%
You’re at the point
right now where a
studio would rather
invest $250 million in
one film for a real shot
at the brass rin...
The short head of Music
Every Avenue is a pop
punk band from
Marysville, Michigan.
established in 2002.
228,000 likes on Facebook,
Millions of vie...
One of the fastest growing artists in touring.
From 11 tour dates they had in 2007, to 140 in 2010
“Industry has a lot to do with things…
The industry is tough, especially for a
band like us, a rock band right now.
We’re ...
This is what has happened to the live music shows
revenues throughout the years …
“The music industry is a microcosm of what is happening
in the U.S. economy at large. We are increasingly
becoming a “winn...
The #4 rule of the Short Head:
If there is a long tail we might find
it… but that is about it
The short head of T-shirts
500,000 Designs submitted
5,000 Printed
99% long tail dead shirts
20 / 70
0.1 / 1000
“For t-shirts I think we’re probably still
close to that 20% of the shirt produces
80% of the revenue... Our business
is c...
Why?
The #5 rule of the Short Head:
Consumers are not unique
and they all want the same hits!
The #6 rule of the Short Head:
Even unique consumers
have limited time
The #7 rule of the Short Head:
For retailers, dealing
with thousands of
designers does require a
lot of resources
So why aren't we special?
2 main reasons
Reason #1: our nature
But that hasn't really changed
”No problem there.
Conformity is an
obsession with me”
Social proof
We assume that the people around us know better
and therefore by imitating what they are
doing/buying/watchin...
”Want to hear something
weird? Always.”
Howfunnyisitwithoutthefakelaugh?
positive social influence increased the
likelihood of positive ratings by 32%
and created accumulating positive
herding th...
What does it say about the “wisdom of
the crowds” if the crowd is not really a
crowd but a small group of people
who spoke...
2 main reasons
Reason #2: social media
This is the big change!
1962, Purdue University
Diffusion of innovations
Professor Everett M. Rogers
A theory that explains how innovations
(new stuff) are being spread t...
Bass diffusion model
Professor Frank Bass
The adoption as a function of external influence such as PR etc (p)
and internal...
How does the diffusion work?
Through interactions between people
once we had several interactions a day
Today we have hunderds …
More interactions > more chances for adoption
The result
We see the same movies
Buy the same
t-shirts
The same
gadgets
Read the
same books
Watch the same clips
This is how long it took them to reach 50 million users
We adopt faster
Much faster
The #8 rule of the Short Head:
Aim for the short head
Or become a long tail loser
How?
To be continued…
The 8 rules of the short head
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The 8 rules of the short head

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The short head theory is kind of the opposite of the long tail theory.

The long tail theory from the early days of the internet (2000+) claimed that “our culture and economy is increasingly shifting away from a focus on a relatively small number of “hits” (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail.”

The short head proves otherwise - in the last several years we have moved towards an even smaller number of mega-hits!

The present is not selling more of less - it is selling much more of much less!

This is the short head - http://www.theshorthead.com/

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  • The long tail
  • In 1997 Titanic was released and broke the record of revenues.since then held the record of highest grossing film of all times and the first movie to reach one billion dollars.Director was James Cameron.In December 2009 he said these words.No wonder that Cameron was afraid to declare that he aims higher. Nobody was able to break his “Titanic” record for 12 years. Why would he be the one to do it now?Few days later he released …
  • This movie…It didn’t take “Avatar” long to break both records of the Titanic – becoming the number one grossing film of all times and the first movie to reach 2 billion dollars.Why am I telling you that?Avatar is just an example. In the last several years the blockbusters became huge. The movie hits are now mega-hits.
  • Only 16 movies ever have reached 1 billion dollars until today – 12 of them were released in the last 6 years! Another 2 were released earlier in the 2000th and the last 2 were released in 1997 and 1999 (the Titanic is the oldest in the respectable group).
  • Also most of all times weekend opening records are from the last several years:Before we continue to talk about what has happened to the movies and how come that the blocbusters became so huge lets jump back to the past
  • Also most of all times weekend opening records are from the last several years:
  • This is the short head!Before we continue to talk about what has happened to the movies and how come that the blocbusters became so huge lets jump back to the pastLets go back 9 years ago.Chris anderson releases the best seller – the long tail
  • This is the short head!
  • Now lets go back in time even earlierThe year 1906.Italy.Vilfredo Federico Damaso Pareto made his most famous observation. He found that twenty percent of the population in Italy owned eighty percent of its land.Vilfredo couldn’t predict that his observation on the distribution of land would turn into something much bigger and general. Something that we call today “the Pareto Principal” and means that 80% of the effects come from 20% of the causes.nd.
  • 80% of your company’s revenues come from 20% of your customers and from 20% of your products, 80% of your stock comes from 20% of your suppliers, 80% of your sales are achieved by 20% of the sales team, 80% of your problems at the office are caused by 20% of your employees, etc.The understating that there is a Pareto principal cleared the way to the…
  • Pareto efficiency, meaning that we should focus on the 20% that are responsible to the 80% – be nicer to the 20% of our customers that buy 80% of our stuff, make better room in our store to the 20% of the products that generate 80% of our revenues etc.The Pareto principal was also challenged by the long tail theory.
  • For example – this guy – in 2001 he and his friend Brad opened Niche Retail, an ecom company. Their business plan anticipated long-tail principles. They focused on niche products. They opened 25 different consumer e-commerce sites, jogging strollers and car seats, for example. "To me, the 80-20 rule is dead," says co-owner . "The public is demanding choice, so it doesn't make sense to train employees on only a few products."Since then they opened more and more stores and today… well, we will get backl to them laterWe will get back to them
  • This is a common expression (from 2006) used to emphasize the long tail theory.Another one is the story in the introduction to the “long tail” book, of how Mr. Anderson learns from Ecast, a music-streaming company, that 98% of its catalog gets played at least once a quarter. Much more than most would predict.I remember that at that time, when I first read it, I was also surprised. It does show that there is a demand for almost all pieces of niche music.But you know what?
  • So what?Does it support the long tail theory or oppose the Pareto principal? Of course not! It only shows that Ecast and I-tunes have a lot of stuff to sell and that there is some demand to almost anything.It doesn’t say anything about the revenues generated from that long tail or about the percentage of products that is responsible for 80% of the revenues. It can still be 20%.
  • The 80-20 looks good – today we deal with 10-90 or even worse.The short head has shrpened the pareto principal.
  • There’s going to be an implosion where three or four or maybe even half a dozen of these mega-budgeted movies are going to go crashing into the ground and that’s going to change the paradigm againBut the short head isn’t a paradigm. It is a profound change in our economy – in the demand and supply. The consumers, or at least most of them, in this case the moviegoers, don’t really want a long tail. They want hits. On the other side we have the suppliers, in this case the studios, who are doing what is right for them – focus on a small amount of potential hits and meeting the demand.If one or more studios would fall in the process it probably won’t really change a thing.
  • It seems like the big 6 studios fully understand and follow the rules of the short head scene while the small studios are still reading the book about the long tail.But who says that the big studios are right? Maybe there is a long tail in the movies and they don’t know it?
  • So I looked into box office mojo again and checked all the revenues of all the studios and all the movies that were playing in 2012.According to BOM (box office mojo) the top 7 studios (the 6 MPAA members and Lionsgate which is the biggest independent studio) had 205 movies in 2012 (156 new and 49 that were released in 2011 and still running).These 205 movies made all together almost 10 billion dollars in 2012. Bear in mind that not all of their movies were hits. They had some major flops but they still managed to get almost 10 billion dollars (domestic).All 802 movies that were playing in 2012, according to BOM, made less than 11 billion dollars. That means that the big 7 studios were responsible for more than 90% of the revenues! 7.69% of the studios, who had movies that were playing in 2012, took almost 100% of the revenues. The other 92.3% of the studios hardly made any revenues…The top grossing 10 movies in 2012 were responsible for 30% of the revenues. That means that 1.5% of the movies that were playing in 2012 made 30% of the revenues.3.6% of the movies played in 2012 made more than 50% of the revenues.Less than 15% of the movies made more than 90% of the revenues!This is a nice short head but maybe it has always been this way?So I turned back to BOM and checked the numbers of 2002.Did the revenue split differently back then?
  • While in 2012 3.6% of the movies made 50% of the revenues, in 2002 it took almost 6% of the movies to reach 50% of the revenues. While in 2012 14.3% of the movies made more than 90% of the revenues, in 2002 14.3% of the movies made less than 80%.It appears that the movie industry has shifted towards the short head, leaving the long tail to the small and medium studios. These small studios are still making more and more movies, trying and sometime succeeding to make a hit, but their revenues as whole are almost meaningless (sounds like what is happening to the long tail musicians… they tour much more than the popular artists but make less revenues – read more here).The big studios are making fewer films, investing more and more money in each of them; they know that at this era all they need is a small amount of huge hits.
  • There’s going to be an implosion where three or four or maybe even half a dozen of these mega-budgeted movies are going to go crashing into the ground and that’s going to change the paradigm againBut the short head isn’t a paradigm. It is a profound change in our economy – in the demand and supply. The consumers, or at least most of them, in this case the moviegoers, don’t really want a long tail. They want hits. On the other side we have the suppliers, in this case the studios, who are doing what is right for them – focus on a small amount of potential hits and meeting the demand.If one or more studios would fall in the process it probably won’t really change a thing.
  • There’s going to be an implosion where three or four or maybe even half a dozen of these mega-budgeted movies are going to go crashing into the ground and that’s going to change the paradigm againBut the short head isn’t a paradigm. It is a profound change in our economy – in the demand and supply. The consumers, or at least most of them, in this case the moviegoers, don’t really want a long tail. They want hits. On the other side we have the suppliers, in this case the studios, who are doing what is right for them – focus on a small amount of potential hits and meeting the demand.If one or more studios would fall in the process it probably won’t really change a thing.
  • Do you know this band?Every AvenueEvery Avenue is a pop punk band from Marysville, Michigan. They have 228,000 likes on Facebook, millions of views on YouTube but most probably you haven’t heard of them and they are still referred to as the “long tail” of the music industry.They were established in 2002.One of the fastest growing artists in touring. From 11 tour dates they had in 2007, to 140 in 2010.
  • According to a songkick.com report, long-tail artists tour more than the most popular artists, and Every Avenue is just an example.Their report divided artists into quartiles based on their site internal popularity ranking, which is the number of users who are tracking that artist and want to see them live.“While file-sharing may have substantially displaced album sales, it also facilitated a broader distribution of music, which appears to have expanded awareness of smaller artists and increased demand for their live concert performancesThese 2 reports teach us that the less popular long-tail artists tour a lot and that there is more demand for their concerts. That is supposed to be encouraging for the long tail musicians, right?
  • Few months ago they decided to break up.why would Every Avenue, who toured all over the place, break up after 10 years and complained about the “industry”?They suffered a long tail loser syndrome by they didn’t call it by its name.
  • “The music industry is a microcosm of what is happening in the U.S. economy at large.We are increasingly becoming a “winner-take-all economy,” a phenomenon that the music industry has long experienced. Over recent decades, technological change, globalization and an erosion of the institutions and practices that support shared prosperity in the U.S. have put the middle class under increasing stress. The lucky and the talented – and it is often hard to tell the difference – have been doing better and better, while the vast majority has struggled to keep up.These same forces are affecting the music industry. Indeed, the music industry is an extreme example of a “super star economy,” in which a small number of artists take home the lion’s share of income.”
  • “The music industry is a microcosm of what is happening in the U.S. economy at large.We are increasingly becoming a “winner-take-all economy,” a phenomenon that the music industry has long experienced. Over recent decades, technological change, globalization and an erosion of the institutions and practices that support shared prosperity in the U.S. have put the middle class under increasing stress. The lucky and the talented – and it is often hard to tell the difference – have been doing better and better, while the vast majority has struggled to keep up.These same forces are affecting the music industry. Indeed, the music industry is an extreme example of a “super star economy,” in which a small number of artists take home the lion’s share of income.”
  • Or like the wired said it best
  • Lets talk about t-shirts for a minute.Apparently it should be a Long tail classic: No need to keep stocks on the shelves; the retailer can just print the desired design on the desired t-shirt the minute an online order gets in; the buyers can express themselves and chose niche designs that fit them… classic long tail logic.
  • Jake told me that over the years Threadless received half a million designs for T-shirts!Only 500 of them were actually printed.99% of the designs that are submitted don’t feel the fabric of a T-shirt. They just get covered with dust in a back hard drive somewhere.In other words, Threadless doesn’t even offer the long tail for sale!
  • This is how these 5000 are acting
  • This is how it looks if we say there are 500,000But I wasn’t convinced so I asked another guy
  •  Josh Abramson, the CEO of Bustedtees told me: “For t-shirts I think we’re probably still close to that 20% of the shirt produces 80% of the revenue…. I’ve been doing this stuff for 14 years since starting CollegeHumor in 1999 — both of our businesses are certainly driven by hits… That being said, we still have a nice benefit from having a big catalog to take advantage of the long tail as well… “.
  •  Josh Abramson, the CEO of Bustedtees told me: “For t-shirts I think we’re probably still close to that 20% of the shirt produces 80% of the revenue…. I’ve been doing this stuff for 14 years since starting CollegeHumor in 1999 — both of our businesses are certainly driven by hits… That being said, we still have a nice benefit from having a big catalog to take advantage of the long tail as well… “.
  • So why doesn’t the long tail work here?
  • First of all, most of us, consumers, love popular stuff (as we can learn from the chart). We are not really that unique and special. We want Hits! This is one of the basic short head basics. We do however appreciate a site that offers us a nice variety and an option to browse.
  • Even if we are unique and feel like browsing for that something special, there is a limit to our ability to deal with too much information and variety. How much time do we want to spend on a T-shirt catalog searching for a…T-shirt? Or as Josh from Bustedtees suggested: “Hits have become more and more important in a world with so much noise online”.
  • As for the online store, dealing with thousands of designers requires a lot of resources. True, it doesn’t take much Database space, but it does requires resources and attention. You need to manage the monthly billing and payment to all of them, offer support, customer relations etc. it can be done but why bother if almost nobody wants to buy it?The long tail is not economical as we once thought – the revenues that we can generate out of it don’t really worth it and it is much more efficient to focus on the hits! 
  • Why don’t we fulfill our rebellious charming unique personalities and run to discover the wonderful gigantic fields of the long tail?Why do we buy the same T-shirts, tablets or Apps? Why do we go to the same movies and concerts? Why can’t we be more fucking special?
  • There are 2 main reasons:Social media, which we will talk about later onOur nature, which we will talk about now
  • The short answer is that we are all basically conformists. We match our attitudes, believes and behavior to our group norms. It helps us feel belong, a part of the group and it lowers our risk.Conformism has been explored in the last hundred year by many psychologist.Solomon Eliot Asch, a Jewish psychologist who was born in Poland 100 years ago, and lived most of his life in New York, conducted a series of experiments during the 1950′s to explore conformism.In his most famous experiment he gathered a group of college student to participate in a task – they were shown a card with one line and another card with 3 lines in different lengths and then had to choose which line of the 3 had the same length as the one in the first card. The thing is that except for one student, the rest of the group members were actually actors and they were given specific instructions on how to respond to each trial, in some cases they all gave the same wrong answer and in some they all gave the correct one. The results were clear – The one student who was tested and didn’t know about the play he was part of, was highly influenced by the other members and used to make the same mistakes they did. Even when he knew the answer and thought that the others were wrong he would choose their wrong answer as well.
  • The social influence that makes us pick the same picks like everybody else is also known as Social proof – We assume that the people that surround us know better and have more knowledge about stuff and therefore by imitating what they are doing we believe that we behave correctly.This may also be referred as “the bandwagon effect” – the probability of any individual to adopt (a new trend, product, ideas) increases with the proportion of those who have already adopted. As more people adopt or believe in something, the others “hop on the bandwagon” regardless of their own beliefs, which they may ignore or override.
  • Our conformism can be used and manipulated. For example, the 16th century French poet, Jean Daurat, used to buy tickets to his own plays and give them for free to people, who in return agreed to applause.When they started clapping their hands, the rest of the audience followed, thinking that their clapping was a signal of the performance’s quality.Same goes to fake laughter in TV shows. The studios found that even though viewers find it annoying, they perceive sitcoms that use canned laughter as funnier than shows that don’t. Fake laugh tracks are less common today but can still be heard for example in “How I Met Your Mother” and other series. A recent study was done in 2011 by Psychologist Bill Kelley who checked the human brain’s response to humor. His findings were that “We’re much more likely to laugh at something funny in the presence of other people. Hearing others laugh — even if it’s prerecorded — can encourage us to chuckle and enjoy ourselves more”.
  • It turns out that if you Like this post on Facebook it would help me get more likes from other people.On august 2013, the science magazine published the research of Lev Muchnik, Sinan Aral and Sean J. Taylor, who checked how prior ratings such as Likes affect our rating. Their findings were that “positive social influence increased the likelihood of positive ratings by 32% and created accumulating positive herding that increased final ratings by 25% on average”.As one of the researchers said: “Hype can work and feed on itself as well”. These findings are very interesting as they also shake the foundations of the “wisdom of the crowd” theory. If we are so influenced by other people thoughts and ratings, then the crowd is not really a crowd but a small group of people who spoke first and a big group of people that followed and accepted what the first group said.
  • As one of the researchers said: “Hype can work and feed on itself as well”. These findings are very interesting as they also shake the foundations of the “wisdom of the crowd” theory. If we are so influenced by other people thoughts and ratings, then the crowd is not really a crowd but a small group of people who spoke first and a big group of people that followed and accepted what the first group said.
  • As said the second issue that effected the creation of the short head is social mediaHow? 
  • Why?Why do we adopt new things so fast?In 1962, Professor Everett M. Rogers gave a lecture at Purdue University, where Professor Bass was teaching at that time.It was a few months after Rogers, who was a professor of rural sociology, published his book “Diffusion of innovations“.“Diffusion of innovations” tried to explain how innovations (new ideas, objects etc.) are being spread through the communication channels over time and among the members of a social system.The “spreading” is done by word of mouth and the reason why it is so important is that “new” things are perceived as risky and uncertain.  People try to lower the risk by seeking out others like themselves who have already adopted the innovation.Therefore the diffusion process starts with the innovators, then the early adaptors, who adopt innovation and then spread the word further until the innovation gets to a critical mass. The diffusion of innovations according to Rogers / source: Wikipedia The book was one of the first attempts to understand how we adopt innovation, a subject that engaged Frank Bass as well.After Professor Roger gave his speech at Purdue University, one of Frank’s students came to him and asked if there was a way to express the idea of imitators and innovators that Rogers talked about, mathematically.Frank took a pen and started scratching an answer, a mathematical model that would describe the “Diffusion of innovations” – it didn’t take him long to come up with one.It did, however, take him another 5 years to write a complete paper that provided empirical support for his model.Two years later, in 1969, this paper was published as the Bass diffusion model.
  • Why?Why do we adopt new things so fast?In 1962, Professor Everett M. Rogers gave a lecture at Purdue University, where Professor Bass was teaching at that time.It was a few months after Rogers, who was a professor of rural sociology, published his book “Diffusion of innovations“.“Diffusion of innovations” tried to explain how innovations (new ideas, objects etc.) are being spread through the communication channels over time and among the members of a social system.The “spreading” is done by word of mouth and the reason why it is so important is that “new” things are perceived as risky and uncertain.  People try to lower the risk by seeking out others like themselves who have already adopted the innovation.Therefore the diffusion process starts with the innovators, then the early adaptors, who adopt innovation and then spread the word further until the innovation gets to a critical mass.  The book was one of the first attempts to understand how we adopt innovation, a subject that engaged Frank Bass as well.After Professor Roger gave his speech at Purdue University, one of Frank’s students came to him and asked if there was a way to express the idea of imitators and innovators that Rogers talked about, mathematically.Frank took a pen and started scratching an answer, a mathematical model that would describe the “Diffusion of innovations” – it didn’t take him long to come up with one.It did, however, take him another 5 years to write a complete paper that provided empirical support for his model.Two years later, in 1969, this paper was published as the Bass diffusion model.
  • This equation describe the adoption as a function of external influence such as PR etc (p) and internal influence meaning word of mouth between those who have adopted and those who might adopt (q)These are the variables of the equation:f(t) – The portion of the potential market that adopts the new product at time t.F(t) – The portion of the potential market that have adopted up to and including time t.a(t) – Adopters (or adoptions) at t.A(t) – Cumulative adopters (or adoptions) at t.And these are the parameters (coefficients):M – The potential market (the ultimate number of adopters).p – Coefficient of innovation (external influence such as PR, advertising etc.).q – Coefficient of imitation (internal influence – interactions between adopters and potential adopters in the social system).
  • How does the diffusion work?
  • How does the diffusion work?
  • How does the diffusion work?
  • This equation describe the adoption as a function of external influence such as PR etc (p) and internal influence meaning word of mouth between those who have adopted and those who might adopt (q)These are the variables of the equation:f(t) – The portion of the potential market that adopts the new product at time t.F(t) – The portion of the potential market that have adopted up to and including time t.a(t) – Adopters (or adoptions) at t.A(t) – Cumulative adopters (or adoptions) at t.And these are the parameters (coefficients):M – The potential market (the ultimate number of adopters).p – Coefficient of innovation (external influence such as PR, advertising etc.).q – Coefficient of imitation (internal influence – interactions between adopters and potential adopters in the social system).
  • The result…We all go to the sameBuy the same
  • The result…We all go to the sameBuy the same
  • The result…We all go to the sameBuy the same
  • The last and most important rule Aim…There are ways to do it…
  • The last and most important rule Aim…There are ways to do it…
  • The last and most important rule Aim…Thereare ways to do it…
  • The last and most important rule Aim…Thereare ways to do it…
  • Transcript of "The 8 rules of the short head"

    1. 1. The 8 rules of the short head
    2. 2. n’t think it’s realistic to try and topple ‘Titanic’ off its perch I don’t think it’s realistic to try and topple ‘Titanic’ off its perch James Cameron, Dec 2009
    3. 3. Few days later… James Cameron Avatar comes out and smashes both records of Titanic
    4. 4. 18 movies ever have reached 1 billion dollars until today. 13 of them were released in the last 6 years Rank Title Studio Worldwide Year^ 1 Avatar Fox $2,782.3 2009^ 2 Titanic Par. $2,186.8 1997^ 3 Marvel's The Avengers BV $1,518.6 2012 4 Harry Potter and the Deathly Hallows Part 2 WB $1,341.5 2011 5 Iron Man 3 BV $1,215.4 2013 6 Transformers: Dark of the Moon P/DW $1,123.8 2011 7 The Lord of the Rings: The Return of the King NL $1,119.9 2003^ 8 Skyfall Sony $1,108.6 2012 9 The Dark Knight Rises WB $1,084.4 2012 10 Frozen BV $1,072.4 2013 11 Pirates of the Caribbean: Dead Man's Chest BV $1,066.2 2006 12 Toy Story 3 BV $1,063.2 2010 13 Pirates of the Caribbean: On Stranger Tides BV $1,045.7 2011 14 Jurassic Park Uni. $1,029.2 1993^ 15 Star Wars: Episode I - The Phantom Menace Fox $1,027.0 1999^ 16 Alice in Wonderland (2010) BV $1,025.5 2010 17 The Hobbit: An Unexpected Journey WB $1,017.0 2012 18 The Dark Knight WB $1,004.6 2008^
    5. 5. Also most of all times weekend opening records are from the last several years
    6. 6. The #1 rule of the Short Head: Hits are now Mega-hits
    7. 7. The #2 rule of the Short Head: The long tail is dead
    8. 8. 1906, Italy
    9. 9. The Pareto principal 80% of your revenues come from 20% of your customers and from 20% of your products…
    10. 10. Pareto efficiency Focus on the 20% that are responsible to the 80%
    11. 11. To me, the 80-20 rule is dead Tyler Smith, Niche Retail The long tail challenged the Pareto principal
    12. 12. Every one of the 1 million tracks in iTunes had sold at least once For example they said that
    13. 13. So what?
    14. 14. the top 10% songs gets 86% of streams
    15. 15. 2.7% of Amazon’s titles produce 75% of its revenues
    16. 16. the top 20% of movies increased from 86% in 2000 to 90% in 2005
    17. 17. 10% of the product on iTunes accounts for 90% of the store’s total sales
    18. 18. The #3 rule of the Short Head: Welcome to the 10/90 principle
    19. 19. The short head of Movies
    20. 20. The big 6 studios are making less films every year
    21. 21. 14% of the movies generate 90% of the revenues
    22. 22. In 2002 it was 80%
    23. 23. You’re at the point right now where a studio would rather invest $250 million in one film for a real shot at the brass ring, than make a whole bunch of really interesting, deeply personal — and even maybe historical — projects that may get lost in the shuffle because there’s only 24 hours”.
    24. 24. The short head of Music
    25. 25. Every Avenue is a pop punk band from Marysville, Michigan. established in 2002. 228,000 likes on Facebook, Millions of views on YouTube
    26. 26. One of the fastest growing artists in touring. From 11 tour dates they had in 2007, to 140 in 2010
    27. 27. “Industry has a lot to do with things… The industry is tough, especially for a band like us, a rock band right now. We’re not bitter about it or anything like,“Fuck the music industry”, that’s the last thing we’re thinking.We’re all continuing to do music” Few months ago they decided to break up.
    28. 28. This is what has happened to the live music shows revenues throughout the years …
    29. 29. “The music industry is a microcosm of what is happening in the U.S. economy at large. We are increasingly becoming a “winner-take-all economy,” a phenomenon that the music industry has long experienced....The lucky and the talented – and it is often hard to tell the difference – have been doing better and better, while the vast majority has struggled to keep up. These same forces are affecting the music industry. Indeed, the music industry is an extreme example of a “super star economy,” in which a small number of artists take home the lion’s share of income.” Prof. Alan Krueger
    30. 30. The #4 rule of the Short Head: If there is a long tail we might find it… but that is about it
    31. 31. The short head of T-shirts
    32. 32. 500,000 Designs submitted 5,000 Printed 99% long tail dead shirts
    33. 33. 20 / 70
    34. 34. 0.1 / 1000
    35. 35. “For t-shirts I think we’re probably still close to that 20% of the shirt produces 80% of the revenue... Our business is certainly driven by hits… That being said, we still have a nice benefit from having a big catalog to take advantage of the long tail as well…” Josh Abramson, CEO
    36. 36. Why?
    37. 37. The #5 rule of the Short Head: Consumers are not unique and they all want the same hits!
    38. 38. The #6 rule of the Short Head: Even unique consumers have limited time
    39. 39. The #7 rule of the Short Head: For retailers, dealing with thousands of designers does require a lot of resources
    40. 40. So why aren't we special?
    41. 41. 2 main reasons Reason #1: our nature But that hasn't really changed
    42. 42. ”No problem there. Conformity is an obsession with me”
    43. 43. Social proof We assume that the people around us know better and therefore by imitating what they are doing/buying/watching/wearing/listening to we believe that we behave correctly
    44. 44. ”Want to hear something weird? Always.” Howfunnyisitwithoutthefakelaugh?
    45. 45. positive social influence increased the likelihood of positive ratings by 32% and created accumulating positive herding that increased final ratings by 25% on average. The science magazine, a research of Lev Muchnik, Sinan Aral and Sean J.Taylor
    46. 46. What does it say about the “wisdom of the crowds” if the crowd is not really a crowd but a small group of people who spoke first and a big group of people that followed and accepted what the first group said?
    47. 47. 2 main reasons Reason #2: social media This is the big change!
    48. 48. 1962, Purdue University
    49. 49. Diffusion of innovations Professor Everett M. Rogers A theory that explains how innovations (new stuff) are being spread through the communication channels over time and among the members of a social system
    50. 50. Bass diffusion model Professor Frank Bass The adoption as a function of external influence such as PR etc (p) and internal influence meaning word of mouth between those who have adopted and those who might adopt (q)
    51. 51. How does the diffusion work?
    52. 52. Through interactions between people once we had several interactions a day
    53. 53. Today we have hunderds …
    54. 54. More interactions > more chances for adoption
    55. 55. The result
    56. 56. We see the same movies
    57. 57. Buy the same t-shirts
    58. 58. The same gadgets
    59. 59. Read the same books
    60. 60. Watch the same clips
    61. 61. This is how long it took them to reach 50 million users We adopt faster Much faster
    62. 62. The #8 rule of the Short Head: Aim for the short head
    63. 63. Or become a long tail loser
    64. 64. How?
    65. 65. To be continued…
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