The long tail Raymond van Dongelen, www.webxy.nl More choice, changing demand

Contents Big picture Scarcity as dominant factor Democratization of important factors Examples and risks Long tail business

Big picture

Scarcity as dominant factor

Democratization of important factors

Examples and risks

Long tail business

The big picture From a Mass society to a Network Society Mass society: Society in groups, usually based on location. Media reaches big masses. Few dominant media (television/ radio) Network society: Individual is the basis. Individual connects to other people. Media are mass media + smaller media to connect individuals

From a Mass society to a Network Society

Mass society: Society in groups, usually based on location. Media reaches big masses. Few dominant media (television/ radio)

Network society: Individual is the basis. Individual connects to other people. Media are mass media + smaller media to connect individuals

Scarcity of shelf space Until recently we had: Limited shelf space Costs for having articles in your store To use one simple taxonomy to organize a store The need to select only the most promising product

Until recently we had:

Limited shelf space

Costs for having articles in your store

To use one simple taxonomy to organize a store

The need to select only the most promising product

Hit driven culture Limited choice Products that are no hits, are misses Stereotyping an audience Pre-filter products The only success is mass success Reinforcing (a hit is a hit because it’s in the the charts)

Limited choice

Products that are no hits, are misses

Stereotyping an audience

Pre-filter products

The only success is mass success

Reinforcing (a hit is a hit because it’s in the the charts)

Long tail

End of the hit culture Online there is: Unlimited shelf space Practically no cost to “store” goods Use multiple taxonomies (e.g. product can be “stored” both in products under 20 euro and consumer electronics)

Online there is:

Unlimited shelf space

Practically no cost to “store” goods

Use multiple taxonomies (e.g. product can be “stored” both in products under 20 euro and consumer electronics)

Six themes long tail Far more niche goods than hits Cost of reaching niches is falling dramatically Filters can drive demand down the long tail The demand curve flattens Many niche products are a market as big as the hit market Natural shape of demand is revealed

Far more niche goods than hits

Cost of reaching niches is falling dramatically

Filters can drive demand down the long tail

The demand curve flattens

Many niche products are a market as big as the hit market

Natural shape of demand is revealed

Power to reach niches Manga lovers? Bollywood lovers? etc.

Manga lovers?

Bollywood lovers?

etc.

Three forces Democratize production Democratize distribution Connect supply and demand

Democratize production

Democratize distribution

Connect supply and demand

Democratize production Why I did not make a hit movie: No access to the necessary tools Not enough talent Until recently only selected talent could get access to tools Makes the curve broader (more products)

Why I did not make a hit movie:

No access to the necessary tools

Not enough talent

Democratize distribution The lower the cost of selling the more you can sell Inventory on demand (like print on demand, store costs are nearly zero) Delivery costs for digital products are nearly zero! Flattens the crurve

The lower the cost of selling the more you can sell

Inventory on demand (like print on demand, store costs are nearly zero)

Delivery costs for digital products are nearly zero!

Connecting supply and demand Lower search costs for consumers (anything that gets in the way of finding) Use the knowledge of the crowd Encourage to search in niches Changes the form of the curve

Lower search costs for consumers (anything that gets in the way of finding)

Use the knowledge of the crowd

Encourage to search in niches

Power of crowds The new taste-makers are people like us “Amplify” word of mouth by using tools like recommendations, blogs, people who bought this also ..., celebrity playlists

The new taste-makers are people like us

“Amplify” word of mouth by using tools like recommendations, blogs, people who bought this also ..., celebrity playlists

Filtering Top tens contain little information (much noise) Use information learned from other users

Top tens contain little information (much noise)

Use information learned from other users

Examples www.amazon.co.uk google adsense iTunes store

www.amazon.co.uk

google adsense

iTunes store

Dutch public broadcasting Uitzendinggemist.nl shows a lot of the shows on dutch public television How can they react to the new challenges?

Uitzendinggemist.nl shows a lot of the shows on dutch public television

How can they react to the new challenges?

New age: the daily me? “See only what you want to see, hear only what you want to hear, read only what you want to read. In cyberspace, we already have the ability to filter out everything but what we wish to see, hear, and read. Tomorrow, our power to filter promises to increase exponentially.[..]read about only the issues that interest you, encounter in the op-ed pages only the opinions with which you agree.” Cass R. Sunstein in republic.com

“See only what you want to see, hear only what you want to hear, read only what you want to read. In cyberspace, we already have the ability to filter out everything but what we wish to see, hear, and read. Tomorrow, our power to filter promises to increase exponentially.[..]read about only the issues that interest you, encounter in the op-ed pages only the opinions with which you agree.” Cass R. Sunstein in republic.com

Long tail business (1) Make everything available Help me find it

Make everything available

Help me find it

Long tail business (2) Lower your costs Digital inventory/ let others manage the inventory (amazon model) Let consumers do the work(crowdsourcing) => Cheaper and potentially better

Lower your costs

Digital inventory/ let others manage the inventory (amazon model)

Let consumers do the work(crowdsourcing) => Cheaper and potentially better

Long tail business (3) Think niche One size does not fit all. One product does not fit all (Many size fits many) One price does not fit all

Think niche

One size does not fit all.

One product does not fit all (Many size fits many)

One price does not fit all

Long tail business (4) Lose control Share information “And” not “or” Trust the market to do your job (post filter your products) The power of free

Lose control

Share information

“And” not “or”

Trust the market to do your job (post filter your products)

The power of free