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Mac129 The Long Tail
 

Mac129 The Long Tail

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Sessions used in Level 1 undergrad class. Introduces the idea of the long tail as a business model for the web

Sessions used in Level 1 undergrad class. Introduces the idea of the long tail as a business model for the web

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    Mac129 The Long Tail Mac129 The Long Tail Presentation Transcript

    • The long tail
      mac129
      1
    • Overview
      Chris Anderson
      Editor-in-chief of Wired
      The Long Tail: Why the Future of Business Is Selling Less of More (2006)
      Free: The Future of a Radical Price (2009)
      2
    • 3
    • 4
    • 5
    • Sales
      6
    • What just happened?
      7
    • What just happened?
      8
    • What just happened?
      9
      ‘[Amazon] created the Touching the Void phenomenon by combining infinite shelf space with real-time information about buying trends and public opinion. The result: rising demand for an obscure book.’ (Anderson, 2006: 16)
    • New economic model:infinite choice?
      10
    • New economic model:infinite choice?
      11
    • Hits vs. misses
      20th century
      National favourites
      Movies
      Songs
      Books
      Games
      12
      Hits
    • Hits vs. misses
      13
      ‘Many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching - a market response to inefficient distribution.’ (Anderson, 2006: 16)
    • Hits vs. misses
      20th century
      National favourites
      Movies
      Songs
      Books
      Games
      Physical world
      Locality
      14
      Hits
    • The tyranny of locality
      15
      Local multiplex
    • The tyranny of locality
      16
      Local multiplex
      Average film needs 1500 people over 2 weeks
      Average cost of ticket £5.00
      1500 x 5 = rental cost
      £7,500
    • The tyranny of locality
      17
      Local multiplex
      Released 4/12/09
    • The tyranny of locality
      18
      Local multiplex
    • Hits vs. misses
      20th century
      National favourites
      Movies
      Songs
      Books
      Games
      Physical world
      Locality
      19
      Hits
    • Hits vs. misses
      20th century
      National favourites
      Movies
      Songs
      Books
      Games
      Physical world
      Local
      21st century
      Fragmented tastes
      Movies
      Songs
      Books
      Games
      Digital ephemera
      Dispersed
      20
      Hits
      Misses
    • Scarcity vs abundance
      21
    • Power curve (aka Pareto principle)
      1906
      Vilfredo Pareto
      80% of land in Italy owned by 20% of population
      22
    • Power curve (aka Pareto principle)
      23
      Income earners (%)
      Population (%)
    • Power curve (aka Pareto principle)
      1906
      Vilfredo Pareto
      80% of land in Italy owned by 20% of population
      80-20 rule
      Supply side economics
      Finite physical resources
      24
    • Power curve (aka Pareto principle)
      25
      Human productivity (%)
      Time available (%)
    • Power curve (aka Pareto principle)
      26
    • Scacityvsabundance
      27
      Robbie Vann-Adibé:
      "What percentage of the top 10,000 titles in any online media store (Netflix, iTunes, Amazon, or any other) will rent or sell at least once a month?"
    • Scacityvsabundance
      28
      Robbie Vann-Adibé:
      "What percentage of the top 10,000 titles in any online media store (Netflix, iTunes, Amazon, or any other) will rent or sell at least once a month?”
      98%
    • 29
      With no shelf space to pay for and, in the case of purely digital services like iTunes, no manufacturing costs and hardly any distribution fees, a ‘miss’ sold is a sale just like any other sale, - it has the same margins as a hit. A hit and a miss are on equal economic footing, both are just entries in a database called up on demand, both equally worthy of being carried. Suddenly, popularity no longer has a monopoly on profitability.
      Anderson, 2004
    • Markets without ends
      30
    • Markets without ends
      31
      2004: 75,000 songs
      2009: 5 million songs
      Average number of song plays (%)
      Popularity of song (%)
    • Markets without ends
      32
    • This is the Long Tail
      33
      ‘You can find everything out there on the Long Tail. There's the back catalog, older albums still fondly remembered by longtime fans or rediscovered by new ones. There are live tracks, B-sides, remixes, even (gasp) covers. There are niches by the thousands, genre within genre within genre (imagine an entire Tower Records devoted to '80s hair bands or ambient dub’.
      Anderson, 2006: 22
    • This is the Long Tail: music
      Digital = < risk?
      34
    • 35
      Tower Records (US)
      Zavvi (UK)
    • This is the Long Tail: books
      36
      ‘The average Borders carries 100,000 titles. Yet more than half of Amazon's book sales come from outside its top 100,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are’
      Anderson, 2006: 23
    • New media, new rules
      37
      Rule 1: Make everything available
      Rule 2: Help me find it
    • Questions
      38
      Can you identify a number of online businesses that function on the basis of the ‘long tail’? Who are their physical world rivals?
      Can you identify any physical world products or services that could benefit from adopting ‘long tail’ working practises?
      What kind of barriers are there that prevent businesses adopting ‘long tail’ working practises?
      Fashion industry?
      Food production?
      Education?