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

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Mac129 The Long Tail

  1. 1. The long tail<br />mac129<br />1<br />
  2. 2. Overview <br />Chris Anderson<br />Editor-in-chief of Wired<br />The Long Tail: Why the Future of Business Is Selling Less of More (2006)<br />Free: The Future of a Radical Price (2009)<br />2<br />
  3. 3. 3<br />
  4. 4. 4<br />
  5. 5. 5<br />
  6. 6. Sales<br />6<br />
  7. 7. What just happened?<br />7<br />
  8. 8. What just happened?<br />8<br />
  9. 9. What just happened?<br />9<br />‘[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)<br />
  10. 10. New economic model:infinite choice?<br />10<br />
  11. 11. New economic model:infinite choice?<br />11<br />
  12. 12. Hits vs. misses<br />20th century<br />National favourites<br />Movies<br />Songs<br />Books<br />Games<br />12<br />Hits<br />
  13. 13. Hits vs. misses<br />13<br />‘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)<br />
  14. 14. Hits vs. misses<br />20th century<br />National favourites<br />Movies<br />Songs<br />Books<br />Games<br />Physical world<br />Locality<br />14<br />Hits<br />
  15. 15. The tyranny of locality<br />15<br />Local multiplex<br />
  16. 16. The tyranny of locality<br />16<br />Local multiplex<br />Average film needs 1500 people over 2 weeks<br />Average cost of ticket £5.00<br />1500 x 5 = rental cost<br />£7,500<br />
  17. 17. The tyranny of locality<br />17<br />Local multiplex<br />Released 4/12/09<br />
  18. 18. The tyranny of locality<br />18<br />Local multiplex<br />
  19. 19. Hits vs. misses<br />20th century<br />National favourites<br />Movies<br />Songs<br />Books<br />Games<br />Physical world<br />Locality<br />19<br />Hits<br />
  20. 20. Hits vs. misses<br />20th century<br />National favourites<br />Movies<br />Songs<br />Books<br />Games<br />Physical world<br />Local<br />21st century<br />Fragmented tastes<br />Movies<br />Songs<br />Books<br />Games<br />Digital ephemera<br />Dispersed<br />20<br />Hits<br />Misses<br />
  21. 21. Scarcity vs abundance<br />21<br />
  22. 22. Power curve (aka Pareto principle)<br />1906<br />Vilfredo Pareto<br />80% of land in Italy owned by 20% of population<br />22<br />
  23. 23. Power curve (aka Pareto principle)<br />23<br />Income earners (%)<br />Population (%)<br />
  24. 24. Power curve (aka Pareto principle)<br />1906<br />Vilfredo Pareto<br />80% of land in Italy owned by 20% of population<br />80-20 rule<br />Supply side economics<br />Finite physical resources<br />24<br />
  25. 25. Power curve (aka Pareto principle)<br />25<br />Human productivity (%)<br />Time available (%)<br />
  26. 26. Power curve (aka Pareto principle)<br />26<br />
  27. 27. Scacityvsabundance<br />27<br />Robbie Vann-Adibé:<br />&quot;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?&quot;<br />
  28. 28. Scacityvsabundance<br />28<br />Robbie Vann-Adibé:<br />&quot;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?”<br />98%<br />
  29. 29. 29<br />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.<br />Anderson, 2004<br />
  30. 30. Markets without ends<br />30<br />
  31. 31. Markets without ends<br />31<br />2004: 75,000 songs<br />2009: 5 million songs<br />Average number of song plays (%)<br />Popularity of song (%)<br />
  32. 32. Markets without ends<br />32<br />
  33. 33. This is the Long Tail<br />33<br />‘You can find everything out there on the Long Tail. There&apos;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 &apos;80s hair bands or ambient dub’.<br />Anderson, 2006: 22<br />
  34. 34. This is the Long Tail: music<br />Digital = &lt; risk?<br />34<br />
  35. 35. 35<br />Tower Records (US)<br />Zavvi (UK)<br />
  36. 36. This is the Long Tail: books<br />36<br />‘The average Borders carries 100,000 titles. Yet more than half of Amazon&apos;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’<br />Anderson, 2006: 23<br />
  37. 37. New media, new rules<br />37<br />Rule 1: Make everything available<br />Rule 2: Help me find it<br />
  38. 38. Questions<br />38<br />Can you identify a number of online businesses that function on the basis of the ‘long tail’? Who are their physical world rivals?<br />Can you identify any physical world products or services that could benefit from adopting ‘long tail’ working practises?<br />What kind of barriers are there that prevent businesses adopting ‘long tail’ working practises?<br />Fashion industry?<br />Food production?<br />Education?<br />

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