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  • 1. The Long Tail & Paradox ofChoice Jonathan Wareham
  • 2. The Long Tail: IntroductionWhat is the Long Tail? The long tail is the colloquial name for a long-known feature of statistical distributions (Zipf, Power laws, Pareto distributions and/or general Lévy distributions ). The feature is also known as "heavy tails," "power-law tails," or "Pareto tails."
  • 3. The Long Tail: Introduction A brief history of the hit  New Technologies in the mid- to late 19th century laid the ground work for pop culture  Commercial printing technology  “Wet plate” technique for photography  1877 – Edison invents the phonograph  Result: the first wave of pop culture  Newspapers and magazines  Novels  Printed sheet music  Records  Children’s books  Newspapers bring the latest fashions from New York, London and Paris  At the end of the 19th century, the moving picture gave the stars of stage a way to play many towns simultaneously and reach a much wider audience.Source: Anderson, C. (2006) “The Rise and Fall of the Hit”, Wired Magazine
  • 4. The Long Tail: Introduction A brief history of the hit (continued)  Such potent carriers of culture had the effect of linking people across time and space, effectively synchronizing society.  Not only did your neighbors read the same news you read in the morning and know the same music and movies, people across the country did too.  In other words, while culture was synchronized, it was also homogenized.Source: Anderson, C. (2006) “The Rise and Fall of the Hit”, Wired Magazine
  • 5. The Long Tail: IntroductionMeasuring the hit Blockbuster movies Billboard magazine Hot 100 songs New York Times bestsellers in books Forbes lists
  • 6. The Long Tail: Introduction Driver of the hit culture: the economics of scarcity  An average movie theater needs at least 1,500 people over a 2-week run; thats the rent for a screen.  An average record store needs to sell at least 2 copies of a CD per year; thats the rent for a half inch of shelf space.  The same applies to DVD rental shops, videogame stores, booksellers, and newsstands.Source: Anderson, C. (2004) “The Long Tail”, Wired Magazine
  • 7. The Long Tail: Introduction Example: Cinema  In 2004, nearly 6,000 movies were submitted to the Sundance Film Festival.  255 were accepted.  24 were picked up for distribution.  The other 231 may never be seen.  Who controls the tools of production and distribution???Source: Anderson, C. (2004) “The Long Tail”, Wired Magazine
  • 8. The Long Tail: Introduction The peak of the hit culture  Between 1990 and 2000, album sales had doubled, the fastest growth rate in the history of the industry.  Half of the top-grossing 100 albums ever were sold during that decade.Source: Anderson, C. (2006) “The Rise and Fall of the Hit”, Wired Magazine
  • 9. The Long Tail: Introduction Decline of the hit  Total music sales fell during 2000, for only the second time in a decade.  Sales fell 2.5 percent in 2001, 6.8 percent in 2002, and just kept dropping.  By the end of 2005 (down another 8.3 percent), album sales in the US had declined 20 percent from their 1999 peak.Source: Anderson, C. (2006) “The Rise and Fall of the Hit”, Wired Magazine
  • 10. The Long Tail: Introduction Not enough blockbustersSource: BoxOfficeMojo.com as posted 17/09/2006 onthe Long Tail blog
  • 11. The Long Tail: The Long Tail and the Internet What happened? The Internet  Record labels blame it on Napster and piracy, but it’s not that simple.  The Internet’s peer-to-peer architecture is optimized for a symmetrical traffic load, with as many senders as receivers and data transmissions spread out over geography and time.  In other words, it’s the opposite of broadcast.Source: Anderson, C. (2006) “The Rise and Fall of the Hit”, Wired Magazine
  • 12. The Long Tail: The Long Tail and the Internet Inventories: physical retail vs. Internet retail Total Inventory (songs) Total Inventory (books) 735,000 2,300,000 Total Inventory (movies) 39,000 130,000 25,000 Rhapsody Walmart Amazon Barnes & Noble 3,000 Netflix BlockbusterSource: Anderson, C. (2006) “The Long Tail: Why the Futureof Business is Selling Less of More”
  • 13. The Long Tail: The Long Tail and the Internet Sales distribution: Head vs. Tail Rhapsody Amazon % Sales from Long Tail % Sales from Long Tail 22% 43% 57% 78% Netflix % Sales from Long Tail 20% 80%Source: Anderson, C. (2006) “The Long Tail: Why the Futureof Business is Selling Less of More”
  • 14. The Long Tail: The Long Tail and the Internet Range of Quality/Satisfaction Search quality High LowSource: Anderson, C. (2006) “The Long Tail: Why the Futureof Business is Selling Less of More”
  • 15. The Long Tail: Three ForcesThe Three Forces of the Long Tail The Three Forces of the Long Tail  Six Themes  Force 1: Democratize the tools of production  Force 2: Democratize the tools of distribution  Force 3: Connect supply and demand
  • 16. The Long Tail: Three Forces: Tools of Production Force 1: Democratize the tools of production  Especially using affordable digital technology that makes it economically feasible to make products, even in small quantities.  This results in “more stuff, which lengthens the Tail”.Source: Anderson, C. (2006) “The Long Tail: Why the Futureof Business is Selling Less of More”
  • 17. The Long Tail: Three Forces: Tools of ProductionExamples of tools of production Blogs – short for Weblog - free technology for creating an online journal to comment on topics like food, politics, technology or any other topic you can think of.  Photoblog – driven by cheap digital photography  Vlog – driven by cheap video recording technology  Podcast – driven by cheap audio and video recording technology Example: Affiliate Blog by Shawn Collins Open Source software.  e.g. Linux, Joomla, Simple Machines Forum
  • 18. The Long Tail: Three Forces: Tools of Distribution Force 2: Democratize the tools of distribution  Internet aggregators create “infinite shelf space” businesses where virtually every product in a category can be economically accessed.  This creates “more access to niches, which fattens the Tail”.Source: Anderson, C. (2006) “The Long Tail: Why the Futureof Business is Selling Less of More”
  • 19. The Long Tail: Three Forces: Tools of DistributionExamples of tools of distribution Amazon NetFlix Rhapsody iTunesBut also: If you build it, they will come Froogle MySpace YouTube Flickr
  • 20. The Long Tail: Three Forces: Tools of DistributionExamples of tools of distribution Youtube – upload amateur videos.  Driver: cheap video recording technology MySpace – social networking site focused on entertainment.  Driver: cheap audio and video recording technology, dynamic user interfaces Wikipedia – Internet encyclopedia that allows users to freely edit its content.
  • 21. The Long Tail: Three Forces: Connect Supply and Demand Force 3: Connect supply and demand  Emergence of businesses and taste makers that act as filters, helping to cost-effectively and flexibly connect people with available goods, no matter how narrow the interest or specialized the product.  This “drives business from hits to niches”.Source: Anderson, C. (2006) “The Long Tail: Why the Futureof Business is Selling Less of More”
  • 22. The Long Tail: Three Forces: Connect Supply and DemandExamples of filters Search engines (Google, Yahoo!, etc.) Sorting (e.g. Froogle) Ratings (e.g. Ciao) Reviews/Editor Recommendations (e.g. Zdnet) Peer recommendations (e.g. digg) Customer Reviews (TripAdvisor.com) Community (e.g. The Lonely Planet Forum) RSS content syndication (e.g. NetVibes) Tagging
  • 23. Paid search Organic search
  • 24. The Long Tail: The Paradox of ChoiceThe Paradox of Choice The Paradox of Choice Video
  • 25. The Long Tail: The Paradox of ChoiceQuestions Are you a maximizer or satisficer? Provide 3 examples where filters work & individual choice succeeds Name 3 examples where we should not make our own choices