The Three Forces Google, Blogs, Rhapsody, Recommendations, Best-Seller Lists. Filters Connect Supply and Demand Amazon, eBay, iTunes, NetfFlix, Youtube, Wikipedia Aggregrators Democratize distribution Digital Videocameras, Desktop Music and Video Editing SW, Blogging tools Toolmakers, Producers Democratize production Example Business Force
The Rules – Rule 1 <ul><li>Think Niche Move Inventory Way In….Or Way Out </li></ul><ul><li>Let Customers Do The Work </li></ul><ul><li>Think Niche One Distribution Method Doesn't Fit All </li></ul><ul><li>One Product Doesn't Fit All </li></ul><ul><li>One Price Doesn't Fit All </li></ul><ul><li>Lose Control Share Information </li></ul><ul><li>Think "And", Not "Or" </li></ul><ul><li>Trust The Market To Do Your Job </li></ul><ul><li>Understand The Power Of Free </li></ul>
Theme - One In virtually all markets, there are far more niche goods than hits. The ratio is growing exponentially larger as the tools of production become cheaper and more ubiquitous.
Theme - Two The costs of reaching those niches is now falling dramatically. Thanks to a combination of forces including digital distribution, powerful search technologies and a critical mass of broadband penetration, online markets are resetting the economics of retail. Thus in many markets, it is now possible to offer a massively expanded variety of products.
Theme - Three Simply offering more variety, however, does not shift demand by itself. Consumers must be given ways to find niches that suit their particular needs and interests. A range of tools and techniques - from recommendations to rankings - are effective at doing this. These "filters" can drive demand down the Tail.
Theme - Four Once there's a massively expanded variety and the filters to sort through it, the demand curve flattens. There are still hits and niches, but the hits are relatively less popular and the niches relatively more so.
Theme - Five All those niches add up. Although none sell in huge numbers, there are so many niche products that collectively they can comprise a market rivaling the hits.
Theme - Six Once all of this is in place, the natural shape of demand is revealed, undistorted by distribution bottlenecks, scarcity of information, and limited choice shelf space. What’s more, that shape is far less hit-driven than we have been led to believe. Instead, it is as diverse as the population itself.
Filters Explained – Pre and Post Consumers Advertisers Recommendations Marketers Customers Department Store Buyers Reviews Studio Execs Playlists Record Label Scouts Bloggers Editors Post-Filters Pre-Filters