Intro

• Top-seller list / blockbuster
• Mainstream media vs. Individual Niche Media
• 98% of 10K albums sell at least one item a quarter
• Long-tail distribution
  • 1. Tail of available variety far longer than we realize
  • 2. Within reach economically
  • 3. All those niches can be significant when aggregated
• Long tail – what happens when everything available to everyone

Chap1 The Long Tail

• Tyranny of Locality
• The biggest money in smallest sales
• Demand follow supply (more buyer after more niche category of products added)
• Cost effective
  • 
  • Cost Effective for long-tail products (songs have no storage costs on iTunes)
• More categories can be sold online (since it has no physical cost)

Chap2 Rise & Fall of Hit

• From local culture to “connected” culture: “hits”
• Then “mass market” to “niche nation”

Chap3 History of Long Tail

• Centralized warehouse
  • Catalog book for selling stuff – 1897 “Wish Book”
  • Time-scheduling system to deliver orders – 10x more efficient, assembly line technique
• Superstore
• Food Store – King Kullen Store in Queens, NY
• Toll-Free calling – catalog shopping again
  • Targeted niche of catalogs – direct mail marketing, response rate 1% is still profitable
  • Phone Call + Credit Card
• E-Comm
  • Start with books 
  • Book is one of the low-seller in EComm initially 
  • Web experience is bad in 1994, so selling in EComm should pick a category which customer experience much better on Web
  • Book industry – seems mature at the time, two wholesaler with warehouse all over, opportunity of virtual retailer
• Other long tail
  • Beer 
  • T-shirt
  • Shoe etc.
• Long tail of national security (warfare is only from countries), its monopoly decreasing due to:
  • Democratization of tools (for the warfare)
    • Niche producers (i.e. gangs)
  • Amplifications of damage caused by producers of warfare
    • Inexpensive attack vs. big economic/social events
  • Acceleration of words of mouth

Chap4 Three forces of long tail

• First force – democratizing tools of production
  • Personal Computer
  • I.e. easier / cheaper to produce more music causes long-tail supply of records
  • Act as “Producer/ToolMaker”
• Second force – cutting cost of consumption by democratizing distribution
  • Bits vs. Atoms
  • Act as “Aggregator/Distributor”
• Third Force – connecting supply & demand
  • Google Search / iTunes recommendations / words-of-mouth
  • Act as “Filters”
• 

Chap5 The New Producers

• Neutrino Example – Amateur Astronomer to Help
  • Pro-Am Collab
  • SETI-home
• Democratizing tools of production
  • Passive Consumer -> Active Producer, via new technology
• Example Wikipedia
  • Controversial because everyone can write – probabilistic instead of completely accurate
  • Wisdom of crowd
  • Wikipedia does better than Britannica in the long-tail section
• Power of Peer Production – example of wikipedia
• Reputation Economy
  • In the long-tail reputation is important
  • In head vs. shoulder vs. tail, people have different treatments to copyright
• Self-publishing
  • Lulu.com

Chap6 The New Markets

• Interloc Example – used book seller in 1980s, able to get funding in 1990s
  • Two parts of book market before:
    • ⅔ textbook efficiently around college campus 
    • ⅓ small used-book stores
• Aggregator – collects huge variety of goods and make them easy to find
  • Democratizing distribution
  • The lower price of selling, the more you can sell
• Business Aggregators
  • Physical Goods : Amazon/Ebay
  • Digital Goods : iTunes, iFilm
  • Ad/Services: Google, Craigslist
  • Information: Google/Wikipedia
  • Communities/User-created content: Myspace 
  • Bits->Atoms: more long tail
    • 
• Amazon Evolution
  • V1: Centralized Warehouse
  • V2: Reduce inventory risk further – consignment program
    • Author pay fees to ensure book is available lol
  • V3: Bring big retailed online (big retailer, i.e. Target)
    • Let the big retailer deal with inventory issues themselves
  • V4: Marketplace program – down the tail, not just big retailer but also smaller ones
  • V5: Print-on-demand
  • V6: Completely bits

Chap7 The New Tastemakers

• Google as mediator of company reputation
• Recommendation system for songs
• Third force – tapping consumer sentiment to connect supply to demand – amplified word of mouth
• Filters
  • In a world of infinite choice, context not content is king
  • Netflix 30% new movie 70% old movie instead of the traditional 30% old move 70% new movie because Netflix has “Filter”
• Not all top ten lists are meanings – i.e. nobody cares if banana outsell soft drink in supermarket 
• Quality as we go long-tail
  • 
  • As tails get longer, signal to noise get worse, need more filter power
  • 
• Pre-filter vs. Post-filter
  • Pre-filter: traditional market-research before producing the product (make sure it’s good stuff)
  • Post-filter: by consumer

Chap8 Long Tail Economics

• Power Law
• Bottleneck of distribution distort demand – i.e. movie theater can only host ~100 movie per year
• 
• Movie:
  • Big box retail sell new release at loss, which “make blockbuster” live harder
  • Long tail retailer – Netflix
• Price sensitivity of long-tail products – needs vs. wants – discount pricing
• Long tail -> Niche/Genre

Chap9 The Short Head – the world shelf created

• Head is important
• Only Long-tail example MP3.com
  • In comparison, iTunes – mainStream then add niche
  • why MySpace a success? Because community + content  combo, community help fans find obsecure music
• Urban – another example of “head”, at same time, city creates env where small niche can survive (i.e. NYC might have all niche foods in the world)
• Shelf is here to stay 
• Shelf is wasteful, one sqft for shelf,  2~3 for aisle, checkout, common space.
  • In 2005, retail rent $40/sqft
  • Assuming 40% mark-up, need $100-150 sale per month
  • Thus only the most profitable products let in
  • Also one item is physical, means it doesn’t go to multiple category of “filter to help select” 
• Walmart example
  • Outdated classification System – Dewey Decimal System
  • Shelf life
• Online retailer has “Search” ability
• Brick&Mortar store need “local” audience
• Creation of “Hits” – “Unpredictable Genius” vs. “Formula based stuff driven to sale”
  • Example: Formulaic TV show

Chap10 Paradise of Choice

• Abundance of choice
• Amazon  “search” ability helpful for choice among abundance

Chap11 Niche Culture

• Audience specific vs generic interest

Chap12 The Infinity Screen

• Ytb vs. TV

Chap13 Beyond Entertainment

• Ebay
  • “self-service model” from seller – 5M revenue per employee
• Lego
• Salesforce
  • Three force of software – writing software , delivering/downloading software , serving software to web browser
• Google Ads
  • Based on Search Keywords
  • Software – reduce cost (automated auction process – everyone buy ads automatically)
  • Publisher – keyword based ad serving / targeting
  • Long tail of business, it’s AUC is world GDP
  • Ads is in the business of “long tail business” 

Chap14 Long tail rules

• Two big rules
  • Make everything available
  • Help me find it
• Nine small rules
  • Lower your costs
    • Inventory efficiency
    • Let customers do the work, i.e. EBay
  • Think Niche
    • One distribution method doesn’t fit all
      • TV / online etc.
    • One product doesn’t fit all
      • Microchunking – eat when you want (short video)
    • One price doesn’t fit all
  • Lose Control
    • Share Info (search faster, like “rank by price”)
    • Think “And” not “Or”
    • Trust market do your job
      • Instead of “pre-filter” do “post-filter”
    • Understand power of free

Chap15 Long tail of Marketing

• Chevy site – UGC ads
• Public Opinion
  • Dell Hell
• Market Impact based on “incoming links”

Coda: Tomorrow’s Fail

Epilogue

• Third world country in long-tail
• Three types of “hits”
  • 1. Authentic top-down, excellent product, start big and stay strong
  • 2. Synthetic top-down, lame product, start big but plummet
  • 3. Bottom-up hits, start small and becomes big