[Dec/2022-Archive-April/2022 | Business] The Long Tail


  • 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


  • 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

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