Exhibit 18.9 The Long Tail: Combined volume of non-hits often represents the bulk of the market.
Another perspective that has gained much attention
since it was conceived of by Chris Anderson, is the concept of the
long tail of publications and entertainment products and
service. The physical world, he pointed out in 2004, is a world of scarcity. Stores have a
limited amount of shelf space, newspapers have limited pages, coaxial cables can transmit no
more than a fixed number of TV channels, radio spectrums can carry only a fixed number of
stations, and there are only 24 hours a day of programming.
To justify their existence in brick-and-mortar
establishments like movie theatres, book stores, record stores, DVD rental
shops, videogame stores etc., products must deliver returns that cover the
costs of manufacture, distribution, rent, and inventory holding. According to Anderson:
“In the tyranny of physical space, an audience too thinly spread is the same as no audience
at all”.
The internet transported us to the world of
abundance, of unlimited shelf space, and low manufacturing and distribution
costs. With hits and misses on equal economic footing, “popularity no longer
has a monopoly on profitability”. Amazon, iTunes, Netflix and
a host of other online distributors can viably carry hundreds of thousands of
books, songs and movies — and they have discovered that the market for these
products does exist.
This is the Long Tail. As depicted in Exhibit 18.9, the combined volume of
these non-hits often represents the bulk of the market. For instance, based on
the limited data made available, the share of books ranked 10,000+ in sales at
Amazon, is roughly 60%. Not surprisingly, companies
like Amazon and Netflix
that tap into the opportunity that the long tail represents, grew rapidly.
In the context of media consumption habits, today’s
online consumers have unlimited choice. As they explore and discover their
unique personal tastes, media consumption on the web is getting shattered into
numerous miniscule fragments. Advertisers for mass market brands will find it
increasingly challenging to reach target consumers, in substantial numbers, on
the internet.
