the long tail model, gwenaelle doceul
Post on 08-May-2015
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The Long Tail Model:
Abundance out of scarcity
By Gwenaelle DoceulMBA
The Long Trail or « La longue traîne »: A brief introduction
When Chris Anderson first used the expression « Long Trail » in 2004 in his online magasine Wired it was nothing of a breakthough in the world of economics.
His work was to rethought the theories of Clay Shirky (Power Laws, Weblogs, and Inequality) and to adapt them to the economy and distribution systems.
His conclusions were that the total demand for a non popular product is higher than the total demand for a product most sought after. The market opportunites were huge;
Chris Anderson, 2004The Long Tail Model
Long Tail Model (con't)
If you observe carefully this draw, you can see that as the tail gets longer, it accounts for more of the market. That is referred to as the « Long
Tail » model.
Knowing that, he applied this theory to ebusiness models. He tried to understand how he could
make money out of such a model.
When should ebusiness use the L-Model
According to the model, ebuisness should be rofitable and apply the Long Tail model only if the
cost of storage distribution
are low.
The booming era of available « scare » products
Thanks to the digital technology, scarcity explodes because of:
the virtually unlimited number of mediathe virtually unlimited storage capacitythe virtually unlimited number of visitors/sellersthe incresed simplicity in matching the offer with the demandthe dematerialization of almost everything i.e physical shelves turned in to pages, space consuming album became available online at Rhapsodic or Itunes
With the booming of new technology, scarcity gave birth to abundance.
Rules of the Entertainment industry
Make everything available:
Dematerialization of products offers unlimited selection of hits and non hits product and gives space for more diversification of the offer, thus addressing a wider range of demand/tastes
Rules of the Entertainment industry (con't)
At a lower cost:
Being online takes away the cost of retail channel (manufacturing, distributing and intermediaires) as well as storage costs
Rules of the Entertainment industry (con't)
And help your customers find it:
Spot a popular item and associate a suggestion of a non hit product. It creates demand by introducing a unwanted nonhit product.
Couple of websites allowing unlimited access to either popular and not-so-
much demanded items:As of october 2007, Itune Music stored
over 5 millions titles, so we can assume it is now between 6-7 millions titles available on line
source: http://fr.wikipedia.org/wiki/ITunes_Store
Dailymotion counts with hundreds of thousands of videos available, with an average of 15, 000 new videos uploaded on a daily basis (as of May 07).
Source: http://fr.wikipedia.org/wiki/Dailymotion
Couple of websites allowing unlimited access to either popular and not-so-
much demanded items (con't)I believe Itunes understood rightly how to use the Long Tail model to make money.
For instance, it made easier the search for new music by creating in the music store a window on the right, suggesting « songs
we might like ».
Thus, it helps us find unwanted songs and induces us to expand our demand
Conclusion
Hits driven ebusiness characteristics
Limited space limited offer due to
physical limitations Many intermediaires
highering the end-consumer price (manufacturer, distributer, seller etc.)
Long tail driven ebusiness
Unlimited offer due to high dematerialization
Unlimited storage capacity
unlimited selection real time information on
trends and public opinion
flexibility thanks to less intermediaires involved
Conclusion (con't)
Hits driven ebusiness characteristics (con't)
High focus on bestselling products
Sell large volume of small quantity of popular products
= niches are not explored
Long tail driven ebusiness (con't)
rapidity to adress a demand
High focus on not sought after products
Sell small volume of large quantity of non popular products
= niches are the source of profit
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