the long tail and beyond
DESCRIPTION
Summary and Analysis of the Long Tail Book and how to implement it to businessesTRANSCRIPT
04/11/2023 Written by Jennifer Ahn [email protected]
2
What is Log Tail
Examples, Environment
what is the breakthrough
characteristics ?
why? ( driving force)
hit driven eco-nomics
Death of the Hits
Attribute to realize Long Tail business
On line busi-
nesses
Social ( internet ) environment
Essential componentRecommenda-
tions
04/11/2023 3
What is Long Tail?
• The world has been driven by the hit. Now, the niches cannot be negligible
• The demand of niches never fell to zero1) The tail of available variety is far longer than we realize2) It’s now within reach economically3) All those niches, when aggregate, can make up a significant market
“The biggest money is in the smallest sales” – venture capitalist Kevin Laws
Getting longer
Never zero
Getting thinner
The probability of hit is getting lower,the abundance is getting bigger !
Written by Jennifer Ahn [email protected]
source : The long Tail
04/11/2023 5
Hit Driven Economies
• “ This is world of scarcity. Now with online distribution and retail, we are entering a world of abundance. The difference are profound!
• “We are turning from a mass market back into a niche nation, de-fined now not by our geography but by our interests.”
The rise and all of the hit
Scarcity of information
Development of transporta-
tion
Mass Me-dia
Era of net & share
Enjoy the same experiencesCrisis in variety & abundance
Death of the Hit !
The myth of the Hit Driven Economies
If it is not hit, it is a miss ! : Because of massive investment for the hits
With this hit driven mind set, history is written by blockbusters.
If it is good enough, it will be hit. The niches are worse than hits.
And more myth Written by Jennifer Ahn [email protected]
com
Everyone wants to be a starEveryone’s in it for the money, The only success is mass success“Direct to video” = bad,“ Self Publish” = bad
“Independent” = “They couldn’t get a deal” Amateur = amateurishLow-selling = Low quality
04/11/2023 6
The Death of Hits
• Evidence in 2005– Hollywood box office fell 7% continuing a decline in attendance that started in
2001 and appears to be accelerating
– Newspaper readership, fell by 3% ( it’s largest single year drop) and is now at
levels not seen since the sixties
– Network TV ratings continue to fall as viewers scatter to cable channels; since
1985 • Who killed the hit recording? (1) piracy (but it also offered massive and unprecedented choice) (2) Mashups : playing a track from one artist over a track from another artist
It's not that people aren't watching films and listen-ing to music, it's that they're watching different films and different music
- The Long Tail. Chris Anderson
“Now people want to con-trol over their media, in-stead of being controlled by it.” – News Corp. chairman Rupert Murdoch 2005
Written by Jennifer Ahn [email protected]
04/11/2023 7
Why? – The Driving Forces of The Long Tail I
• Six Themes of the Long Tail
1. There are far more niche goods than hits
2. The cost of reaching those niches is no falling dramatically
3. Consumers have the ways to find niches that suit their particu-
lar needs and interest. filters. : recommendation, ranking
4. The demand curve flattens
5. There are so many niche products that collectively they can
comprise a market rivaling the hits.
6. The natural shape of demand is far less hit-driven than we have
led to believe • Three Forces
Written by Jennifer Ahn [email protected]
04/11/2023 8
Why? – The Driving Forces of The Long Tail II
• Everyone is able to make their own content
• The traditional line be-tween producers and consumers has blurred.
• Examples Personal Computer Apples Garage band, Astronomy’s Pro-Am
movement Wikipedia peer produc-
tion
Democratize the tools of production
Democratize the tools of distribution
Connect supply and de-mand
Result : More Stuff, which lengthens the Tail
Result : More access to niches which fattens the Tail
Result : Drive busi-ness from hits to niches
• Every one can distrib-ute their own content
• Examples Internet newspaper Lulu.com ->Self distri-
bution site CNN i-report
• Directly connect supply and demand efficiently
• Lower the search cost, minimize hassle, wrong turns
• Explore unknown to-gether
• Examples Google wisdom-of-crowds Amazon recommenda-
tions customer review
Written by Jennifer Ahn [email protected]
source : The long Tail source : The long Tail source : The long Tail
04/11/2023 9
Examples (Democratize the tools of production )
• Astronomy’s Pro-Am movement– GalaxyZoo.org : Cosmologist Kate Land of the University of Oxford and her team are ask-
ing for help in classifying galaxies from the Sloan Digital Sky Survey, the largest digital map of the universe
– SETI@Home : search for extraterrestrial intelligence at home, using the spare computing power of more than half million home computers
– Astronomy has a natural place for volunteer manpower
The Wikipedia : Peer production – mass volunteerism and ama-teurism– In 2001, a software application Wiki allows anybody with Web access to go to a site and
edit, delete of add to digital encyclopedia. – Wikipedia offers more than 1million articles in English ( Britannica’s 80,000, Encarta’s
4,500)– Non-authoritative, But self-repairing, up-to-date, substantive and accurate
Written by Jennifer Ahn [email protected]
In 42 entries on sci-ence topics 4 errors in Wikipedia, 3 errors in Britannica. Shortly after this re-port, the Wikipedia en-tries were corrected, while Britannica had to wait for next reprinting- 2005 by nature
04/11/2023 10
Examples
• Lulu.com : DIY publisher – Not for the money, but for distributing your message. Use it for reputation. – The traditional line between producers and consumers has blurred
• Amazon. com : Inventory on Demand – Virtually connect centralized supply with scattered demand – Print-on-demand : The idealized form books staying as digital files until customers are
purchase Near-zero inventory cost
Written by Jennifer Ahn [email protected]
(Democratize the tools of distribution )
( Connect supply and demand )
04/11/2023 11
What are breakthrough characteristics ?
• Why do they do it?– In the hit-driven economy, the business model is based only on money, but,
in the log-tail economy, there are other reasons like “reputation”– They take advantage of internet to achieve reputation and gain the money in
other way– “Reputation economy” , “Gift economy”, “Exposure culture” – “ The big sin in exposure culture is not copying” – Tim Wu, a Columbia University law
professor
Different objectives, motives, methods
Copy-right is
essential
Gray area about copy-
right(independent
labels, academic presses)
Give up some of
their copy-right Written by Jennifer Ahn [email protected]
com
04/11/2023 12
What are the breakthrough characteristics ?
1. Infinite number of goods
Unlimited shelf : What the internet presented was a way to eliminate most of the phys-ical barriers to unlimited selection. : It allow web retailers to offer their customers more variety and con-venience, cementing brand loyalty with existing customers and extend-ing it to new ones who may or may not be near physical store
Efficiency leads infinite number of goods
Wal Mart, Amazon (offer million different books)
Written by Jennifer Ahn [email protected]
1. Physical Re-
tailersProfit threshold for physical stores (ex Tower Records
2. Hybrid Retail-
ersProfit threshold for physical stores with no overheads(ex. Amazon )
3. Pure Digital Re-
tailersProfit threshold for physical stores with no physical goods(ex. Rhapsody)
Three steps to infinite vari-ety
source : The long Tail
04/11/2023 13
What are the breakthrough characteristics?
2. Nearly zero marginal inventory and distribution cost
Pure digital model : Each product is simply a database entry, costing effectively nothing ! : But really? Internet retailers have to invest to their infra and operat-ing even small amount of inventory?
We have to devise the way how to deal with virtual inventory with nearly-zero cost!
3. “The ants have megaphones, what are they saying?” Shorten the channel between supply and demand
: Birdmonster , new rock band , using Myspace.com, free marketing, free distribution
A DIY age, where technology has shifted the balance of the power from label to band. Who will lose money ? It might be new opportunity for small content makers, ants!
Written by Jennifer Ahn [email protected]
Amazon connect centralized supply with scattered demand : ! the store and the customers don’t have to be in the same place Vir-tual connection btw supply and demand
The genius of Amazon’s model is!
04/11/2023 14
What the breakthrough characteristics?
4. Good Filters Recommendation Age
: Information gathering is no longer issue. Recommendation( & rat-ing ) serve as shortcuts through the ticket of information : In a world of infinite choice, context –not content – is king !
Filters Rule Main effect
• Helping people move from the world they know ( hit) to the world they don’t know ( niches) , • Driving demand down the tail by revealing goods and ser-vices that appeal more than the lowest-common-denominator fare
Written by Jennifer Ahn [email protected]
The world of scarcity
The world of In-formation
The world of abundant
(Recommendation age)
How to gather the information
How to hunt the information
How to use the fil-ters
Nich
es
Good filters
comfortable
TailoredFilter the noises for me Just Fit my needs
04/11/2023 15
What the breakthrough characteristics? The misunderstandings about infinite choices
① Tend to run out of suggestions pretty quickly and the advice stays the same over time : Only genre recommenda-tions is not a good filter. Collaborative filters is needed ( peer judgment , wisdom of crowds!)
② The long tail is full of crap : “The most frequent mistakes people make about the long tail is to assume that things that don’t sell well are “not as good” as things that do sell well” : In the Long Tail, a wide dynamic range of quality awful to great( That’s because they are not pre-filtered by makers ) : Niche products are not for everyone = one person’s noise is another’s signal ( different and subjective taste)
That’s why the filters are so important. for narrow set of taste, filter will work. ex) Google is the winner about filter technol-ogy
Written by Jennifer Ahn [email protected]
Require Filter PowerSignal to Noise Ratio
Consumer Acceptance Threshold
source : The long Tail
04/11/2023 16
What the breakthrough characteristics ?
Pre-filters and Post filters Pre-filters is trying to predict what will fit for customers needs
predicting tastes Post-filters is collaborative filtering based on wisdom of crowds,
coming after publication measure the tastes of customers self-correct the errors and never disappear entirely
Written by Jennifer Ahn [email protected]
Pre-filters Post-filters
Filter place Editors Blogs
Screening tool
Record label scouts Playlist
Checker Studio executives Reviews
Judger Department store buyers Customers
Predictors Marketers Recommendations
End-users Advertisers consumers
04/11/2023 17
What the breakthrough characteristics ?
5. The death of the 80/20 rule The misunderstood in the 80/20 Rule
① It’s almost never exactly 80/20 : in research 80/10 or even less
② The 80 and the 20 are percentages of different things ( don’t need to be 100) – 80 is a percentage of products, 20 is a percentage of sales
③ Original definition is about products and revenues, but Rule can just as equally be applied to products and profits
The Long Tail offers, even if 20% of the products account for 80% of the revenue, that’s not reason not to carry the other 80% of the products.
Written by Jennifer Ahn [email protected]
Products Revenues Profits
20%
80%
100%
80%
20%
0%
Bricks-and-mortar retailer
Products Revenues Profits2%
25%33%
8%
25%
33%90%
50%33%
Long Tail retailer
online only in-ventory= Niches
Offline only inventory = Hits
04/11/2023
What is breakthrough characteristics ?
6. Shorten head : the hits and niches The Cause of shifting demand
① Availability of greater variety : choice of one of the ten vs. choice of one of the thousand less concentrated in the top ten
② Lower “search costs” recommendation and filters. ③ There is sampling trial of a song : reducing the risk of purchasing
Successful Long Tail aggregators need to have both hits and niches !
- Although the demand has shifted to the Tail, The Long tail theory doesn’t mean the abandon of the hit economy
- Conventional view is that more choice is better, but there is The Paradox of Choice – 2004, Barry Schwartz
① “Why Choice Is De-motivating” : The more choice, the more negative of aspect of having a multiple of options begin to appear.
The Hits let customers know where to start and the filters make se-lection process easier
Written by Jennifer Ahn [email protected]
Shifting demand(because of 3 as-pects)
Both hits and niches should be co-exist
04/11/2023 19
The Secret of successful Long Tail business
• Two big imperatives
• 9 rules of successful Long Tail aggregators
Written by Jennifer Ahn [email protected]
1. Make everything avail-able
2. Help me find it
Rule 1. Move inventory way in…or way out
: infinite goods, clear the rights ( big barrier to growing the Long Tail)
: collaborative filtering, creating larger market
Virtual Inventory ( Amazon), Digital Inventory ( iTunes) centralized (indirect ) in-ventory Rule 2. Let customers do the work
Peer-production ( eBay, Wikipedia, Craigslist, MySpace, Netflix, Google Adsense) It’s not outsourcing, it’s crowd-sourcing
Rule 3. One Distribution method doesn’t fit all
Try to fulfill various consumption patterns. Multiple distribution channels are the only way to reach the biggest potential market
Lower your cost
Rule 4. One Product doesn’t fit all
“micro-chunking” – ex) album, individual track, ringtone, free thirty-second sample, music video, remix, etc. One size fits one; many size fits many
Think Niche
04/11/2023 20
The Secret of successful Long Tail business
Written by Jennifer Ahn [email protected]
Rule 5. One Price doesn’t fit all About niche product, people more tend to be price inelastic more flexible, price discrimination by various product
Think Niche
Rule 6. Share Information
Providing transparent and various information can build trust at no cost Information about buying patterns, when transformed into recommendations, can be a powerful marketing tool Gathering information about buying pattern and user profile should be the shape of “opt-in” rather than “opt-out” -
Rule 7. Think “And” not “or”
In hit economy ( scarcity thinking ), markets are zero-sum, namely, either/or choice But in the market with infinite capacity, the right strategy is almost always to offer all the possible alternatives of product. ex) various language in DVD title
Rule 8. Trust market to do your job
“Pre-filtering” vs. “Post-filtering”, Predict-oriented market vs. measure & respond market Wisdom of crowds ① People are information-rich, ② easy to compare goods, ③spread the word about what they like Don’t predict the market ! : measure and respond (measuring is easier than offline market! )
Loose con-trol
04/11/2023 21
The Secret of successful Long Tail business
Written by Jennifer Ahn [email protected]
Rule 9. Understand the power of free Because their costs are near zero, their prices can be too . ex) Skype, Yahoo mail ex) in 2005, Universal released the first 9min. of Serenity (a sci-fi film) online, free & uncut Take a grant of the fact that music or small content is free ! Find various way fore revenue
Loose con-trol
04/11/2023 22
Strong brand helps
Beyond the Long Tail ( out of the book of the Long Tail )
• What is the real brand in the Long Tail Business?– If I expand the brand measurement according to “Brand relevance”
concept in “BrandMatics (McKinsey) ”, online service aggregators’ ser-vice itself can be the brand, rather than individual products.
– In the online business, making high value of service brand is essential
Written by Jennifer Ahn [email protected]
Secrete of Strong Brand
Measuring Brand Making Brand Managing Brand
Information effi-ciency
( as the time fac-tor)
Risk Reduction( As the trust Fac-
tor)
Image benefit( as the expressive
factor)
Brand RelevanceMarket Segmenta-
tionThe Brand Diamond
If online can help in-formation efficiency and reduce risk better than offline, Brand Relevance low-ered
Because of the online service itself ,(Recommendation, Rate, Warrantee) people can reduce selecting risk, and get reliable information for quick decision Brand Relevance lowered
Information Efficiency make up by the filtersRisk Reductionmake up by collective wisdomService Brand Power > Product Brand Power
Reference : “Power Brands” Hajo Riesenbeck/Jesko Perrey
The Brand purchase fun-
nel