The Long Tail. 1988: Touching The Void published; quickly forgotten. 1999: Into Thin Air published; instant bestseller

Transcription

1 The Long Tail The Long Tail, Chris Anderson, Wired 12.10, October 2004 The Long Tail Slide 1 A tale of two books 1988: Touching The Void published; quickly forgotten 1999: Into Thin Air published; instant bestseller 2000: Touching the Void outsells Into Thin Air 2:1. What happened? Amazon happened. The Long Tail Slide 2

2 A new media retail model Reference tips generate 17% of Amazon s sales! The new rules of the game: Zero-cost inventory Selling bits, not atoms Endless catalogues Zero-cost search Collaborative filtering. The Long Tail Slide 3 Old media economy Scarce Physical Resources: Theaters Shelf-space TV channels Radio frequencies Economic implications: To cover the rent, you must cater to local audiences To become a best-selling book/movie/cd, it s not enough to sell nation-wide; It must sell in every local market! The result: Pop economy: summer blockbusters, manufactured artists, bestselling books, mega-games Lowest denominator Cultural brain damage To sum up: We are stuck in an inefficient market dictatorship of very few mega-products, fueled by a physical reality that is no longer relevant (scarcity). The Long Tail Slide 4

3 New media economy What percentage of the top 10,000 titles in a web-based media store sell at least one copy a month? Myth: 20% Reality: 99% Myth: Only hits sell; Truth: Misses sell very well also; And, there are so many of them! Myth: store inventories reflect what people want to buy: Truth: It reflects familiarity, advertising savvy, monopolistic pressures What do customers really want? No-one knows Only the web knows One thing is sure: we want more Enters the Long Tail. The Long Tail Slide 5 The Long Tail Bla The Long Tail Slide 6

4 Long Tail characteristics Quantity: Contains everything: every song, movie, and book ever produced Quality: Contains a lot of crap, but the crap is well-defined and atomized (unlike CD s and textbooks) Cost of selling 1 copy of a hit = cost of selling 1 copy of a miss Revenues: Barnes & Noble carries 130K titles; More than 50% of Amazon sales come below the top 130K titles The real market for books is much larger than what we find in bookstores; Same with music and video Typical Long Tail players: Amazon, ebay, Google, itunes, The Long Tail Slide 7 Rule 1: make everything available Sleepers abound: documentaries, foreigns, independents, oldies, out-of-print books, retro-games Mega-niches abound: (e.g. Bollywood rentals are 100K a month; documentaries is also a huge business) Opportunities abound: each year, 6,000 movies are submitted to the Sundance Film Festival; 255 are accepted; 24 picked up for distribution Movies: Why not make all of them available? Games: Sell every title as a 99-cent download three years after its release - no support, no guarantees, no packaging Books: Make any title available using print-on-demand It's more expensive to evaluate than to release! The Long Tail Slide 8

5 Rule 2: cut the price in half; then lower it itunes price per track: 99 cents The price is set by the record companies, to protect the atoms business (CD retailers) Rhapsody's experiment: 49 cent tracks outsell 99 cent tracks 3:1 The lower bound is the price of downloading a pirated track from the net; what is it? How to compete with free: Fair pricing Ease of use Consistent quality Example I: $9.99 a month for unlimited, high-quality on-line music streaming Example II: $ each time you listen Conclusion: Pull consumers down the tail with lower prices. In theory, the price can be asymptotic. The Long Tail Slide 9 Rule 3: help me find it Hit-only sites and long-tail only sites don t do well A successful long-tail business must offer both; the hits bring the customers, then you can pull them down the curve Typical example: Recommendations can be based on: Human editors Collaborative filtering. The Long Tail Slide 10

6 To sum up: Out: In: Atoms Bits Push Producer-centric Supply-side tyranny Broadcast Mass market Pop Mainstream Silly / Wrong Pull Customer-centric Demand-side democracy Personalized Mass customization Diversity Exploration Clever / Right. The Long Tail Slide 11