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Living in a Long Tail October 26, 2009

Posted by moving4word in Understanding social media.
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In recent years, we’ve witnessed the decline of broadcast news and primetime show viewership. We’ve seen chart topping music artists and blockbuster movies boast less than record numbers. What’s going on? Has product quality declined? Or has the audience found other muses?

The Long Tail by Chris Anderson

The Long Tail

According to Chris Anderson’s book, The Long Tail, a mass culture driven by scarcity is being replaced by a niche culture offering an abundance of choices. Anderson begins his book with a striking example of Ecast, a digital jukebox company. The company claimed that 98% of the 10,000 albums it offered sold at least one track per quarter. The vast majority of these albums were not blockbusters, but each track was able to attract at least one consumer. Based on a mountain of findings like this, Anderson proposed the Long Tail theory which assumes that the internet is creating a new niche culture by offering improved search capabilities, a huge inventory, and efficient distribution methods. As people become more aware of and filter through product abundance, demand will shift from the mass culture “hits” at the head of the curve to the aggregate power of the long tail made up of demand for many niches.

The Theory

A small percentage of “hit” products (think Titanic movie) comprise the head of the tail and account for a large portion of profits. Although each the 90-95% of products in the tail of the curve (think small indie movie) sell exponentially less than those in the head, their combined profits can account for a large portion of an industry’s total profits. For example, data from Rhapsody, Netflix, and Amazon show that long tail profits amount to between 21% to 41% of their markets.

Long Tail Diagram

Long Tail Diagram

Using major online companies like eBay and iTunes as examples, Anderson explains that by reducing transactional costs to almost zero, the internet allow retailers to provide consumers an abundance of choice. At the same time, consumers can now create, customize, and sell their own media and products.   Online information sharing allows consumers to rate and recommend products, thus filtering the abundance so other can easily find the specialized products they want.

Darth Vader

Darth Vader

The Long tail isn’t limited to buying and selling; it’s permeated our culture. For example, there’s even  a long tail of religion. Although most Americans identify as Christians, there are potentially an infinite amount of religions including everything from Scientology(thousands of followers) to the worship of Darth Vader (16 followers- Okay, I made that up, but you get the picture).

A  Long Tail of Questions

The Long Tail is not without its critics. In his blog, MondayNote, Frederic Filloux suggests that very few businesses have actually been able to extract money from the Long Tail.  I’ve found that Wall Street Journal reporter, Lee Gomes, shares my concerns about the size of the Long Tail. Is the Long Tail going to continue to grow, or has the vast majority of growth already happened? I’m also a little skeptical about how much the market can shift toward the tail. Yes, people are drawn to niche markets, but won’t people always revert to mass culture? There’s something about the preferences or actions of millions of other people that we just can’t resist. However, it seems that some mass distributors have caught on to the idea of the Long Tail. The low-budget, independent movie, Paranormal Activity, existed for a few years in the tail before being bought by DreamWorks. Instead of a traditional marketing campaign, the company relied on the online marketing and word of mouth across social networks. Now the #2 movie at the box office, it’s at the head of the distribution.

A Bigger Picture

Groundswell encourages organizations to tap into their customers’ thoughts and experiences. The Long Tail suggests that there is already conversation going on about your organization, the trick is filtering the information so that you can find it. Here Comes Everybody  discusses how the long tail of social media users take advantage of the internet’s low transactional costs to organize themselves, share information, and collaboratively produce materials. It’s largely these created organizations that create niche content on the web and drive the market toward the tail.

For those of you with more abstract minds

The Long Tail:For those of you with more abstract minds

UrbanPromise

As a non-profit, urban, ministry, UrbanPromise is a niche in the long tail of non-profit organizations. However, this book suggests, that by improving UP’s SEO, the people who are interested in helping impoverished children will be able to find them. Also, UrbanPromise should be able to locate other niche sites or organizations that may host potential donors. Although it’s not the biggest or most popular organization, the long tail theory suggests that UrbanPromise can survive with fewer, but dedicated followers.