Self Help

Long Tail Why the Future of Business Is Selling Less of More - Chris Anderson

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Matheus Puppe

· 44 min read

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  • Traditionally, hits have ruled the entertainment and media industries. Industries were built around chasing and capitalizing on blockbuster movies, bestselling albums, and top-rated TV shows.

  • However, hits are starting to lose some of their dominance as markets fragment into countless niches. Number one is still number one, but hits don’t have the same economic impact they once did.

  • Examples include fewer mega-selling albums being produced in recent years, declining box office revenues as audiences get more segmented, and TV viewers increasingly choosing from hundreds of niche cable channels instead of just a few networks.

  • Consumers are scattering across many different niche destinations on the Web rather than just consuming the top hits. This is challenging the conventional logic of how media and marketing succeeds.

  • While people still pay attention to what’s popular, hits are no longer the defining economic force in entertainment like they once were due to the growth of niches and long tail markets on platforms like the Internet.

  • The passage contrasts the author’s adolescence growing up in the 1970s-80s with limited media options, to a modern teen (Ben) with unlimited access to content online.

  • Ben can access mainstream and niche/underground content equally from movies, music, games, etc. online and through file sharing. He has less need for traditional TV, radio, newspapers.

  • The author argues this represents a shift from a mass culture dominated by a few major outlets, to a “mass of niches” as distribution costs fall on the internet. This reveals markets that were previously “uneconomical” like niche movies, music, etc.

  • Both mainstream hits and niche content now compete for attention. While hits still exist, everything else is a new cultural and economic force as audiences fragment across many small markets online rather than being consolidated around a few mainstream outlets.

  • This challenges traditional media industries accustomed to focusing on big hits to mass audiences via limited and expensive distribution methods like theaters, radio, TV. But new digital distribution opens many small niche markets.

  • The author was talking to the CEO of a digital jukebox company called Ecast in 2004. The CEO asked what percentage of their catalog of 10,000 albums sold at least one track per quarter.

  • The author guessed 50% based on the idea that digital distribution would be different, but the actual percentage was 98%. Almost the entire catalog sold something.

  • This revealed a huge untapped market for niche and obscure content. When supply is unlimited, even rare sales of niche content can add up to big revenues.

  • This “98% rule” was found to apply across digital stores like iTunes, Netflix, and Amazon - nearly their entire catalogs sold something. Aggregate demand for niche content was much larger than expected.

  • The author termed this phenomenon the “long tail” - the tail of the demand curve for niche products is very long, and in digital can be profitable due to low distribution costs. This upends assumptions about hit-driven businesses and unlocks new markets.

  • The long tail concept resonated widely as a description of how new efficiencies are making previously unprofitable customers, products and markets viable across many industries.

  • The book discusses how technology is enabling the rise of niche markets and the “long tail” of less popular products.

  • It gives the example of the book “Touching the Void” which saw a resurgence in sales many years later when it was rediscovered by readers of a similar book through online recommendations. This shows how the internet allows obscure products to find an audience.

  • In the past, distribution was limited by physical constraints like store shelf space. Only a few “hit” products could succeed widely. But online, the selection is vast, allowing even niche audiences to be served.

  • The 20th century entertainment industry relied on hits, but the 21st century will be equally about serving niches due to the abundance created by digital distribution and recommendations. This points to a new economic model in media.

  • The author conducted research with business schools and companies to analyze usage data and emerging trends showing how consumers are exploring the “long tail” of less popular offerings online.

  • Traditional broadcast and distribution technologies like radio, TV, and physical shelves have limited capacity. This forces a focus on hits that attract the largest audiences in order to be economically viable.

  • However, most people want more than just the top hits. They have varied interests outside the mainstream. But alternatives have been pushed to the fringes by hit-driven economics.

  • This is the world of scarcity. Online distribution allows for abundance by removing constraints of shelf space, broadcasting hours, etc. Services like Rhapsody show demand extends far beyond hits into a “long tail” of less popular items.

  • While individual sales are small in the long tail, the sheer number of niche products means the long tail market can rival or exceed the hits market. Online retailers are able to profitably offer the entire inventory rather than just the tops hits.

  • This abundance has expanded existing markets and uncovered entirely new ones. The long tail market often exceeds expectations and continues growing as more inventory is made available. Companies like Amazon, Netflix, and eBay capitalize on serving long tail demand.

The passage discusses the rise and fall of the “hit” in culture and commerce due to technological changes. In the pre-industrial era, culture was more fragmented and local due to a lack of transportation and communication technologies. Printing, photography, and recorded music in the late 19th century started to synchronize culture on a larger scale by propagating trends and popular content.

The 20th century saw the rise of mass media like film, radio, and television, which further standardized culture and created national stars and fads that nearly everyone experienced simultaneously. Hits dominated and niche content was rare, as the economics of distribution networks like retailers and broadcasters favored widely popular titles.

However, new technologies like the internet are now dramatically lowering distribution costs and revealing huge amounts of niche content and long-tail sales via platforms like Netflix, Amazon, and digital stores. This is qualitatively changing the market by bringing niches within economic reach and creating a positive feedback loop that will transform industries for decades to come.

  • In the 1990s and early 2000s, the music industry was dominated by hit albums and boy bands manufactured to appeal to mainstream audiences, particularly teenage girls.

  • *NSYNC’s 2000 album No Strings Attached set sales records, selling over 2 million copies in its first week. However, this marked the peak of the hit album/boy band era.

  • Beginning in 2001, music sales and the number of hit albums declined sharply due to new technologies and cultural shifts. File sharing sites like Napster allowed people to access any song for free, undermining album sales.

  • The iPod and portable MP3 players enabled people to carry huge music libraries, satisfying the demand for variety and niche tastes beyond top 40 hits. Recommendation algorithms on sites like Pandora further fueled musical diversification.

  • As a result, the music industry has struggled, with sales declining over 25% from 2000-2005. Fans, especially teens, fragmented across thousands of subgenres rather than focusing on blockbuster hits. This marked the end of the industry’s hit-making model and dominance of the mainstream.

  • As genres and subgenres fragment into narrower niches, the concept of a single global “hit” is giving way to many smaller “micro-hits” that appeal to specific interests.

  • Online music services can create thousands of top 10 lists for individual genres and niches, effectively generating many small-scale hits rather than a few mass-appeal ones.

  • Radio listenership has declined significantly as alternatives like iPods, cell phones, and internet streaming have risen. This has hurt rock radio stations in particular.

  • The blockbuster hit-driven business model of major media industries relies on a few huge successes compensating for many less successful projects. But as audiences fragment, huge mainstream hits are becoming harder to achieve.

  • Overall, traditional mass media is losing its ability to command large shared audiences. Culture has shifted to a model of individualized taste where people explore niche interests rather than following mainstream hits. Major entertainment and news industries are struggling to adapt to this new paradigm.

  • The modern “hit culture” conditions us to only pay attention to the biggest successes and see everything else as a failure. This is reinforced by how industries allocate resources based on popularity.

  • However, this is starting to change as the internet allows people to find niche content and form tribes around shared interests rather than rely on mass broadcast media.

  • The roots of the “long tail” concept of catering to niche interests go back over a century to retailers like Sears that used catalogs and large warehouses to offer huge selections directly to customers.

  • Sears revolutionized shopping by giving rural customers access to tens of thousands of products at lower prices than local stores. Their efficient operations were early examples of supply chain management and just-in-time delivery.

  • Sears helped usher in the era of superstores by opening retail locations in the 1920s as automobiles and urbanization changed shopping preferences. Their huge selections at low costs influenced retailers like Walmart that dominated later decades.

This passage summarizes that:

  • It required no more than a price-tag comparison between traditional merchants and superstores like King Kullen and Sears to understand how the latter offered lower prices, greater variety, and one-stop shopping through self-service models.

  • This spurred the growth of the supermarket and middle class in the 1950s-60s by freeing up funds through lower food prices.

  • Toll-free 800 numbers in the late 1960s-1970s enabled the return of catalog shopping as suburbs lacked local selection, fueling a home shopping boom through targeted niche catalogs.

  • The potential for online catalogs and shopping through the Internet was much greater due to even lower costs, broader reach, and improved customer experience through unlimited selection like Amazon aimed to offer for books.

So in summary, it points out how each new retail format significantly improved the customer experience in key ways like selection, convenience and price, driving further growth - and hints that online shopping’s potential through the Internet could enable it to fulfill an even greater portion of total retail spending over time.

  • The trillion dollar US economy now has long tail markets everywhere due to forces like unlimited digital distribution and discovery tools.

  • Online retailers like Amazon and the web presences of big box stores can offer much more inventory through their digital channels.

  • Technologies like search, recommendations, and reviews help connect consumers to niche products in the long tail, flattening the demand curve.

  • While few niche products sell huge volumes, their collective sales can rival hits due to the huge number of niches.

  • Forces that drive the emergence of long tails include democratizing production tools, lowering distribution costs via the internet, and improving search/discovery of available content.

  • This shifts economics and culture away from a small number of popular hits and toward a massive array of niches in the long tail of demand.

  • Amateur astronomers played a key role in the discovery of Supernova 1987A. Their observations between 9:30pm and 10:30pm UT helped confirm the connection between the neutrinos detected earlier and the visual light from the supernova.

  • This highlighted the rise of “Pro-Am” collaborations between professional and amateur astronomers, enabled by technologies like affordable computer-guided telescopes, CCD sensors, and the internet for sharing information.

  • Amateur astronomers now make significant contributions to astronomy, such as observing asteroids for NASA. Projects like SETI@home and analyzing Mars photos also harness the collective skills and computing/observation power of amateurs.

  • Astronomy has become one of the most democratized fields due to the important role amateurs can play with the right tools. Their contributions have vastly increased the scope and impact of astronomical research.

  • Amateur astronomers, known as “Pro-Ams”, have been able to help scientists identify over 200,000 craters on Mars through citizen science clickwork projects. Their accuracy was almost as high as expert planetary geologists.

  • The rise of Pro-Ams is enabled by the democratization of tools of production, as envisioned by Marx. Technologies like desktop video editing, blogging platforms, and video games now allow amateurs to engage in previously professional domains like filmmaking, publishing, and game development.

  • This shift from “passive consumers” to “active producers” is changing culture and the economy. Amateur blogs and homemade movies on platforms like YouTube are challenging mainstream media.

  • A key example is Wikipedia, which taps the collective wisdom of millions of amateur contributors rather than relying on paid experts alone. Through its open, collaborative wiki model, it has built one of the largest and most accessed reference works ever.

  • The spread of accessible creative tools means more ordinary people can become “amateur producers.” While most will not achieve professional quality, a talented few may produce influential, creative works that challenge traditional sources of commercial culture.

The passage discusses Wikipedia and how it has become an almost self-repairing, living encyclopedia through collaborative editing enabled by wiki software and the contributions of many volunteer editors.

Some key points:

  • Wikipedia grew tremendously from 2001-2005 and now has over 5 million articles in many languages, far surpassing commercial encyclopedias like Britannica.

  • Anyone with Internet access can edit Wikipedia entries, in contrast to editors having closed control in traditional encyclopedias. This fosters more participation and coverage of topics.

  • Wikipedia operates on probabilistic/statistical logic rather than absolute certainty, so individual entries may be inaccurate but collectively the information is reliable.

  • Rapid self-correction allows issues like vandalism to be fixed quickly, showing an emergent “immune system” functionality through the volunteer editors acting like a Pro-Am swarm.

  • Over time, Wikipedia’s open collaborative model has led it to outperform commercial encyclopedias in scale, timeliness, and depth of many topics despite varying quality in individual entries.

Wikipedia differs from traditional professionally produced encyclopedias in that it has a probabilistic level of quality rather than a guaranteed minimum threshold. This means some articles will be great, some mediocre, and some poor. However, remarkably, Wikipedia has managed to self-organize into a comprehensive user-generated encyclopedia through open contributions and edits, rather than collapsing into anarchy.

Wikipedia contains popular top entries that compete well with professional encyclopedias, as well as narrower and more niche subjects that Wikipedia handles better due to unlimited space. It also contains a vast “tail” of entries on obscure topics that no other encyclopedia attempts. Authors in the tail tend to be enthusiastic volunteers motivated by improving public understanding in their area of expertise.

The key question is why people create valuable content without monetary incentive. In the tail, non-monetary motivations like reputation, expression and fun are more important. Reputation, measured by attention and influence, can have value similar to money. Creators in the tail also have more relaxed views on copyright and intellectual property due to non-commercial aims and goals of free distribution.

The passage discusses how self-publishing and self-publishing services like Lulu are allowing more authors to publish books without needing to find a traditional commercial publisher. It notes that the vast majority of authors are writing non-commercial books aimed at niche audiences, rather than trying to become bestsellers. Self-publishing services have lowered the costs of publishing so that nearly anyone can now publish a book. While most self-published authors are not expecting to make money, it is seen as a way to distribute their message to interested audiences. In the future, the passage hopes that marketplace and regulations will better reflect this new reality of self-publishing as a legitimate publishing path, rather than just for “vanity” purposes.

The passage describes the origins of AbeBooks, an online marketplace for used, rare and out-of-print books. It started in the 1980s when Richard Weatherford realized computers could help connect buyers and sellers of rare books by building an inventory database. His early attempts failed due to being ahead of their time.

In the early 1990s, Weatherford was able to launch a closed network called Interloc that allowed booksellers to search each other’s inventories. This helped booksellers find books for their customers. The network established data standards and allowed bookseller catalogs to be uploaded over modems. It expanded to the web in 1996.

In 1997, Marty Manley was looking for an out-of-print book and had trouble finding it. This experience gave him the idea to open up Interloc to individual buyers, essentially creating the first online used book marketplace. He acquired Interloc and launched AbeBooks, which has grown significantly and helped connect buyers and sellers of rare books on a global scale.

  • Manley He found Interloc, a database of used book information. He saw its potential and teamed up with Weatherford to launch Alibris, merging Interloc into a new company tailored for both consumers and booksellers.

  • The used book market was previously made up of an efficient textbooks market and a less efficient general used book store market. Textbooks had predictable demand and supply cycles that made resale efficient.

  • General used book stores had limited, random selections due to relying on local sellers and luck. This made it hard to find specific books.

  • Alibris aggregated the inventory of thousands of used book stores, vastly increasing selection and liquidity. This made previously “out of print” books easily available.

  • By bringing more buyers and sellers together, Alibris helped supercharge growth in the online used book market, which grew at double digits annually versus stagnation previously. Alibris was an example of an “aggregator” leveraging technology to create an efficient market from an inefficient one.

  • Amazon has a larger selection of goods than the average record store due to its online inventory model, but it still only captures about 1/4 of the “long tail” of available music.

  • In total, there are estimated to be over 10 million music tracks circulating online through peer-to-peer networks and unreleased tracks, equivalent to around 2 million albums.

  • Pure digital retailers like iTunes and Rhapsody can reach farther down the long tail because their inventory and distribution costs are near zero - it’s just database entries and broadband transmission.

  • Amazon has progressed from a hybrid retailer model with physical goods to embracing more pure digital models to reduce costs and access more of the long tail. This includes print-on-demand books to minimize inventory costs for low selling titles.

  • By leveraging virtual inventory held by third parties and moving to digital distribution, Amazon aims to break the “tyranny of the shelf” and truly access the entire scope of products available without holding physical inventory.

  • Amazon pioneered print-on-demand and DVD-on-demand technologies, allowing books and movies to be printed and shipped individually only when ordered. This avoids the costs of maintaining large physical inventories.

  • Print-on-demand has long been desired in the book industry but was limited by technical and economic constraints. Advances now allow high quality individual prints that are indistinguishable from mass prints.

  • While compelling economically, print-on-demand has not been widely adopted yet due to some remaining cost disadvantages compared to large batch printing. Things like rights issues and file formatting also present challenges.

  • The potential benefits are large though, such as reducing booksellers’ returns through more accurate on-demand fulfillment. Wider adoption could significantly improve the economics of both popular and niche titles.

  • The ultimate goal is digital distribution with no physical goods or inventory at all, just files stored and delivered digitally on demand. This allows marginal costs close to zero and payment only for what is actually purchased.

  • Online digital stores for music, video, books, etc. are demonstrating this on-demand model at large scale, with huge libraries available virtually without physical constraints or costs. This trend will likely continue expanding to more product categories.

  • Yahoo’s LAUNCHcast music service provides customized playlists for each user based on their ratings of songs. It learns their preferences over time.

  • It also learns from the ratings of millions of other users to identify patterns and connections between artists that may not be obvious. Positive ratings between different genres can suggest they be placed together.

  • LAUNCHcast experiments by adding some new artists and songs to playlists to see how they’re received. If they’re highly rated, it adds them to more playlists.

  • Record labels can use this to test new artists. Reprise tested Bonnie McKee but discovered her strongest appeal was to teenage girls, not the adult demographic they targeted. However, her album still didn’t sell well despite this data.

  • My Chemical Romance already had an existing fan base from previous albums/shows which spread positive word of mouth online. This grassroots support helped their album succeed where McKee’s failed, despite similar promotion efforts.

  • Up-and-coming bands can use online tools like MySpace to attract crowds to their shows and build a fan base from the bottom up. This was demonstrated by the band Birdmonster.

  • Birdmonster was an indie band that promoted itself online through strategies like posting songs and information on its website and MySpace page. This helped bookers learn about them and eventually get opening gigs for bigger bands.

  • The band self-released a mini-album by recording some tracks themselves and distributing them online through services like CD Baby and iTunes. They also promoted the songs through music blogs.

  • This online promotion and self-release strategy helped the band build a fan base and gain attention from industry folks. However, they turned down record label deals because they felt they could record, distribute, and market their music themselves more effectively through digital means without giving up creative control.

  • The key points are that technology enabled this band to self-promote, self-release, and build success without a major label, demonstrating the shifting power dynamics in the music industry. Their digital strategies allowed them to gain exposure and opportunities traditionally provided by labels.

  • Reed Hastings believes recommendations are one of Netflix’s most important advantages, especially for non-blockbuster content. Recommendations have the demand-generating power of advertising but at no extra cost.

  • Recommendations arise naturally from Netflix’s customer data and personalized webpage recommendations can spread demand more evenly between hits and niche titles. This acts as a free marketing tool for films that can’t otherwise afford marketing.

  • Recommendations help democratize the film industry by leveling the playing field between big budget blockbusters and smaller films. Advertising usually represents over half the costs for blockbusters.

  • Different recommendation techniques work better for different genres of music. One challenge is recommendations tend to run out of suggestions more quickly in niche genres where fewer people have provided data.

  • Top 10 lists conflate different genres and niches, making the rankings meaningless. Lists only make sense when comparing titles within a specific genre or category. This provides better discovery of similar content for niche audiences.

  • Filters are important in the Long Tail model because without them, the vast amount of content risks just being noise. Filters help pull coherent signals (quality content) from random noise.

  • In traditional markets focused on hits/bestsellers (“Short Head”), there is less need for filtering because content is already pre-filtered to appeal to the masses. But the Long Tail includes nearly everything, so filtering is needed to reduce noise.

  • Filters help elevate quality niche content that appeals to specific audiences, while suppressing lower quality, irrelevant content. This improves the user experience and ability to discover niche products.

  • Contrary to assumptions, the Long Tail is not only full of “crap” - it contains works of both high and low quality, just like any other large collection of content. Filters are needed to distinguish diamonds from the rough.

  • For niche audiences, the best, highest quality products may actually be far down in the Tail, because they are too specialized to be mainstream hits. Filters help connect people to these niche products.

  • As the Tail gets longer with more content, the signal-to-noise ratio decreases, making powerful filters even more important to maintain a good user experience and ability to discover relevant content.

  • The 80/20 rule, discovered by Vilfredo Pareto in 1897, holds that roughly 80% of consequences come from 20% of causes. When applied to wealth distribution, it found that 80% of wealth was held by 20% of the population.

  • George Zipf later found similar distribution patterns for word usage frequencies - the most common words are used much more than less common words, following a predictable power law distribution.

  • Power law distributions are very common in nature, describing phenomena like city sizes, scientific paper citations, and more. They arise when there is variety, inequality of some quality, and network effects that amplify differences.

  • The “Long Tail” refers to power law distributions that are not cut off by limitations like shelf space. In consumer markets, when there is variety, some products are better than others, and effects like word-of-mouth amplify differences, it leads to a long-tailed power law distribution of sales and popularity.

  • As distribution barriers fall away in the digital world, more of the Long Tail can be accessed, altering the traditional 80/20 patterns of success being concentrated in the head and less in the tail.

  • Pareto distributions, also known as power laws or 80/20 rules, are commonly seen in nature and economics where a small number of things are disproportionately more successful than others. This results in an “imbalanced” distribution of outcomes.

  • When box office revenues are plotted on a logarithmic scale, they typically follow a power law distribution at first but then suddenly drop off after the top 100 films. This is because of constraints in the traditional theatrical distribution system, which cannot economically support more than around 100 films per year.

  • However, newer distribution channels on TV, DVD, and the internet have lower costs and allow a much longer “tail” of less popular content to still be profitable. This challenges the assumption that only the top 20% of content is worthwhile.

  • The 80/20 rule is often misunderstood - it does not mean only carrying the top 20% of products. Low-cost distribution allows serving niche demand across a wide range of content, not just the most popular 20%. While some content will always be more popular, the “long tail” encourages carrying a broad range.

  • For a hypothetical bricks-and-mortar retailer, about 20% of products account for most of revenues, following an 80/20 rule.

  • For a long tail retailer with 10x more inventory, the top 2% of products still account for 50% of revenues, but revenues are more evenly distributed across the full inventory.

  • Profits are where long tail retailers really shine. With low inventory costs, margins can be higher for non-hit products compared to bricks-and-mortar.

  • DVD economics are used as an example, showing new releases have low margins for retailers but account for most early sales. Older titles are more profitable.

  • By shifting demand farther into the long tail with recommendations, a retailer can improve profits by tapping into the higher margins of non-hit inventory.

  • Comparing industries online vs offline, the demand curve is much flatter online as search costs are lower, encouraging exploration of more inventory. Niche products significantly outperform in online markets.

  • The long tail may increase demand by making more products accessible, or just shift where demand is directed as inventory grows incredibly large online. It depends on the sector.

  • Human attention is more expandable than money. While we may not consume more media in terms of quantity, better filters and personalization allow us to consume media more efficiently and find content that is more satisfying and relevant to our interests.

  • When media is non-rivalrous (e.g. streaming video), people will consume more of it since it doesn’t cost extra. But if viewing required pay-per-view, attention would become more scarce. Subscription models encourage more exploration and consumption down the “long tail” of niche content.

  • The long tail is composed of many “micro-tails” - there are long tails within genres, artists, topics, etc. Recommendation systems work most strongly within niches rather than across the entire market.

  • Popularity exists at multiple scales. Something can be very popular within a niche genre but not break out as a mainstream hit by topping overall popularity charts.

  • Items see their popularity decline over time. The factor of age influences popularity in addition to appeal and niche-ness. There is a “long tail of time” as even hits end up further down the tail as they age. Search engines like Google are changing this by allowing older content to still get discovered.

  • The article discusses the continued importance of hits/mainstream content despite the rise of the long tail and abundance. Hits provide common cultural experiences that help broader markets form.

  • Retail stores and broadcasts with limited shelves/time still focus on hits as they aim for the lowest common denominator. E-commerce is still a small portion of overall retail.

  • Unequal popularity distributions like power laws are inevitable as there will always be more ways people are alike than different. Hits help kickstart recommendations and filters that make long tail markets work.

  • Successful long tail platforms need both hits and niches to span popularity ranges and connect people across interests. Consumers want one-stop shopping assurance that relevant content can be found in one place.

  • Offering both hits and niche content gives platforms traction - hits provide familiarity while long tail caters to uniqueness. This full-spectrum approach is important for customer satisfaction and marketplace success.

Here is a summary of the key points about defining a space:

  • Both physical spaces like cities and idea/cultural spaces like the internet can be thought of as having a “long tail” where niche interests cluster. Major population hubs and mainstream interests occupy the head of the curve, with more diverse niches spreading out in the tail.

  • Cities in particular are natural homes for niche varieties to flourish because their dense populations concentrate demand enough to support specialized or obscure businesses, stores, subcultures, etc. That diversity of options is much less feasible in smaller towns.

  • Retail shelves are highly optimized physical spaces that maximize sales and profits through decades of research. Products are meticulously placed, stocked, and managed based on demand patterns and shelf performance metrics. However, this system also incurs high fixed costs like rent that pressure high sales volumes.

  • Defining a space, whether physical or conceptual, involves understanding patterns of interest, demand curves from mainstream to niche, factors that support or hinder variety, economic costs and constraints, and optimizing use based on research into user behavior. Both opportunities and limitations shape how a space can be defined.

  • Getting space on store shelves is highly competitive as supermarkets only choose the most promising products based on expected popularity or profitability. Only a small percentage of the thousands of new products submitted each year make it to shelves.

  • Even successful products often don’t last long on shelves, with an estimated 70-80% of products not surviving beyond a short period of time.

  • The physical constraints of shelves creates inefficiencies as products cannot be organized in unlimited ways or tailored to each individual shopper. Only crude categorizations are possible.

  • Online retailers have opened our eyes to new possibilities by allowing products to be found through search and recommendations. They are not limited by physical shelf space and can optimize categories, placements, and recommendations dynamically.

  • Physical stores are constrained by the “physics of atoms” - products can only exist in one place and categories cannot be reconfigured on the fly for each shopper. This limits findability and the ability to serve individual interests.

  • Stores like Walmart have changed the retail landscape, carrying only a tiny fraction of the music selections that used to be found in specialist stores due to the economics of big box stores with small shelf spaces in each category.

  • The Dewey Decimal system developed in the late 19th century reflects the Protestant Christian worldview of its time but fails to adequately represent other major world religions. It was designed for organizing physical library shelves rather than concepts.

  • Physical constraints require categorizing books into rigid subject areas, even though concepts can span multiple areas. This ‘orphans’ books if misshelved and makes contextual discovery difficult without search.

-Digitization and search enables more flexible ad-hoc organization online. Libraries and retailers are moving away from rigid shelving toward more dynamic classification like tagging and recommendations.

-Location limits what physical stores can offer based on local demand. But online retailers have a global reach unconstrained by geography. They can offer greater inventory and matching recommendations based on aggregated user behavior and relationships between items.

The key point is that rigid physical classification schemes are becoming less important as search and dynamic organizational behaviors online unlock more flexible, context-sensitive discovery of ideas and products across geographic boundaries.

The passage discusses how distribution scarcity shaped media and entertainment in the 20th century. Broadcast technologies like radio and TV could only reach a limited audience due to physics constraints. This led networks to focus on “hits” - broadly appealing formulaic content - to maximize viewership and ads.

This created a “hit-driven” culture focused on predictions, pulling failures, and limited choices. Younger generations raised with the internet are starting to shift attention away from formulaic broadcast TV to online niche content. The internet allows long tail economics where niche and modestly popular products can still exist.

Overall, the passage argues that past distribution scarcity led the media industry to overvalue hits and stars. But the internet now enables a “paradise of choice” where varied niche content can find audiences without needing to be a big commercial success. This shifts away from the short head of hits towards the long tail of diverse content.

  • There has been an explosion in product variety due to factors like globalization, demographics, and the availability of long-tail products online. Stores now carry thousands of variations compared to just a few decades ago.

  • However, research suggests too much choice can be overwhelming and paralyzing for consumers. A famous jam study found people were less likely to purchase when given 24 varieties vs 6.

  • The concern is that abundance leads to anxiety over missing something better and lack of confidence in one’s selection.

  • However, the author is skeptical of limiting choices. Mass customization allows people to find what’s right for them.

  • A follow up jam study found that properly organizing choices through search/filters helps consumers handle abundant options.

  • Online retailers like Amazon expertly leverage data and customer reviews to guide buyers through thousands of product variations in a helpful rather than overwhelming way.

  • The key is not limiting choices but ordering them in a way that makes the selection process easier rather than more stressful.

The passage discusses the rise of niche culture through the example of house music in the 1980s. As disco became over-commercialized and formulaic, DJs like Frankie Knuckles in Chicago started mixing different genres of music like disco, pop, and new electronic beats into a new sound called house music. They would remix and mash up old and new songs into high-energy sets at clubs like the Warehouse.

This house music scene provided an alternative to mainstream pop music and allowed for more variety and experimentation. DJs like Ron Hardy at the MusicBox club took the sound further by playing at a frenetic pace inspired by his heroin use. The house music style then spread to northern England and helped spawn the rave scene.

The development of house music shows how niche cultures can emerge as a reaction against overly commercialized, blockbuster styles of music. It created a new music industry driven by DJs and clubs, rather than the traditional pop music model. This gave rise to more variety and customization for listeners outside of the mainstream.

The passage discusses how the rise of house music in the late 1970s and 1980s laid the groundwork for today’s “Long Tail” ecosystem of dance music. Key factors that enabled house music to flourish included the democratization of tools like mixing decks and affordable production technology. This allowed hundreds of small indie labels to proliferate.

Clubs and parties served as important distribution channels with low barriers to entry, allowing DJs to play underground records and get feedback from dancers. This close feedback loop helped DJs curate music for their audiences by “surfing the Long Tail”.

As production costs fell further, house music fragmented into many niche genres. To help navigate this complexity, record labels emerged as tags to categorize different microgenres. DJs could then efficiently identify relevant tracks based on label alone.

Open access remixing practices also allowed tracks to take on “platform” characteristics, snowballing in value as more complementary remixes were produced. This further aided DJs surfing the Long Tail.

Overall, the passage discusses how these factors laid the groundwork for today’s massively parallel culture, where both hits and niche content can thrive due to lower barriers to production and distribution enabled by technology.

  • Cultural references and internet memes that seem ubiquitous online are often obscure in the real world. When the author polled people at a conference, only about 10% recognized each reference.

  • Mass culture is fragmenting into millions of microcultures as people seek out niche interests online. Thanks to abundant choice, people can connect with others who share obscure interests.

  • This shift from mass to massively parallel cultures means we all belong to many overlapping and non-overlapping tribes simultaneously based on different interests.

  • The rise of niche media like blogs has disrupted traditional news businesses. Individual bloggers can now target narrow audiences in niche areas, picking off readers one by one from mainstream media.

  • Collectively, the blogosphere has better error-correction than mainstream media due to millions of citizen reporters covering specialized topics rapidly and cross-linking information. Popular blogs now rival or exceed mainstream newspapers in readership and influence.

  • This signals broader changes as the Long Tail effect enables anyone to access and create abundant niche content online, reshaping social and media landscapes around micro-interests rather than mass appeal.

  • The passage discusses how YouTube fundamentally changed television and video distribution when it launched in 2005, allowing anyone to easily upload and share videos.

  • YouTube demonstrated the power of the “long tail” where niche and amateur videos could find audiences alongside commercial content. Browsing YouTube showed a mix of professional and user-generated clips.

  • Users quickly uploaded over 100,000 videos daily to YouTube, which were watched by around 100 million viewers daily, rivaling medium-sized TV networks in viewership.

  • Google bought YouTube in 2006 for $1.65 billion, recognizing its potential as a new distribution platform for both long-tail and mainstream professional content.

  • Today, Google Video and YouTube have become major distribution channels for both independent creators and established studios/networks seeking new audiences online. Professionals can host archives or one-off clips alongside user uploads.

So in summary, the passage discusses how YouTube revolutionized video distribution by empowering amateur uploading and creating a new “infinite” paradigm for both niche and popular video content to find audiences online.

  • Online video sites like Yahoo and Microsoft are becoming major video platforms, rivaling mainstream TV networks in viewership. Popular online videos can attract hundreds of thousands of daily viewers on par with cable TV shows.

  • Independent filmmakers and niche content creators now have a way to distribute their work and earn money through sites hosting paid streaming video. This breaks down distribution barriers that previously made obscurity likely.

  • New forms of unencumbered online video created specifically for streaming, like the Latino music site Barrio305, are finding entrepreneurial success and proving Internet video need not be restricted by traditional TV’s limitations around rights and exclusivity deals.

  • As broadband connects more homes, online video is increasingly watched on TVs through devices like Roku or Xbox, blurring the lines between online and traditional television viewing. While expensive TV dramas may still require traditional models, the “Long Tail” of niche interests can find audiences online in ways not supported by traditional TV’s limited channel structure.

  • Technologies like broadband internet and video streaming will allow people to access and distribute video content much more freely, removing constraints of traditional TV programming and distribution models.

  • Video content will be produced and distributed by millions of ordinary people through services like Google Video and Barrio305, rather than just professional producers and TV networks.

  • This democratization of video production and distribution means that content will come in a wider variety of lengths, better matching individual attention spans rather than being constrained to 30-minute TV show formats.

  • Short-form mobile video is also likely to grow in popularity as people watch snippets of content on the go. Sports and other events may be divided into highlights and short segments.

  • Technologies like the VCR and video rental stores in the 1980s significantly expanded the number of movies available to consumers beyond what was playing in theaters or on TV at any given time.

  • Services like Netflix now provide an almost infinite selection of movies and TV shows that can be accessed on demand from home. This continual expansion of choices empowers consumers and increases both the variety and quantity of content consumed.

  • eBay relies on individual sellers to list products themselves, so eBay often doesn’t know exactly what’s being sold. Without standard product identifiers, it can’t offer powerful search and recommendation tools like Amazon.

  • Most of eBay’s sales come from small and medium businesses using it as an online storefront. Competitors are better able to extract product data from these sellers and offer comparisons that eBay can’t.

  • KitchenAid is known for the variety of colors their kitchen mixers come in. Traditional retail stores typically only carry 3 colors, but online 50+ colors are available. This long tail of less common colors still sells well online.

  • LEGO has a large online catalog and mail order business beyond what’s in stores. Their site allows enthusiasts to customize sets and even design and sell their own creations. While mass customization is promising, limitations in part selection and packaging drive up costs for simple designs.

The passage discusses how companies are realizing the potential of catering to niche markets and long tail opportunities through more affordable and automated means. It gives examples of how LEGO allows for custom creations from standard parts, similar to how iTunes allows customized playlists. It then describes how created a software platform that allows smaller developers to reach customers through its cloud-based services, lowering barriers and tapping into niche markets. Google also revolutionized online advertising by automating the buying and selling of ads based on search keywords, making the process much more affordable and accessible for smaller advertisers. These examples illustrate how lowering costs and improving accessibility can open up big opportunities in catering to niche interests and the “long tail” of various markets.

  • Google pioneered a self-service advertisement model where advertisers can set up and customize ads with minimal human involvement from Google. This lowers costs for both Google and advertisers.

  • Advertisers can constantly tweak ad copy and keywords to optimize clickthrough rates. This level of control and measurement was previously unavailable for small businesses.

  • The low-cost, self-service model allows thousands of small businesses to advertise on Google who never advertised before. This extends Google’s advertising reach significantly down the “long tail”.

  • Google applied a similar self-service model to publishers, allowing any website to display Google ads with just a few lines of code. This opened up digital advertising to hundreds of thousands of smaller publishers and blogs.

  • By going after both very large advertisers and the long tail of small businesses, Google was able to grow its total advertising revenues dramatically, while serving a much broader range of customers than traditional advertising allowed.

  • The key aspects are extremely low barriers to entry, constant optimization capabilities, and automation that requires little to no human involvement from Google once ads are set up. This maximizes efficiency and outreach.

Recommendation systems like those used by streaming services are an efficient way to promote a long tail of less mainstream content and encourage customers to explore new films and music. This larger, more diverse selection benefits both consumers and creators. Some key principles for successful long tail businesses include lowering costs through digital distribution, letting customers do useful work like reviews, targeting niche audiences through multiple channels and formats, using variable pricing, and sharing information to help customers find what they want. Transparency and a focus on abundance, rather than scarcity, can maximize the size of the overall market. Applying these principles allows businesses to serve wider audiences while still being profitable.

The Campbell-Ewald advertising agency wanted to create an innovative online marketing campaign for the Chevy Tahoe SUV. They launched a contest called Chevy Apprentice which allowed users to create and submit their own TV ads using provided video clips and music. Over 30,000 entries were submitted.

However, some entries subverted the intended marketing message by criticizing the Tahoe’s gas mileage, environmental impact, and other issues. These “attack ads” became popular online, racking up hundreds of thousands of views on YouTube. While this undermined the brand messaging, Chevy and Campbell-Ewald made the strategic decision to not remove any of the ads, creating viral attention for the campaign.

The campaign was considered a success. The contest site attracted over 600,000 visitors who spent significant time viewing content. It drove more traffic to Chevy’s main website than Google or Yahoo during this period. Tahoe sales increased after the campaign launched, with a large market share gain. So while user-generated content posed risks, the open approach also engaged critics and generated valuable marketing exposure.

  • The Chevy Tahoe viral marketing campaign on YouTube backfired after users uploaded negative videos mocking the SUV. However, some argued this was inevitable with user-generated content and it was better for Chevy to participate than stay closed off.

  • While the negative videos were not new information for potential Tahoe buyers, Chevy looked “pretty cool” for not taking them down. User word-of-mouth is now more influential than traditional ads.

  • Brands have lost control of their messaging online as users dictate the dialogue. Marketers now have to listen to consumers rather than define identities/messages themselves.

  • Effective marketing now comes from influencers, which can be identified through tools monitoring social media, blogs, wikis and searches.

  • Companies should monitor how they are portrayed online, respond respectfully to criticism, and engage influential users/bloggers. But ultimately, marketing cannot manipulate public opinion if the product is poor.

Here’s a summary of the key points:

  • Hollywood studios often release movies even if they’re not very good, hoping marketing can drive enough ticket sales to break even. But word of mouth now spreads too quickly online for bad movies to be successful.

  • Online reviews and discussions allow audiences to identify good and bad movies much earlier. Second weekend box office drops have increased from 30% to over 50% as a result.

  • The story of Jeff Jarvis and his negative experience with Dell technical support highlights how one blog post can spark massive online discussion and criticism of a company.

  • Jarvis’ “Dell Hell” posts gained widespread attention and likely contributed to Dell reforming its customer service approach. The company now monitors blogs and online discussions more closely.

  • This shows how empowered online consumers can drive major changes in large companies that were previously oblivious to individual complaints. Word of mouth on the internet now has more influence than traditional media and marketing.

  • Hyperlinks are now over half of website traffic and come with a built-in tendency for engagement due to the reputation of the linking site.

  • Google’s search algorithm privileges hyperlinks above all else as a measure of relevance and popularity (votes of confidence/relevance). More inbound links means higher search rankings.

  • High search rankings translate to organic search traffic from Google, which has a positive bias and leads to advertising revenues for sites. So links drive traffic which generates money.

  • This makes word-of-mouth and gaining inbound links extremely important for success online today. Long tail marketing focuses on attracting these impactful links.

  • Microsoft struggled with its public image until it launched Channel 9 in 2003, providing unprecedented transparency into the company by letting employees openly blog and discuss their work on video.

  • Channel 9 was a huge hit and helpedhumanize Microsoft by explaining the engineering processes in a candid way. It boosted Microsoft’s reputation among developers and employees now blog openly about various products and teams.

  • Microsoft has shifted from a top-down PR approach to managing reputation to empowering employees to transparently represent the company online, with great success.

  • Traditional PR approaches of contacting mainstream media are becoming less effective as their influence wanes and readers/viewership declines. Instead, influencers like bloggers and social media sites are where word-of-mouth marketing starts.

  • Bloggers want authentic engagement, not paid promotions. Directly contacting them as a PR person comes across as inauthentic. However, some bloggers will engage if the PR person proves they understand the blog and its audience.

  • Companies are starting to give special access and early product details to influential bloggers to build relationships. But fundamentally, bloggers prefer to hear directly from those creating “cool” things.

  • The solution may be for PR to coach employees on effective social media outreach themselves, rather than acting as the intermediary. This could include training on identifying influencers, gaining social media traction, sharing appropriately, and other grassroots marketing tactics.

  • Niche and artisanal foods/products are increasingly popular as consumers seek more varied and personalized options. The internet helps niche producers reach global audiences by facilitating word-of-mouth and personalized customer engagements.

  • Emerging technologies like affordable 3D printers may one day enable individuals to self-manufacture custom physical goods in their homes based on downloaded files, similar to how digital goods are accessed today. This could further empower long-tail niche production.

  • The passage discusses how the “Long Tail” concept of niche products will extend beyond digital media to physical goods delivered to homes.

  • It envisions a future where customized, on-demand production allows for an infinite variety of physical products like personalized action figures. These would be stored digitally and 3D printed on demand for delivery within a week or two.

  • This would eliminate the constraints of mass production and allow consumers access to nearly any product they desire through an “infinite aisle” of options.

  • The Long Tail is already extending beyond just entertainment and information into other areas like fashion, travel, food and beverages. Even big companies are getting in on niche markets.

  • Issues discussed include how the Long Tail can help reunite cultural diasporas by making niche sports, TV, etc from their home countries accessible globally. It argues this will increase as more content moves online.

  • Common misunderstandings are addressed, such as the Long Tail not predicting the end of hits but a change in their dynamics and role in a marketplace with more variety and niche products available.

So in summary, it envisions the Long Tail concept expanding physical goods production through on-demand digital manufacturing, and explores how this increases product variety and accessibility of niche interests globally.

  • Type 3 hits (hits discovered organically online) will continue to do well and even better as the web amplifies word-of-mouth.

  • Type 2 hits (mainstream successes) will suffer as consumers spread negative reviews faster online.

  • Many top-down hits will get smaller, but more bottom-up niche hits will get bigger, resulting in more variety overall. It’s a rise of new kinds of hits, not the end of hits.

  • The Long Tail theory doesn’t mean obscure producers will get rich. It mainly benefits producers through increased attention, reputation and readership rather than direct revenues. Converting this to money depends on the individual.

  • Consumers have more choice as individual tastes are increasingly satisfied.

  • Aggregators have more opportunity as it’s easier than ever to provide vast variety and tools to organize it. Specialized niche aggregators will rise alongside generalists.

  • Producers are affected non-economically through increased micro-celebrity and ability to gain fans/followers, even if not direct revenues. This brings cultural benefits. How money follows is still unfolding.

  • Walmart and Blockbuster sales figures from Nielsen are used as proxies for overall offline retail sales in those categories, since they are the largest retailers. Their sales patterns are assumed to be similar to the overall market.

  • The percentages listed refer to different genres of media (music, movies, etc.). For items 1-100, sales are divided as follows: 65% from items 1-47, 47% from 48-68, 68% from 69-101. For items 101 and up, the breakdown is: 36% from 101-153, 53% from 154-206, 32% from 207-238, 62% from 239 and up.

  • These figures describe the disproportionate concentration of sales in a relatively small number of hit items, following the 80/20 rule where 20% of items generate 80% of revenue. The Long Tail argument is that the remaining catalogue of lesser-known items can also be profitable when aggregated.

  • The passage provides these sales breakdown numbers to quantitatively illustrate the uneven demand across hits versus niche items, without stating the purpose or source of the exact figures.

  • 89, 107, 137-138, 190, 191, 221-222, 244 - These are page references related to topics like iTunes, InStyle magazine, intellectual property, The Long Tail theory, marketing concepts, pricing strategies, etc.

  • Information theory - Related to concepts like signal-to-noise ratios and filtering information.

  • Intellectual property - Discussion of rights related to creative works.

  • Internet - Growth of e-commerce, distribution of content, use of hyperlinks.

  • iTunes - Details on its music offerings, pricing, and role in popularizing digital music.

  • Long Tail - Definition and economics of the Long Tail distribution pattern in markets.

  • Marketing - Discussion of applying Long Tail concepts to marketing strategies.

  • Music - Democratization of music production/DJing, discussion of niche genres, streaming services like Rhapsody.

  • Netflix - Details on its DVD rental business model and expanding into streaming.

  • Newspapers - Discussion of declining newspaper readership and rise of news aggregators.

  • Niches - Importance of niches and micromarkets in the Long Tail.

  • Scarcity vs. abundance - How digital distribution impacts scarcity of information/content.

In summary, it covers a variety of topics related to the emergence of the Long Tail distribution pattern across media like music and books, enabled by the growth of the Internet and e-commerce.

Here is a summary of the key passages:

  • The book discusses how the long tail concept applies to television, with topics like falling ratings, golden age of TV, programming conventions, and the rise of web-only TV and video content.

  • It mentions advertising on television and how it influences attention.

  • DVDs and how they impacted television viewing are brought up.

  • The use of videos on platforms like YouTube, as well as different video formats and rentals over time, are discussed.

  • Other topics briefly touched on include Google, the internet, viral marketing, Walmart’s role in music/entertainment sales, niche interests/communities, and new tools like 3D printers and location-based services.

  • The author Chris Anderson is introduced as the editor of Wired magazine who explores how the digital world has enabled access to niche content and markets via platforms like Netflix, Amazon, etc.

So in summary, the passage lists out various television, video, internet and tech-related topics covered in the book “The Long Tail” by Chris Anderson about the growth of niche markets and content due to new digital distribution channels.

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About Matheus Puppe