I went to a very interesting talk by Chris Anderson, author of The Long Tail. Though I haven’t read his book yet, I’m now tempted to buy a copy   Here’s a quick summary of what he presented.

 

He views the marketplace by slicing it into two parts – the Head and the Tail. In today’s mass-market economy driven by mass distribution, a small number of ‘hit’ products dominate and capitalize the entire market. The author calls it ‘Hit-ism’, where the market resolves around the few selected ‘hit’ products or services. For example, in the world of box-office, probably the top 20% of the movies represents 80% of the market (the figure isn’t accurate but you get the point). That top 20% is the Head, and the rest is the Tail. This economic model, the author argues, is about to change.

 

There have been an increasing number of products and services that focus on and serve the Tail market, which collectively turns out to be as large as the Head market itself in some cases. One example he presented was the comparison of Wal-Mart’s (offline) CD distribution and the sale of the Rhapsody music service. Rhapsody and other online music services, which make available many times more albums than Wal-Mart and serve the Tail market by offering unmatched variety of music, represent about 40% of the consumer music market, essentially doubling the size of the market. Another example is Netflix and Blockbuster (offline), in which Netflix carries 20 times more DVDs to serve the Tail market and now represents approximately a quarter of the movie rental market. It can even be interpreted that Google serves the Tail market in terms of offering advertisement opportunity to those who previously couldn’t afford it. Also, Google’s project to digitize books is based on the same concept – it makes niche books available to niche market, which probably will, collectively, substantially increase the size of the market. More examples can be seen in blogging, wiki, journalism, and others.

 

Under the Long Tail model, many of the previous assumptions fail. For example, success is not measured by popularity, nor is it wise to pursue one-size-fit-all, nor do we all have similar taste. The Long Tail model is characterized by diversity and variety. Hence, as the subtitle of the book says, the future of business is selling less (quantity) of more (variety).