8/10/2008 Update: As I was writing this post, a storm had erupted based on a study by Harvard Professor Anita Elberse reportedly disputing some of the assertions by the Long Tail book. I think the overview that I wrote here still applies - and the post distinguishes between pure long-tail strategies and the "1000 fan" strategy of niche-marketing. A good overview of the dispute can be found at The Marginal Revolution.
The Long Tail by Chris Anderson redefines the economics of selling as we know it. For the past 50,000 years or so, our economics have been defined by assumptions so ingrained into our thinking that we have taken them as givens. Some of these mythical givens are:
- "You need a blockbuster hit to win in business."
- "The top 20 percent of the products generate 80 percent of the profits."
- "Mass appeal is the key to business success."
Understanding The Long Tail provides an important strategic edge for Internet Startups. Where you choose to play in the tail defines how you should approach your market.
Imagine a roaring campfire. You and your family sit around, staring into the flames, watching the them lick the energy away from the shrinking wood. I like to call it “The Caveman’s TV.” One channel, same show - all the time.
When I was a kid, we had about six channels to choose from. At school, you could generally find at least a handful of kids to talk about the latest episode of “Lost in Space” or “Gilligan’s Island” (two of my favorites). Our selection was dictated to us by the broadcast media giants. The limited “shelf space” of television required that only the hits with the broadest appeal would make it on air. Even today, off-line stores like Walmart and Blockbuster focus on providing the biggest sellers due to limited shelf-space.
Last night, as I sat around a campfire with my 12 year daughter, her 12 year old friend and my 14 year old son, I asked them about what they liked to watch or do for entertainment. My computer-hopping daughter likes to interact at Meebo.com, which allows her to Instant Message her friends without downloading the AIM software. Her friend enjoys playing with SmartMusic, software that enables her to jam with an imaginary band on her clarinet. My son surfs YouTubefor funny video (funny to a 14 year old that is). Personally, I spent time recently surfing martial arts sites looking for a good weapon’s bag to hold my Aikido sword (Bokken) and staff (Jo).
The Long Tail has provided us with a wide range of opportunities as consumers. No longer restricted by shelf-space or a fixed set of consumers in a local geography, the Web has created the ability to provide an enormous range of products – hits and niche products alike, without the limitations of shelf-space, geography, customer base that merchants have worked with for most of human history.
But what does this mean for Internet Startups? If you want to bring a new offering or product to market, how does that impact your ability to sell?