The Long Tail of Market Disruption

. . . in which we examine how marketing professionals and creators of all types of products and services can use this upside-down view of the world to market more effectively.

The Long Tail According to Chris Anderson

Quickly summarized, the 'Long Tail' refers to the shape of a curve which has a concentration of high values for a small number of occurrences, and tails off to much lower values (approaches zero) for the vast majority of occurrences. The long tail is the part of the graph that is continuously approaching zero.

In Chris's writing, he examines the long tail of sales for all the products in a given category that were not 'bestsellers', or 'hits', or 'blockbusters', but rather catered to a much smaller niche audience.

Traditional views of the world see business as a "winner-take-all" venture, where the top two or three products represent 80 to 90 percent of all sales.

Or where Tiger Woods' income is more than twice Phil Mickelson's, and Phil's is more than twice the next highest. And together, they earn more than the rest of the PGA tour combined.

We have become acclimatized to thinking there is nothing beyond number 1 and number 2.

Chris Anderson coined the term Long Tail a couple of years ago in an article he wrote as editor of Wired Magazine. He has expanded his discussion of the Long Tail into a whole book which is now published, and rapidly ascending the NY Times bestseller list (ironically, it is not a 'Long Tail' book, but a very solid 'Head'). 

Although it has been called the Long Tail theory, much of what Chris has observed is not really theoretical at all, but plainly evident. There is no disputing the shape of sales data curves, nor can we dispute that the internet has introduced a new dynamic to sales of anything that can be digitized (and therefore has a low-cost footprint for storage and distribution).

What Anderson points out is that through most of the past century, and especially since the advent of broadcast media, we have tended towards a one-size-fits-all kind of mass marketing that emphasizes only the winners, or the head of the curve, and ignores the tail. Yet there are vast numbers of tiny niche products which in total represent much larger markets or unit sales than the hits.

The new order

The book is primarily about how the internet changes the economic equation for the the tail of the curve and enables niche products to find their audience efficiently (or vice versa). It focuses on digital and digitizable media and entertainment products - books, CDs, DVDs, film, music where the examples are most obvious because they are all information products.

Amazon, eBay, Netflix and iTunes have demonstrated amply that with "unlimited shelf space" and near zero-cost accessibility to niche products, huge revenues can be generated from what we used to think of as marginal (loser) products. But we knew that -- all of us have idiosyncratic preferences and things that we buy on foreign vacations because you can't get them here.

These internet stores just prove what was already obvious -- if you had access to things you like at a reasonable price, you will buy them, no matter how few other people do the same.

The bigger questions for me concern the niches rather than their aggregation. Internet retailers can generate hit-sized sales volumes from the aggregation of very large number of products selling in relatively small quantities -- their economics aren't so different from the old model, except that more products are in the channel. But that same model doesn't necessarily apply to the producers of small volume niche products.

What incentives do they have to fill the niche channels and how do they market effectively to make money at this game? Does thinking about things this way imply anything different for the marketer of a bona fide hit, mass market product or those products that are in 3rd through 10th place - the great middle mass market?

Are there existing markets we can learn from that have always been about selling the long tail?

These are questions that Anderson largely leaves unanswered, and an area of huge opportunity for businesses that understand we are going through a disruptive realignment of how companies create products and relate to customers.

What corporate America is only beginning to wake up to is that this realignment changes everything. The iconic companies of the industrial revolution must adapt or die.

This is also true of the vast army of traditionally-oriented marketing agencies supporting them that still have blinders on as well.

In my view, we are only beginning to see the upending of long held beliefs about "the right way" to market products. The next few installments of my blog will focus on these long tail marketing issues.

If you haven't already visited, Chris has an excellent Long Tail blog with links to many other sites discussing Long Tail implications. And, just so that we recognize that the hype the Long Tail is getting doesn't mean that's the only point of view, here's another way of looking at it The Shape of the Tail.