Long Tail (1st assignment)

Presentation on the long tail

 After reading an article about the long tail theory written by Chris Anderson my perseption of how its possible to make money on the internet somewhat changed. My belief was that business would be successful if they were offering products or services that were the most popular, i.e. the mainstream, but this seems not to be the case, and therefore decided to give my presentation on the long tail theory.

Areas to cover:-

- What the long tial theory is.

- The long tail in blogging

- Example of the long tail theory in action

- Conclusion

So What is the Long Tail Theory??

Well basically the theory is about how our economy and culture is shifting for mass marlets to millions of niches, which the satisfaction of such new markets has been helped by the developmet of new technoligals and concepts such as the ‘infinate shelf space effect’.

Statistics in an article from Tom Storey clearly shows that we are turning into a more digital and techonligally based age, with more and more products and services looking to the internet for wider distribution and target audience. An example of one industry that is has been changed greatly by the utalisation of the internet is the music industry.

An example of this in action is in the music industry, where online download companies have started to expand there product databases because they have realised that theses can also make a steady profit because no matter how obscure the material is, this is a market for it somewhere, as started in Armstrongs article one download company has seen that not only his op 50000 tracks are gettin hits but the top 100,000, top 200,000 and the top 300,000 are all still generating steady income. The companies can do this because of the concept of unlimited shelf space, these obscure tracks can just sit on some server somewhere waiting to be downloaded and it doesnt realloy matter if they are hit once a day or just once a month.

  The long tail in relation to blogging

Through more research, i have discovered that we can relate the long tail theory to the world of blogging itself. The is a good diagram on the website listed which illustrates what i am going to talk about.

 Many people have the conception that only a small amount of the blogs which are present on the web have an audience, these being the A-list bloggers which have the majority of the audience. But according to the long tail theory, this is not the case. Due to the ‘tail’ of B and C list bloggers is infinite, on average then the amount of people reading these blogs, although the numbers being smaller for each blog, usually outweighs the amount which are viewing the small line of the A-list bloggers. Here we already have a vast amount of niche markets already divided up which can be taregted by advertisers and marketing strategies of businesses.

 Example of the long tail theory in action

1.

A story which i read on the web, illustrated the use of the long tail theory. Universal, one of the worlds leading music companies in the world decided to contuct an experiment into the idea, what it did was to put 3000 of its out-of-date music tracks back into circulation on download sites across europe. the result of the experiment saw over 250000 downloads of these tracks.

Not only is this a major advantge for universal, but also for the artists which helps them stay in the public eye and also for consumer choice, if the long tail theory is gettingg utillised alot more then it means consumers will have a hell of a lot more choice of products when it comes to purchasing ovr the web.

 What this proves is that money can be made from obscure and un-mainstream items provideing the storage costs are low enough, and in the music industry the cost of storing a music track on a server is virtually nothing.  some people expect the sales from the long tail repertoire can, in time, outweight the sales of hits.

2.

When looking at the DVD rental industry, a company such as blockbuster usually holds around 3000 titles whereas a company such as netflix, which does not has bricks and morter limitations has around 40,000.Refering back to blockbuster the top 600 titles make up 80% of the sales with the tale making up the other 20% due to each title only selling either once or twice a month, but if the tail is extended to say 40,000 like Netflix, then the really sales figure generated by the long tail is around 50%. Therefore for a company such as Netflix, which doesnt have the limitations that Blockbuster do, there is a great amount of revenue to be made out of the long tail.

Conclusion 

In conclusion, the long tail theory shows that onoine companies are able to use the internet in order to exploit and generate profit from a number of niche markets. What makes this possible is the fact that digital storgae and digital delivery lowers the cost to insignificant amounts. Therefore business can offer a massive database of products and not just the most popular which has be the trend in the past. Filtering and recommendations allow the user to find whatever they are looking for quickly and efficantly. Companies which do this find that they can generate up to 50% of their sales through markets that are unreachable by mainstream offline businesses, and this then gives them the competitive edge over there rivals.