The Rise of the Long Tail

Description:

The Economics of scale are not. Quite simply, it is becoming more and more important to provide an endless range of products - something different for everyone. Why should everybody have a black T-Ford, if you can make an orange racing monster for the one who wants that? Increasingly, it is possible to serve a million niche markets with a highly customizable product, and because there are a million niche markets, it is becoming really profitable to do so.

The term "The Long Tail" refers to the endless right half of a logarithmic graph. On the vertical axis are the number of sales, while the horizontal axis represents products or product versions. Now, if you see the left half of this graph as the mass market - the "hits", with a lot of sales for only a few product versions, then the right half has a lot less sales for a lot more products - the million niche markets. But in theory, the area (money) of this part of the graph is just as big as the left half - and thus just as profitable.

As a result, more and more companies focus on the right half: the niche markets. You want that orange racing monster? You'll get it. You want something else on your radio than Britney Spears? Sure, I'll give you an online radio station featuring Mandy Moore. In Open Source: you want Gnome, or KDE, or OpenStep, or CDE, or anything else on your desktop? Pick one. And Microsoft: you want Windows XP home edition, professional, server, media edition, or maybe one of the many many mobile versions? By serving a million niche markets, companies can earn the same amount of money as when serving the big, Economics-of-scale-driven mass market.

Image and idea courtesy of Chris Anderson

Enablers:

• The Internet (more information on products from different companies), and
• Mass communication in general;
• More efficient production / development methods;
• Bad economy after good economy (more value for money, but spoiled consumers = more careful selection of products)

Inhibitors:

• Bad economy (less funding from companies)

Experts:

• Chris Anderson, editor of Wired Magazine.

Web Resources:

• http://longtail.typepad.com/about.html