JPRODINNOVMANAG200724274281 2007ProductDevelopment&ManagementAssociation

TheLongTail:WhytheFutureofBusiness IsSellingLessofMore
ChrisAnderson.NewYork:Hyperion,2006.230+ xiipages.US$24.95 TheLongTailisanextensionofaninfluentialarticle publishedinWiredMagazine(Anderson,2004).Asa businessconcept,thelongtailphenomenonis attractivebecauseproductsthatareinlowdemand orhavelowsalesvolumecancollectivelymakeupa marketsharethatrivalsorexceedstherelativelyfew currentbestsellersandblockbusters,ifthestoreor distributionchannelislargeenough(Wikipedia, 2006).Thephraselongtailisfromthenameofthe lowfrequencyportionofastatisticaldistribution. Althoughthetypicalaudienceforthisbookmaybe businessleaders,JournalofProductInnovation Managmentreaderscanrefinetheirproduct developmentperspectivesonpopulartopicssuchas globalization,disruptiveproducts,andthevoiceof thecustomer. Chapter3reviewspreInternetexamplesofthe longtailphenomenon.Catalogssuchasthe1897 WishBookfromSears,RoebuckandCo.had200,000 itemsandvariations.Thisprovidedruralconsumersa massiveselectionofqualitymerchandiseatfavorable pricesandavailability.AsglobalInternetusage

increases,theimpactofthelongtailphenomenon increases. ChrisAndersonstatesManyofourassumptions aboutpopulartasteareactuallyartifactsofpoor supplyanddemandmatchingamarketresponseto inefficientdistribution(p.16).For example,fifty yearsagoafewtelevisionnetworkexecutives controlledthefewprogramsavailableforviewingon agivenevening.Decadesago,viewersweremore likelytoacceptwhateverthenetworksoffered. Today,viewingbehaviorismorediverseandthereis moreefficientdistribution.Therearemoremany moretelevisionnetworks(forexample,ascience fictionnetwork),moretelevisionspercapita,and compellingalternatives,soitisunlikelythatagiven networkprogramwillbeseenbymorethan30 percentofpotentialviewers.Now,itismorelikely thatconsumerswillfindandviewtheirpersonal favoritesfromachoiceofhundredsofchannelsand theninteractwithanonlinecommunitythatshares similarpreferences. Chapter4exploresspecificsupplyanddemand conditionsnecessaryfornarrowlytargetedgoodsand servicestobeeconomicallyattractive.Tosustainthe longtail,demandmustfollowsupply.Chapter5 examinestheimpactofincreasingthenumberof producersofproductsandservicesbecauseofthe globaldemocratizationoftoolsandinformation. Besidesadvertising,howdoconsumersfindthe productstheyneed?NetflixandGoogletap consumerwisdomcollectivelybywatchingwhat millionsofthemdoandtranslatingthatintorelevant searchresultsorrecommendations(p.56).This environmentsupportsamarketplacewherebothhits andnichescanprosper.Andersonreferstothe connectionbetweensupplyanddemandasfilters. Andersonstates,ALongTailisjustaculture unfilteredbyeconomicscarcity(p.53). Alongtailaggregatorisacompanyorservice thatcollectsahugevarietyofgoodsandmakesthem

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availableandeasytofind,typicallyinasingleplace (p.88).Commonexamplesincludewebsitessuchas Amazon andeBayforphysicalgoods,iTunesfor digitalgoods,Craigslistforservices,Wikipediafor information,andMySpaceforusercreatedcontent. Theseaggregatorsbecameinnovatorsbecausethey matchedmarketinsightswithanintegrated technologysolutiontodelightcustomers. Chapter7beginsbydeclaringTopdown messagingislosingtraction,whilebottomupbuzzis gainingpower.(p.98)Forthefirsttimeinhistory, wereabletomeasuretheconsumptionpatterns, inclinations,andtastesofan entiremarketof consumersinrealtime,andjustasquicklyadjustthe markettoreflectthem(pp.106107). Recommendations,frompeoplewhoseopinionsare respected,serveasshortcutsthroughlargeamounts ofinformation.Thesupersetoffiltersincludes recommendationsandothertoolsthathelpyoufind qualityinthelongtail.Themaineffectoffiltersis tohelppeoplemovefromtheworldtheyknow (hits)totheworldtheydont(niches)viaaroute thatisbothcomfortableandtailoredtotheirtastes (p.109). Oneofthemostfrequentmistakespeoplemake aboutthelongtailistoassumethatthingsthatdont sellwellarenotasgoodasthingthatdosellwell (p.116).Agivennichehasbothqualityproductsand alotofcrud.SturgeonsLawstatesthatthe percentageofcrudisintherangeof90percent.On astoreshelforinanyotherlimitedmeansof distribution,theratioofgoodtobadmattersbecause itsazerosumgame:Spaceforoneeliminatesspace fortheother.Prominenceforoneobscurestheother (p.116).Longtailsarenotprefilteredbythe requirementoffactorssuchasshelfspace, bandwidth,orthebiasesofpurchasingmanagers. Andersondefinesaprefilterasonethatisapplied beforeaproductgetstothemarket.Groupsthatmay includeeditors,executives,buyers,marketers,or advertiserspredictwhatwillbedesirableforagiven market.Incontrast,postfiltersarethevoiceofthe marketplace.Postfiltersfindthebestofwhatis availableinaparticulararea.Theymeasureand amplifyconsumerbehavior.Postfiltersimpacta companysbrandandproducts.Acompanysbrand isnotwhatthecompanysaysitis,butwhatGoogle saysitis(p.99).

Chapter8examinesPareto/Zipfdistributionsand contrastsscarcitycentricandabundancecentric viewsofeconomics.Althoughatraditionalretailer mayderive80percentofitssalesfrom20percentof theproductsitoffers,whataretheimpactsof abundantshelfspace,abundantdistribution,and abundantchoice?AndersonconcludesInLongTail markets:(1)Youcanoffermanymoreproducts.(2) Becauseitissomucheasiertofindtheseproducts (thankstorecommendationsandotherfilters),sales arespreadmoreevenlybetweenhitsandniches.(3) Becausetheeconomicsofnichesisroughlythesame ashits,thereareprofitstobefoundatall levelsof popularity(pp.134135,emphasisinoriginal). Andersonstatesthatthehitdrivenmediaand entertainmentculturethathascometodefinethe secondhalfofthetwentiethcenturyisdefinedby: Adesperatesearchforonesizefitsallproducts Tryingtopredictdemand Pullingmissesoffthemarket Limitedchoice(p.165)

SuccessfulLongTailaggregatorsneedtohaveboth hitsandniches(p.148).Thisexplanationisusedto comparethesuccessofApplesiTunesover MP3.com. Chapter10addresseschoice.Aremorechoices better?Morechoicesarebetterwhencustomershave agoodprocessformakingchoicesratherthanbeing overloadedwithoptions.Dynamicmethods,which aredefinedaswhatevermakessenseatthetime,of findingproducts,suchasakeywordsearch,support longtailaggregatorsbetterthanpredefined taxonomies,suchasgenreortheDeweyDecimal System. Chapter13providesexamplesofthelongtailat workinmanufacturingandservicebusinesses. Chapter14statesThesecrettocreatingathriving longtailbusinesscanbesummarizedintwo imperatives: 1. Makeeverythingavailable. 2. Helpmefindit(p.217). Next,theninerulesofsuccessfullongtail aggregatorsarepresented.Theseare: 1. Lowerinventorycostsbyusingyour warehousesanddigitalproductionmethodsas

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wellasvirtualinventorymethods,suchas yourpartnerswarehouses. Letcustomersdosomeof theworkthrough peerproductionmethodssuchasreviewsand crowdsourcingusingthehighlyefficient measuresofthewisdomofcrowds. Usemultipledistributionmethods.For example,allowcustomerstobrowseordo researchorpurchaseeitherinstores oronline. Allowcustomerstopurchasethecomponents orpackagesthattheydesire. Useelasticpricing. Shareinformationwithcustomersand partners. Wheneverpossiblethinkandnotor. Inscarcemarkets,youhavetopredictwhat willsell.Inabundantmarkets,offermore choicesandletthemarketsortitout. Allowcustomerstosampleyourproducts(pp. 218224).

Thelongtailphenomenonalertsinnovators those whomustmatchbusinessesandmarketneedswith availabletechnology thataparadigm shiftis underway.Thewaythatproductconceptsare selected,developed,andcommercializedisevolving. References Anderson,Chris(2004).TheLongTail.Wired Magazine12(10):170177(October2004).Alsoat www.wired.com/wired/archive/12.10/tail.html (accessedOctober23,2007). Wikipedia(2006) http://en.wikipedia.org/wiki/The_long_tail (accessed October23,2006). MarkA.Hart,NPDP OpLaunch