The document discusses Chris Anderson's concept of the "long tail" which describes how online retailers like Amazon are able to profit from selling less popular items in large numbers, known as the "long tail" of the demand curve. It notes how the internet has fragmented tastes and allowed for infinite choice by removing the constraints of physical shelf space and locality. Whereas in the 20th century, businesses relied on a few "hits" or popular items, the long tail model means that even obscure or niche items can find an audience and be profitable when costs are low and distribution is global.

1. The long tail mac129 1

2. Overview Chris Anderson Editor-in-chief of Wired The Long Tail: Why the Future of Business Is Selling Less of More (2006) Free: The Future of a Radical Price (2009) 2

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6. Sales 6

7. What just happened? 7

8. What just happened? 8

9. What just happened? 9 ‘[Amazon] created the Touching the Void phenomenon by combining infinite shelf space with real-time information about buying trends and public opinion. The result: rising demand for an obscure book.’ (Anderson, 2006: 16)

10. New economic model:infinite choice? 10

11. New economic model:infinite choice? 11

12. Hits vs. misses 20th century National favourites Movies Songs Books Games 12 Hits

13. Hits vs. misses 13 ‘Many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching - a market response to inefficient distribution.’ (Anderson, 2006: 16)

14. Hits vs. misses 20th century National favourites Movies Songs Books Games Physical world Locality 14 Hits

15. The tyranny of locality 15 Local multiplex

16. The tyranny of locality 16 Local multiplex Average film needs 1500 people over 2 weeks Average cost of ticket £5.00 1500 x 5 = rental cost £7,500

17. The tyranny of locality 17 Local multiplex Released 4/12/09

18. The tyranny of locality 18 Local multiplex

19. Hits vs. misses 20th century National favourites Movies Songs Books Games Physical world Locality 19 Hits

20. Hits vs. misses 20th century National favourites Movies Songs Books Games Physical world Local 21st century Fragmented tastes Movies Songs Books Games Digital ephemera Dispersed 20 Hits Misses

21. Scarcity vs abundance 21

22. Power curve (aka Pareto principle) 1906 Vilfredo Pareto 80% of land in Italy owned by 20% of population 22

23. Power curve (aka Pareto principle) 23 Income earners (%) Population (%)

24. Power curve (aka Pareto principle) 1906 Vilfredo Pareto 80% of land in Italy owned by 20% of population 80-20 rule Supply side economics Finite physical resources 24

25. Power curve (aka Pareto principle) 25 Human productivity (%) Time available (%)

26. Power curve (aka Pareto principle) 26

27. Scacityvsabundance 27 Robbie Vann-Adibé: "What percentage of the top 10,000 titles in any online media store (Netflix, iTunes, Amazon, or any other) will rent or sell at least once a month?"

28. Scacityvsabundance 28 Robbie Vann-Adibé: "What percentage of the top 10,000 titles in any online media store (Netflix, iTunes, Amazon, or any other) will rent or sell at least once a month?” 98%

29. 29 With no shelf space to pay for and, in the case of purely digital services like iTunes, no manufacturing costs and hardly any distribution fees, a ‘miss’ sold is a sale just like any other sale, - it has the same margins as a hit. A hit and a miss are on equal economic footing, both are just entries in a database called up on demand, both equally worthy of being carried. Suddenly, popularity no longer has a monopoly on profitability. Anderson, 2004

30. Markets without ends 30

31. Markets without ends 31 2004: 75,000 songs 2009: 5 million songs Average number of song plays (%) Popularity of song (%)

32. Markets without ends 32

33. This is the Long Tail 33 ‘You can find everything out there on the Long Tail. There's the back catalog, older albums still fondly remembered by longtime fans or rediscovered by new ones. There are live tracks, B-sides, remixes, even (gasp) covers. There are niches by the thousands, genre within genre within genre (imagine an entire Tower Records devoted to '80s hair bands or ambient dub’. Anderson, 2006: 22

34. This is the Long Tail: music Digital = < risk? 34

35. 35 Tower Records (US) Zavvi (UK)

36. This is the Long Tail: books 36 ‘The average Borders carries 100,000 titles. Yet more than half of Amazon's book sales come from outside its top 100,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are’ Anderson, 2006: 23

37. New media, new rules 37 Rule 1: Make everything available Rule 2: Help me find it

38. Questions 38 Can you identify a number of online businesses that function on the basis of the ‘long tail’? Who are their physical world rivals? Can you identify any physical world products or services that could benefit from adopting ‘long tail’ working practises? What kind of barriers are there that prevent businesses adopting ‘long tail’ working practises? Fashion industry? Food production? Education?