The Long Tail. A powerlaw Semilog Source: Kevin Marks, Technorati.

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Presentation transcript:

The Long Tail

A powerlaw

Semilog Source: Kevin Marks, Technorati

WTF? Box office gross Film rank Source: Kevin Marks, Technorati

Savagely truncated Box office Films

The Long Tail

Long Tail TV

Seen another way

History of the Long Tail 1890: Sears Catalog 1980: 800 numbers 1990: Supermarket shelves

Two steps of abundance 1990: Explosion of variety of products. Now: Explosion of information about products. You need both.

This isn’t just about entertainment Google: Long Tail advertisers eBay: Long Tail hard goods CapitalOne: Long Tail customers Offshoring: Long Tail services

The economics of bits, not atoms Virtually unlimited capacity + Virtually free distribution = Custom streams, not mass markets

The three forces of the Long Tail Minimize the transaction costs of consumption Democratize the tools of production

Connect consumers to amplify word of mouth

Six Research Projects

#1 How does the expansion of the tail affect the shape of the head?

The changing shape of demand?

80/20 >>> 50/50?

#2 Does the Long Tail have a fractal dimension?

Minitails Small Worlds Minitails

#3 How does price elasticity work in the Tail? Should prices go up (scarcity) or down (encouragement)? How do you know?

Two pricing models 1)Entertainment (want): lower prices down the Tail 1)Information (need): raise prices down the Tail

#4 Long Tail vs. Bottom of the Pyramid. Same effect or different?

,000 >$20,000 $1,500-$20,000 $1,500 <$1,500 1,500-1,750 Purchasing Power (US$)Global population (m) = ?

#5 Primary Markets vs. Secondary Markets

Secondary markets Used Goods Gray Goods Overstock Goods

#6 The tragically neglected economics of abundance

The fundamental difference between the economics of old media and the economics of new media is the difference between scarcity and abundance. The Long Tail is abundance.

Is infinite shelf space like Moore’s Law or like steam?

1970s: “Waste transistors” Now: “Waste storage, bandwidth”