Trendsurfing: The 'long tail' effect (The Times)
By David Rowan
Want to impress the boss? Start spouting the latest snappy buzzphrase that's whizzing through corporate Britain. The "long-tail effect", currently making waves from broadcasting to bookselling, is one of those suddenly ubiquitous notions brashly promising a revolution in consumer capitalism. Yes, I know, Trendsurfing is the last column you would expect to big up an eye-glazing corporate fad. But do stick with me: this is that rare business trend that might even earn you some cash.
The "long-tail effect" is all about profitable niche businesses replacing the traditional mass market. Thanks to the internet and digital technology, the thinking goes, we have far more choice than ever at our fingertips, from the songs on iTunes to the DVDs we rent through the post. With distribution cheap and storage space unlimited, entertainment companies need no longer rely on blockbuster movies or chart-topping albums for their profits. As a result, any niche product may now find a paying audience without any of the traditional marketing costs. Whether you create Labour-inspired folk songs or fourth-rate erotic fiction, in theory you should be able to make money competing with the big boys.
The concept has zipped around the world since last October, when it was defined in a Wired magazine article by editor-in-chief Chris Anderson. The "long tail", Anderson explained, represents the slowly trailing demand curve of any industry's products once its big "hits" have been plotted on a graph. In the books trade, for instance, the Harry Potters and Nick Hornbys dominate the high sales numbers on the left of the graph, but as the curve gradually tails off to the right, it encompasses another million or so less popular titles before reaching zero. Now, thanks to the Amazons and Napsters, the entire inventory - mainly comprising the previously ignored niche titles - are yours to choose from. And because there are so many of them, collectively they may be worth more than the blockbusters themselves.
This challenges the economic models of everything from toy design to Turkmen film distribution. "People are going deep into the catalogue," Anderson notes. "And the more they find, the more they like." He claims that the effect threatens the end of "mass entertainment" itself: suddenly, we can bypass the hit-driven culture promoted in the mainstream media, spending our time (and money) pursuing our personal tastes.
It all sounds a little obvious: specialist websites and TV channels are old news. Yet in the past few weeks, the "long-tail effect" has dominated presentations by broadcasting executives, venture capitalists, even Google's boss Eric Schmidt. Google, with its targeted advertising programmes, is already bringing unexpected incomes to the owners of obscure websites on dog-training or defence contracting. Now the "misses" can make money as well as the hits. "And because there are so many more of them," Anderson says, "that money can add up quickly to a huge new market."
What does this mean for your business? Make available everything you have, at a low enough price, and it will potentially attract customers. And if you're in the water-cooler business, watch out. If Anderson is right, there go all those shared cultural experiences we used to gossip about.
(The Times Magazine, May 21 2005)
Want to impress the boss? Start spouting the latest snappy buzzphrase that's whizzing through corporate Britain. The "long-tail effect", currently making waves from broadcasting to bookselling, is one of those suddenly ubiquitous notions brashly promising a revolution in consumer capitalism. Yes, I know, Trendsurfing is the last column you would expect to big up an eye-glazing corporate fad. But do stick with me: this is that rare business trend that might even earn you some cash.
The "long-tail effect" is all about profitable niche businesses replacing the traditional mass market. Thanks to the internet and digital technology, the thinking goes, we have far more choice than ever at our fingertips, from the songs on iTunes to the DVDs we rent through the post. With distribution cheap and storage space unlimited, entertainment companies need no longer rely on blockbuster movies or chart-topping albums for their profits. As a result, any niche product may now find a paying audience without any of the traditional marketing costs. Whether you create Labour-inspired folk songs or fourth-rate erotic fiction, in theory you should be able to make money competing with the big boys.
The concept has zipped around the world since last October, when it was defined in a Wired magazine article by editor-in-chief Chris Anderson. The "long tail", Anderson explained, represents the slowly trailing demand curve of any industry's products once its big "hits" have been plotted on a graph. In the books trade, for instance, the Harry Potters and Nick Hornbys dominate the high sales numbers on the left of the graph, but as the curve gradually tails off to the right, it encompasses another million or so less popular titles before reaching zero. Now, thanks to the Amazons and Napsters, the entire inventory - mainly comprising the previously ignored niche titles - are yours to choose from. And because there are so many of them, collectively they may be worth more than the blockbusters themselves.
This challenges the economic models of everything from toy design to Turkmen film distribution. "People are going deep into the catalogue," Anderson notes. "And the more they find, the more they like." He claims that the effect threatens the end of "mass entertainment" itself: suddenly, we can bypass the hit-driven culture promoted in the mainstream media, spending our time (and money) pursuing our personal tastes.
It all sounds a little obvious: specialist websites and TV channels are old news. Yet in the past few weeks, the "long-tail effect" has dominated presentations by broadcasting executives, venture capitalists, even Google's boss Eric Schmidt. Google, with its targeted advertising programmes, is already bringing unexpected incomes to the owners of obscure websites on dog-training or defence contracting. Now the "misses" can make money as well as the hits. "And because there are so many more of them," Anderson says, "that money can add up quickly to a huge new market."
What does this mean for your business? Make available everything you have, at a low enough price, and it will potentially attract customers. And if you're in the water-cooler business, watch out. If Anderson is right, there go all those shared cultural experiences we used to gossip about.
(The Times Magazine, May 21 2005)
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