“Leveraging the long tail”

The topic for this week is “Leveraging the long tail” in web 2.0 pattern. According to Anderson.C (2004), he indicated “the theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of “hits” (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail. As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-targeted goods and services can be as economically attractive as mainstream fare.”

Anderson described more clearly with the graph, the vertical axis is a period of seeling profit and the horizontal axis is popularity products; obviously, the dark part is the first 20% of popularity products can provide enough 80% revenue for business, however he found out the long tail will not suddenly decrease until zero, it becomes a very long tail. Due to the long tail has caused, those products become the niche products for business.

 

Anderson has declared three significant points of long tail:

  1. The diversification of products will make the market curve tail growth long, and its length is far beyond everyone’s imagination.
  2. In the Internet era so commonly, all the products can be cost-effective manner to engage with consumers.
  3. To integrate the end niche products will allow companies to create larger market.

 

Therefore, I would like to introduce Apple iTunes for this topic. iTunes is an online retailer which can stock virtually everything, and the number of available niche products outnumber the hits by several orders of magnitude. Those millions of niches are the Long Tail, which had been largely neglected until recently in favour of the Short Head of hits. In addition, iTunes online market, 80 percent of all revenue comes from around 52,000 tracks; but iTunes also provides music videos, television shows, iPod games, audiobooks, podcasts, movies and movie rentals. As a result, download music tracks from iTunes is main revenue, as we can say it’s the first 20% of popularity products make a very significant income on iTunes, and the 80% remains are niche products which make products more diversity that the long tail will never be end.

 

To sum up, iTunes has been great successful in their products, they keep production costs low and distributions must be cheap. It attracts people in a very low inventory costs to make the products which are only 20% popularity products out of 80% of other niche products. As we can say, the long tailers drive their inventory costs nearly to zero.

 

 Reference

Wired. “The Long Tail”. Retrieved May 9, 2012.

 

Billingworld. “Eight Lessons from the Long Tail”. Retrieved May 9, 2012.

 

Wikipedia. “ITunes”. Retrieved May 9, 2012.

 

Anderson,C(2004). “The Long Tail, in a nutshell”. Retrieved May 9, 2012.