The Long Tail phenomenon
This concept was first described by Chris Anderson in 2004 in Wired Magazine to describe some business models such as Amazon or Netflix. It has completely changed the view on the revenue sources in entertainment business.
Anderson argued that not only popular hit products contribute to company’s revenue, but also the non popular downstream products, moreover they can bring more cash and sometimes the volumes of their sales exceed those of the bestsellers.
This is true for the businesses where distribution costs and inventory store are of a little significance. The Long Tail thus without no additional costs serves the small niches. This is mostly applicable for Web-business or mass market retailers.
The Long Tail phenomenon can also be applicable in terms of distribution channels, where small niche target sites can in volume better sell you product that big sites, or advertisers, like Google who gains more money from the small advertisers.
‘Popularity no longer has a monopoly on profitability’
In Long Tail the main principle is make everything available, discovering new markets and expanding them. There are no extra costs, geographical position is of no matter anymore, so even if there just few customers out there, make the product available, adapt to personal tastes and use the strategy of mass customizations.
The Long Tale phenomenon is a threat to physical but I think in long term, the can still be safe for couple of years from now, people not familiar with Internet will still go there to search for blockbusters. But when the new generation will arrive, they can easily replace the physical stores. There is also threat of new entrants that will create the similar Long Term models online, but the sites like Amazon have a great notoriety, so it will be difficult to replace them.
The Long Tail phenomenon a great opportunity for ones and a major threat for the others shows us one more time that the business world is constantly evolving, and that to stay in business one should be proactive.
This concept was first described by Chris Anderson in 2004 in Wired Magazine to describe some business models such as Amazon or Netflix. It has completely changed the view on the revenue sources in entertainment business.
Anderson argued that not only popular hit products contribute to company’s revenue, but also the non popular downstream products, moreover they can bring more cash and sometimes the volumes of their sales exceed those of the bestsellers.
This is true for the businesses where distribution costs and inventory store are of a little significance. The Long Tail thus without no additional costs serves the small niches. This is mostly applicable for Web-business or mass market retailers.
The Long Tail phenomenon can also be applicable in terms of distribution channels, where small niche target sites can in volume better sell you product that big sites, or advertisers, like Google who gains more money from the small advertisers.
‘Popularity no longer has a monopoly on profitability’
In Long Tail the main principle is make everything available, discovering new markets and expanding them. There are no extra costs, geographical position is of no matter anymore, so even if there just few customers out there, make the product available, adapt to personal tastes and use the strategy of mass customizations.
The Long Tale phenomenon is a threat to physical but I think in long term, the can still be safe for couple of years from now, people not familiar with Internet will still go there to search for blockbusters. But when the new generation will arrive, they can easily replace the physical stores. There is also threat of new entrants that will create the similar Long Term models online, but the sites like Amazon have a great notoriety, so it will be difficult to replace them.
The Long Tail phenomenon a great opportunity for ones and a major threat for the others shows us one more time that the business world is constantly evolving, and that to stay in business one should be proactive.
Here you can find some studies related to the long tail phenomenon.
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