Chris Anderson makes the comparison between now, where we have digital access to media, and the past, where everything was sold only in stores. He makes the point that with the introduction of the online distribution abilities, we are standing in a world of abundance, rather than a world of scarcity.
The story of author Joe Simpson shows how Amazon.com helped his book gain soaring demand and high sales. It noted buying patterns and then made recommendations to readers based on it’s observations. In turn, these algorithm-fueled recommendations created a positive feedback cycle, which increased the books demand. This is an example of an entirely new economic model in media.
This article emphasizes two limitations that our physical world puts on our entertainment. The first is the need to find local audiences. Retailers only stock products they can sell in their local audience. The second limitation is they physics side where for example, the radio spectrum can only hold so many channels.
I liked the idea that Chris Anderson explained, “the more we explore alternatives, the more we’re drawn to them.”
This has changed our understanding of business models in many ways. First, Anderson uses an example of a question asked by Robbie Vann-Abib, CEO of Ecast, “what percentage of the top 10,000 titles in any online media store will rent or sell at least once a month?” Most people will intuitively respond “20%” because that is the way our world used to perform (by the 80-20 rule.) We automatically think that if something isn’t a very popular “hit,” it is not going to sell. This has changed drastically due to digital abilities for media. Now, there is no physical manufacturing costs, no distribution fees, etc. so the cost of songs on iTunes, for example, remains very low with very little risk of a song not being a “hit.”
Anderson describes the “new rules for the new entertainment economy.”
Rule 1: Make everything available.
For example, the Internet sites have far more space and ability to hold a much larger variety of movies, documentaries, songs, etc. Everything is available online!
Rule 2: Cut the price in half. Now lower it.
When you lower prices, people tend to buy more.
Rule 3: Help me find it.
There needs to be some quantity from which someone can explore further than they usually would. In order to become a true force in the entertainment economy, there needs to be enough choice to change consumer behavior.
The Long Tail changes our understanding of business models in terms of approach by creating the idea that it is better to have a product online where you can provide more variety and where there is less cost to the seller. Ideas of marketing has changed in many ways, but in my opinion, algorithms have made a huge difference in how a product gets “marketed” to the public. All of the sudden, with the Internet, a product can be “thrown” in front of you that you never would have scoped out on your own. This has opened a very cool new world of advertising and marketing. The scale of the Internet is GINORMOUS and now businesses can provide their products in a much more diverse way (which is better for everyone.)
Tags: Chris Anderson, The Long Tail
