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In a seminal article titled The Long Tail, published in October 2004 on Wired, Chris Anderson described a new niche strategy where it became possible to sell large numbers of unique items in relatively small quantities. In fact, what would have been uneconomic in brick and mortar businesses was becoming possible AND profitable thanks to the Internet.
This concept of the “long tail” flourished and now applies to many other situations, such as domain names, for example, as well as (and especially) advertising. In an interesting post on this matter, Scott Karp does an excellent job explaining wherein lies the innovation: factoring relevance into the auction model! However, as Sergey Brin himself said, “It didn’t generate much money”. But Google couldn’t simply use Overture’s business model, unless they wanted a lawsuit. But where Yahoo! The Long Tail - Wired Blogs. Sun, 08 Nov 2009 00:46:19 “Priced and Unpriced Online Markets" by Harvard Business School professor Benjamin Edelman.
Discusses tradeoffs in market such as email, IP addresses, search and dial-up Internet. "Reminiscent of the old adage about losing money on every unit but making it up in volume, online markets challenge norms about who should pay, when, and why. " Faculty.washington.edu/mfan/is582/articles/Debating the Long Tail - Conversation Starter - HarvardBusiness.pdf. Will the "Long Tail" Work for Hollywood? Much has been written about the long tail phenomenon in the entertainment industries.
Long-tail enthusiasts claim that low-selling books, CDs, and movies, which are not available in brick-and-mortar stores, will collectively take up a majority share of the market over time. A bestseller itself, Chris Anderson's The Long Tail: Why the Future of Business is Selling Less of More is currently one of the more visible proponents of this perspective. Could the long tail really provide increased profits for Hollywood? And is it true that it is better to be Netflix with its tens of thousands of titles than a Blockbuster store, stocking a limited number of popular movies? Intrigued with these questions, HBS assistant professor Anita Elberse and associate professor Felix Oberholzer-Gee analyzed the distribution of revenues in the U.S. home video industry from 2000 to 2005. Which view is right? The increasing clutter may be a problem, she notes. Place your bets "I don't know," Elberse admits.
Datawocky: The Real Long Tail: Why both Chris Anderson and Anita Elberse are Wrong. A new study by Anita Elberse, published in the Harvard Business Review, raises questions about the validity of Chris Anderson's Long Tail theory.
If you're related to Rip Van Winkle, the Long Tail theory suggests that the dramatically lower distribution costs for media (such as music and movies) enabled by the internet has the potential to reshape the demand curve for media. Traditionally, these businesses have been hits-driven, with the majority of revenue and profits being attributable to a small number of items (the hits). She's Got a Point (or Three) As I have already complained, despite what appears to be sufficient data on which to base her claims, Anita Elberse's HBR paper lacks what it takes to obtain proper analysis.
I was therefore very happy to find at least a single point in which I could actually work, even if partially with the numbers.In the Advice for Producers section of the paper Elberse says My research suggests that the tail is long and flat, and therefore that content providers will find it hard to profit much from it. It remains to be seen whether the new media environment will indeed make many previously unprofitable niche products profitable. Online channels lower the barriers to market entry for such products, and thus introduce the possibility of additional sales—but they also lead to a flood of products all competing for consumers’ attention. A statement which, given three critical points along the sales curve gives us sufficient data by which to try and calculate what actually hides behind the numbers.