The Long Tail

Without a doubt the web has changed the way we shop, and as Australian retailers start to respond and react to the realisation that consumers can get a better choice and often a more competitive price by turning to the web.  One of the driving forces behind this is a theory called “Leveraging the Long Tale”, the term was coined by editor of Wired magazine Chris Anderson in 2004. But what does it mean?

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. Chris Anderson (2004)

The "Head" represents the most popular products - the mass market items. The "Tail" sells far fewer units but the total number of niches make it significant.

But why is this so prominent on the world wide web? The reason is with no shelf space to pay for and, no manufacturing costs and hardly any distribution fees, a “miss” sold is just another sale, with the same margins as a “hit”. From a website point of view a “hit” and a “miss” are both just entries in a database called up on demand, both equally worthy of being carried. As a result there are no longer a need to lump products together in order to make money, suddenly popularity no longer has a monopoly on profitability. To emphasize this point, below are some Longtail Facts:

  • The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon’s book sales come from outside its top 130,000.
  • The average Blockbuster carries fewer than 3,000 DVDs. Yet a fifth of Netflix rentals are outside its top 3,000 titles.
  • Rhapsody streams more songs each month beyond its top 10,000 than it does its top 10,000.
One example of a company “leveraging the long tail” is Audible, who sell digital audiobooks, radio and TV programs, and audio versions of magazines and newspapers. In early 2008 Audible was brought by and  the subsidiary currently enjoys a near-monopoly in the commercial online digital download market for audiobooks. Just like Amazon, Audible offers  85,000 titles by more than 1200 different providers, amounting to over 1,000,000 hours of audio programming. But how does Audible stack up against Anderson’s definition above and O’Reilly’s extended definition of what Web 2.0 is? Below is an evaluation of Audible against some of the best practices in order to “Leverage the Long Tail”:
  • Build on the driving forces of the Long Tail: With Amazon being one of the most prominent long tail retailers on the web, follows there lead by offering a broader range of services (in there case audiobooks), these range from popular best-sellers and more specific niche market books, by doing this they open there market base up and attract a greater range of customers.
  • Use algorithmic data management to match supply and demand: Having been brought by Amazon, uses the same successful pioneered algorithm to help customers find products of a similar interest and boost add-on sales.
  • Use an architecture of participation to match supply and demand: Audible uses product reviews and popularity rankings in order to provide users with and customers with insight into the “wisdom of crowds”. From my perspective, I rarely buy anything without Googling or reading the customer reviews, so having the website provide them for me certainly helps my purchasing habits.
  • Leverage customer self-service to cost effectively reach the entire web: does a great job of this by providing the files but its up to the customer to choose the file format they require and place it onto the device. The customer can also maintain there account and access previously downloaded content from there home page. has also created its own app, as a way for its customer to access its service above the level of a single device (another Web 2.0 facet).
  • Leverage the low-cost advantages of being online: has been able to take advantage of being online by automating many of the process, the service allows the user to click to download (on demand), allowing them to have the content almost immediately.

Audible Top Sellers, With Reviews clearly found a niche in the market place and thus  been brought by One of the quotes found on the about page seems to some up the market they have created for themselves: “I love to read, but I don’t have time to sit down and do it. Rather than give up on reading, I have gone the audio route! “. Combining the niche with the ability to leverage the long tail has enabled to become the dominate force in Audiobooks.

Further Reading:

Longtail Blog

Wired Magazine [Oct 04] – The Long Tail