Log in

No account? Create an account

Previous Entry | Next Entry

Jai Bajrang Bali

Just finished reading Chris Anderson’s, fascinating book, ‘The Long Tail’, which transcends genre definition as a whole. It deals with economics/psychology/technology/consumerism. The central premise of the book deals with ‘How endless choice is creating unlimited demand’.

In other words, the book explains the phenomena of how consumer interests are increasingly shifting from being driven by a ‘hit’ culture to actually exploring things which are not mainstream, viz, niches.

“The mass of niches has always existed, but as the cost of reaching it falls-consumers finding niche products, and niche products finding consumers-it’s suddenly becoming a cultural and economic force to be reckoned with”

This phenomena is also referred to as ‘The Long Tail’, with reference to how in demand curve, the first thing you notice is that all the action appears to be in a tiny number of things on the left hand. Those are the hits. However, instead of focusing our attention at the left of the curve, there appears to be an interesting trend towards the right of the curve.

Firstly the curve doesn’t exactly taper off towards zero. It only looks that way because the hits have compressed the vertical scale. But on a closer inspection, the far end of the Tail actually is a microcosm of various niches, which might not individually amount to much, but many of these niches have sub-niches and so on, which in aggregate amounts to quite an eclectic range.

The book goes on to cite three fundamental reasons for the growth of the Long Tail:

Democratization of production
Democratization of distribution
The power of collective intelligence

Democratization of production refers to the process of production no longer being the sole domain of manufacturers. Increasingly, user generated content is being created, which is not subject to the whims and fancies of recording label executives. This has been aided because of the vast array of digital tools at the disposal of individuals. In other words, creative tools like Windows moviemaker etc have ensured that amateur moviemakers can make their movies without having to do the rounds of Hollywood studios or kowtowing to the powers that be and surrendering their creative license.

Democratization of distribution refers to the increasing influence of the online delivery model as compared to the current bricks and mortar system of distribution. In other words, websites like Rhapsody, I tunes, Amazon, You tube etc offer an increasing choice for the consumer which bypasses the existing handicap of brick and mortar stores, viz, shelf space.

The power of collective intelligence refers to the growing tribe of influencers on popular culture, viz, Page rank on Google, Reader reviews on Amazon, blogs etc. Unlike a traditional system, where you didn’t know where to look to gauge the efficacy of a particular product, the power of influencers is engaging. Particularly, in the case of niche items, review and word of mouth make a difference, because there is not much available by way of mainstream media to assist in the decision making process.

Niches by definition do not appeal to the lowest common denominator, hence, the need for collective intelligence to influence the decision making process.

In respect of the true roots of the Long Tail and unlimited shelf space, Chris Anderson gives the example of Sears Roebuck, whose catalogue-retailing model was the first example of creating unlimited shelf space. Incidentally, farmers in rural America could order a wide range of products from the Sears Roebuck catalogue, which was a tome. The catalogue, often in excess of 800 pages comprised every possible product that a consumer could conceive of. Due to the advent of transportation, Sears Roebuck also had to invest in traditional brick and mortar stores, and this entailed sufficient investment in what many consider to be the beginning of supply chain management.

An interesting topic raised in the books is as to whether prices should go down with demand as you travel down the Tail? Or should they rise as they concentrate on appealing to niche audiences?

The answer is to distinguish between “want” markets and “need markets”. In other word, ‘Need markets” are typically those in which customers know what they are looking for and just cant find it anywhere, except, say online. In want markets, we are very particular of what we want, and are more price insensitive. A typical example of this is White Drongo, which caters to a very niche market, viz, manga and graphic novels. Hence, on bestsellers such as Sandman or Watchmen, there might be a discount of say 10 to 15 per cent. However, incase of niche titles like say Osama Tezuka’s Ode to Kirohito, the discount might be zero or very marginal.

However, music is a “need market”, as for the right price, we might be willing to experiment with older titles and obscure artists too.

Broadly speaking, the Long Tail is about abundance, owing to abundant shelf space, abundant distribution and abundant choice. However, this tends to go against the grain of traditional economics, which deals with making choices under scarcity. In other words, how to allocate scarce resources.

“Clearly abundance (also known as “plentitude”) is all around us. Moore’s Law is a classic example. What Carver Mead, the semiconductor pioneer, recognized in 1970 when he encouraged his students to “waste transistors” was that transistors were becoming abundant, which is to say effectively free. This shift in thinking form making the most of scarce computing resources to “wasting” cycles by say, drawing windows and icons on the screen led to the Mac and the PC revolution.

…And indeed, the abundance of the Long Tail is still surrounded by constraints. Although there are near infinite selection of media, there is still a scarcity of human attention and hours in a day. Our disposable income is also limited. On some level, it’s a fixed pie game.

To conclude, The Long Tail is something I can relate to considering the fact that I don’t tend to be influenced by ‘hitism’, which’ so pervades mainstream culture. I have slightly eclectic tastes, as do lots of my friends and the Long Tail is very relevant to us.



Latest Month

June 2010
Powered by LiveJournal.com