What are the economics of “the Long Tail”?
I already wrote two notes about Chris Anderson’s book, “The Long Tail.” And Henri Kaufman, who knows more about marketing than the vast majority of us, wrote even more interesting ones on one of his blogs. I mostly agree with what he writes (in French), especially that he has to pull comments out of his notes in order to make them ‘visible’ (check this previous post for my opinion about the visibility of comments). Anyway, in this last note about what Henri calls the “Comet’s Tail,” our guide will be a professor at Harvard Business School. Read more…
The title of James Heskett’s article is longer than some bloggers’ posts, “What Happens When the Economics of Scarcity Meets the Economics of Abundance?,” but it’s also pretty interesting for people who believe that “there is no such thing as a free lunch.” Here are some excerpts.
The “Long Tail” describes the region of the item “popularity curve” comprising the vast population of least-popular items, whether it is song titles, books, or little-known brands. Life in the Long Tail is a busy routine involving the downloading of anything digital from the Internet; paying for some things, such as iTunes, but sharing and trading many others.
It is a world where everything digital is available at all times. And because of the very low cost of maintaining and distributing inventory, everything is likely to remain available forever, enabling the occasional gem of intellectual property to survive “in print” or in circulation. It is a world of non-zero-sum thinking.
But is this viable? The contents of this blog — and of millions of other ones — are freely available. Does this mean everything can be free? In fact, what are the economics of “the Long Tail”?
If so much is free, can money be made there? Because if there is no money to be made, many would regard this as a quaint set of beliefs held by people about to come face-to-face with the real world. Anderson describes three conditions critical to potential long-tail profits, all of which are provided by the Internet combined with creative new software and hardware: drastically reduced costs of creation, increased ease of distribution, and search devices employing “filters” and user recommendations that make all of what is available accessible and understandable to potential consumers.
As it is my last post on this subject — at least for a while — let me you ask some questions: Who will benefit from this Long Tail? Customers, producers, or middlemen (they’re still there)? And even if I don’t think it can be applied to all sectors of distribution, what is your opinion?
Source: James Heskett, Harvard Business School Working Knowledge, August 4, 2006; and other web sites
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