Word: tails
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...long tail as a theory is most persuasive in explaining how companies selling more products with lower demand can easily compete with (or even surpass) those solely dependent on hits. Amazon.com founder Jeff Bezos was the first retailer to deploy that new business model online. Amazon's virtual inventory of 3.7 million books dwarfs the typical Barnes & Noble retail store, which carries about 100,000 titles. The vast majority of Amazon's books may sell only a few thousand copies, but the 3.6 million less popular books not carried by its rival account for 25% of Amazon's total book...
...leverage of the long tail can give even tiny companies a chance to compete against the biggest of behemoths. A healthy 40% of sales for the online music site Rhapsody, for example, comes from esoteric tunes not found in Wal-Mart's CD bins. In some cases, the long tail turns underdogs into giant killers. Anderson's case in point: the online video retailer Netflix, which overtook the neighborhood video-rental company Blockbuster. He found that 21% of Netflix's sales came from obscure or older movies, not the blockbusters that gave the once mighty chain its name. Blockbuster, meanwhile...
Anderson's premise, once you accept it, is like a song you can't get out of your head: you start seeing long tails everywhere. Microbrews become the long tail of beers, for example. Blogs are the long tail of journalism. Even porn has its version--the increasingly bizarre porn fetish sites that could be profitable only...
...long tail has its intellectual roots in economic ideas that date back a century. In 1906, Italian philosopher Vilfredo Pareto noted that 80% of the property in Italy is owned by 20% of the population, a formula that, much later, became known as the 80/20 rule. It has forever influenced brand management, customer service and even personnel development. Focus your attention and resources on that top 20%, which is where the best returns on investment can be found...
...rule in reverse. They upended the belief that the Internet's main benefit to consumers would be lower prices. Instead, they suggested that greater value online came from consumers having access to a wider selection of products and services. The key for businesses hoping to capitalize on the long tail, says Carnegie Mellon's Michael D. Smith, one of the paper's authors, is to cater to "significant heterogeneity in taste." Even though a majority of us may like U2 on our MP3 players, for example, there are enough of us who enjoy string quartets or British ska to make...