We used to live in a world where resources are limited, and there are always restrictions. Industries can not produce all they want because they have limitations in raw materials. Distributors may not sell all available products because they have limitations of physical space. Customers do not always buy what they need but what they are because they have limitations in terms of information.
These restrictions led to the creation of a culture of "super hits", the industries only make what sells, distributors have only broken and what customers buy what is fashionable. This is explained in the famous "Pareto's Law" or Law 80/20 (80% of revenues come from sales of 20% of products).
Now an example:
Joe Simpson, British climber, wrote in 1998 a book called "Touching the Void" (Touching the Void) that although it received good reviews, it was not really successful in sales. Until there is a common story, a well written book that does not sell well. A decade later, Jon Krakauer wrote "Into Thin Air" (with little air) that if was a bestseller. Another common history, a well-written book that sells well. However, the interesting thing comes with the success of "Into thin air", and, suddenly, "Touching the Void" started to sell again.
The publisher had to make a new edition of "Touching the Void ', which spent 14 weeks at the top of the bestseller New York Times. Even IFC Films produced a documentary drama about the history which was acclaimed by critics. Currently, "Touching the Void" outsells "Into thin air" at a ratio of 2 to 1.
happened?
One word: Amazon. The system of online library detected that the users were getting "Into thin air" and recommended "Touching the Void." Others who followed the advice written rave reviews, and formed a snowball effect: more and more people bought "Touching the Void" and more comments, and more sales ...
In the pre-internet era, most likely those who had bought "Into thin air" would never have heard of "Touching the Void." Internet allowed this, Amazon was the one who created the successful "Touching the Void" by combining real-time information about purchases and suggest trends and the result was that generated new demand for a book that almost never bought.
Earlier, there was always the need for local market to distribute the products. And the distributors had only products generating enough revenue to cover the cost of storage and display.
Why things were done well before? For economic reasons, an attempt to equate supply and demand under conditions of information distribution and totally inadequate. The product not only had to have a market but the market had to be local. Prevailing tyranny of physical space both for distribution to market an audience too thinly equivalent to having none.
But how to know which products distributed? There appeared when the charts, film fashion, the seller and the Pareto Law. By the way, I think that has nothing wrong with a system that works but many of us do not always want that, at some point end up moving away from fashion and the more options we have more we depart.
Welcome to a new era where we no longer depend on the "fashion" or what is considered "success." To the extent that technology spreads, we are reaching a point where you have access to "perfect" (in the sense that it is complete, we know that it exists and where we can get) and the truth is that we begin to discover that our tastes are not are as common as previously thought (as usual made us think marketing companies). The digital world, with online distribution systems, is leading us to a world of constraints, a world of abundance.
No need to pay shelves, no manufacturing costs and almost no distribution costs, any sale is a sale and give the same amount of money selling a product "successful" to sell a product "marginal" both are mere records in a database.
We must change the mentality, we are anchored in the mindset of "blockbuster" and think that what we find in the supermarket is little demand, should therefore not be good. We at 80 / 20, only 20% is good, 80% is marginal. We
equating quantity with quality, economies of scale and mass market demand successfully.
To get an idea about what we really like, see the statistics of "Rhapsody" music subscription service that offers more than 750,000 items.
cumulative sales curve is a typical demand curve: strong preference for more topics Hot and sharp drop for the less popular. In this sense, looks like any physical music store. But the interesting thing is when you look beyond the 40,000 best selling titles (which is more or less what stocks a normal physical store). In a normal physical store, no movement because there is no inventory, but sales continue to Rhapsody. Sold at least once a month not only the first 100,000 subjects, but also the first 200,000 and 300,000, and so on. Each new item is added to Rhapsody finds its audience (but small).
This is the long tail.
Anything can be found in the long tail But what really surprises is its size. If enough sales are combined marginal in the long queue, you get to have a bigger market than the "blockbuster" (20%). For example: An average library has about 130,000 books. However, Amazon, more than half of sales come from titles that are below the limit of the 130,000 best sellers. Think of the consequences of this, assuming that statistic can be taken as a rule, and we may conclude that the potential market for books is at least twice the size it is now.
In reflecting on the matter, it is clear that most successful businesses in Internet access based on these long queues. Google gets most of its revenue from small advertisers, eBay sells unique, Netflix gets 20% of its revenue from the titles below the 3,000 most rented (3,000 is the inventory of a typical Blockbuster store type).
based business in the long tail is the consumers as individuals, rather than simply packaging them as part of the mass. Have access to many options can be useful for example, to rediscover the passion for movies and music and potentially increase the overall size of these markets (regular customer of Netflix rents 7 DVDs per month, 3 times more compared to a client from DVD rental shop traditional like Blockbuster).
The long tail moment has arrived.
