Long Tail Chris AndersonThe Long TailSlide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Anatomy of the Long TailNew Rules for Entertainment EconomyRule 1: Make Everything available…contd.Rule 1: Make Everything available …contd.Slide 15Slide 16Rule 2: Cut the price in half. Now lower it.Rule 2: Cut the price in half. Now lower it. …contd.Rule 3: Help me find it.Rule 3: Help me find it…contd.Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29Rule 3: Help me find it. …contd.SummaryReferencesDiscussion QuestionsSlide 34Long Tail Chris AndersonModified By Nagaradhika Bavisetty & Shrikant LohgaonkarOld Dominion UniversityThe Long TailIn Mathematics•The name for a statistical distribution curve based on a high amplitude population followed by a low frequency population which gradually tails off. - WikipediaIn Business•Products that are in low demand that can collectively make up a market share that rivals the relatively few current bestsellers when distributed over such a big channel as the Internet. - Chris AndersonAny Industry where there is demand / availability for specialized products can and will be influenced by the long tail as accessible selection increases and transaction friction decreasesHow sales of a book can be increased?-Recommendations by the seller. Creating infinite shelf space.-Positive feedback by the customer.“Combine infinite shelf space with real-time information about buying-trends and public opinion”.•Creating infinite shelf space is equivalent to providing unlimited selection in entertainment industry for customers.•Consumers interest will be known and what they want will be revealed. Ex: DVD’s on Netflix, music video’s on Yahoo.Two limitations on Entertainment:•To find local audiences: - An average movie theater will not show a film unless it has 1500 people over a two-week run, an essential rent for a screen. - An average record store needs to sell at least two copies of a CD per year to make it worth carrying “Retailers will carry only content that can generate sufficient demand”Ex: There are 1.7 million Indians in USA. Yet the top rated movie Lagaan : Once upon a time in India on just two screens.• Physics: -Radio spectrum can carry only some stations and co-axial cable can carry many TV channels. - another instance of aggregating large audience in one place.•Hit-driven Economics: - Not enough room to carry everything for every body. - Not enough shelf-space for all CD’s, DVD’s and games produced.ON-LINE Distribution: -Every one’s tastes departs from mainstream and want more than just hits. -with online distribution and retail, we entered world of abundance. “What percentage of the tracks available on-line store will rent or sell at least once a month?”• Most of people say it as 20% because of 80-20 rule also known as Pareto’s principle. Pareto’s rule: - Pareto’s rule states that small number of causes is responsible for a large percentage of the effect ,in the ratio of about 20:80. - 20% rule in entertainment industry is about hits not sales of any sort.-Misses usually make money and as there many of them it makes huge market.• Industry’s don’t know what people need and people don’t know what they want?Anatomy of the Long TailNew Rules for Entertainment EconomyRule 1: Make Everything availableIf you love documentaries, Blockbuster is not for you. Netflix: Offers more than a thousand documentaries.Such profligacy is giving a boost to the documentary business.Daughter From Danang, a documentary about the children of US soldiers and Vietnamese women.But PBS had no plans to release it on DVD. Netflix offered to handle the manufacturing and distribution.Now Daughter From Danang consistently ranks in the top 15 on Netflix documentary charts. There are large number of equally attractive genres and subgenres neglected by the traditional DVD channels: foreign films, anime, independent movies, British television dramas, old American TV sitcoms.Rule 1: Make Everything available…contd.http://www.Netflix.comhttp://www.Amazon.comRule 1: Make Everything available …contd.These underserved markets make up a big chunk of Netflix rentals. Bollywood alone accounts for nearly 100,000 rentals each month. Netflix has made a good business out of what's unprofitable fare in movie theaters and video rental shops.It can aggregate dispersed audiences. What matters is not where customers are, or even how many of them are seeking a particular title, but only that some number of them exist, anywhere. Long Tail approach is to simply dump huge chunks of the archive onto DVDs, without any extras or marketing. Call it the Silver Series and charge half the price.Rule 1: Make Everything available …contd.Last year, more than 7,000 movies were submitted to the Sundance Film Festival. http://festival.sundance.org/2006/utilities/submissions.aspx255 were accepted, and just two dozen have been picked up for distribution.Why not release all 255 on DVD each year as part of a discount Sundance Series? “In a Long Tail economy, it's more expensive to evaluate than to release.“The same is true for the music industry. So too for videogames. Retro gaming, including simulators of classic game consoles that run on modern PCs. Game publishers could release every title as a 99-cent download three years after its release - no support, no guarantees, no packaging.Rule 1: Make Everything available …contd.All this, of course, applies equally to books. Amazon and other networks of used books have made it easy to find and buy a second-hand book as it is a new one. By divorcing bookselling from geography, these networks create a liquid market at low volume, dramatically increasing both their own business and the overall demand for used books. Combine that with the rapidly dropping costs of print-on-demand technologies and it's clear why any book should always be available. Indeed, it is a fair bet that “children today will grow up never knowing the meaning of out of print.”Rule 2: Cut the price in half. Now lower it.Success of Apple's iTunes. We now have a standard price for downloading a track: 99 cents. But is it the right one? 99 cents per track works out to about the same price as a CD.Most consumers just buy one or two tracks from an album online, rather than the full CD. That wholesale price is set to roughly match the price of CDs, to avoid dreaded "channel conflict."