The Long Tail A powerlaw Semilog Source Kevin

Box office gross WTF? Film rank Source: Kevin Marks, Technorati

History of the Long Tail • 1890: Sears Catalog • 1980: 800 numbers •

Two steps of abundance • 1990: Explosion of variety of products. • Now: Explosion

This isn’t just about entertainment • Google: Long Tail advertisers • e. Bay: Long

The economics of bits, not atoms Virtually unlimited capacity + Virtually free distribution =

The three forces of the Long Tail Minimize the transaction costs of consumption Democratize

Connect consumers to amplify word of mouth

#1 How does the expansion of the tail affect the shape of the head?

$#2 Does the Long Tail have a fractal dimension?$

#3 How does price elasticity work in the Tail? Should prices go up (scarcity)

Two pricing models 1) Entertainment (want): 2) lower prices down the Tail 3) Information

#4 Long Tail vs. Bottom of the Pyramid. Same effect or different?

Purchasing Power (US$) Global population (m) >$20, 000 1 $1, 500 -$20, 000 2

#5 Primary Markets vs. Secondary Markets

Secondary markets • Used Goods • Gray Goods • Overstock Goods

#6 The tragically neglected economics of abundance

The fundamental difference between the economics of old media and the economics of new

Is infinite shelf space like Moore’s Law or like steam?

1970 s: “Waste transistors” Now: “Waste storage, bandwidth”

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The Long Tail

A powerlaw

Semilog Source: Kevin Marks, Technorati

Box office gross WTF? Film rank Source: Kevin Marks, Technorati

Box office Savagely truncated Films

The Long Tail

Long Tail TV

Seen another way

History of the Long Tail • 1890: Sears Catalog • 1980: 800 numbers • 1990: Supermarket shelves

Two steps of abundance • 1990: Explosion of variety of products. • Now: Explosion of information about products. You need both.

This isn’t just about entertainment • Google: Long Tail advertisers • e. Bay: Long Tail hard goods • Capital. One: Long Tail customers • Offshoring: Long Tail services

The economics of bits, not atoms Virtually unlimited capacity + Virtually free distribution = Custom streams, not mass markets

The three forces of the Long Tail Minimize the transaction costs of consumption Democratize the tools of production

Connect consumers to amplify word of mouth

Six Research Projects

#1 How does the expansion of the tail affect the shape of the head?

The changing shape of demand?

80/20 >>> 50/50?

$#2 Does the Long Tail have a fractal dimension?$

#2 Does the Long Tail have a fractal dimension?

Small Worlds Minitails

#3 How does price elasticity work in the Tail? Should prices go up (scarcity) or down (encouragement)? How do you know?

Two pricing models 1) Entertainment (want): 2) lower prices down the Tail 3) Information (need): raise prices down the Tail

#4 Long Tail vs. Bottom of the Pyramid. Same effect or different?

Purchasing Power (US$) Global population (m) >$20, 000 1 $1, 500 -$20, 000 2 $1, 500 75 -100 1, 500 -1, 750 3 4, 000 <$1, 500 = 4 ?

#5 Primary Markets vs. Secondary Markets

Secondary markets • Used Goods • Gray Goods • Overstock Goods

#6 The tragically neglected economics of abundance

The fundamental difference between the economics of old media and the economics of new media is the difference between scarcity and abundance. The Long Tail is abundance.

Is infinite shelf space like Moore’s Law or like steam?

1970 s: “Waste transistors” Now: “Waste storage, bandwidth”