Today, enterprises are often in dilemma, where to find more and more whimsical consumers. Few years ago, when mass culture dominated, this was not a difficult issue. Fewer things competed for our attention, and hits managed to attract a mass audience. But this is no longer the case. “The age of one-size products for all ends, and there comes something new, niche market,” says Chris Anderson, editor in chief of Wired magazine and author of
The Long Tail, where he is reconstituting a map for 21.century economy.
The development of technologies for high-speed Internet, mobile phones, MP3 players, online shopping and digitization of all types of content, opens the door into a new era, where instead of “hits” culture, “niche” culture is dominant. Networks enable access to culture and content of all kinds, from mainstream to the most marginal. This trend challenges the economic power of hits. The market is broken into countless niches and consumers are becoming more and more diffuse.
The essence of the long tail theory is in the removal of physical restrictions of the shelves and others bottlenecks of distribution, which ensures that goods intended for a small target audience are the same economically attractive than those for the masses. New technologies incredibly quickly reduce the costs of achieving niches, and although the sale of products in each niche is relatively small, due to their abundance, these products make up a market that can compete with the hits. The long tail is therefore a culture that was not refined by economics of scarcity.
Although we are all trained to look at the world through the hits, new diversity and new environments thoroughly change our view on the world. More than we get away from mainstream, more we realize that our taste does not fall so much in the mainstream, as advertisers, culture, or simply a lack of choice were able to convince us. The diverse interests of consumers are working their way into the spotlight. Although niches always have been here, their economy is changing because of digitization and networked consumer. Market that was invisible until now rises to the surface. Price of saving bits is negligible, so everybody can find their audience.
Anderson noticed that the fastest growing part of the online business of content providers such as Netflix, Amazon and Rhapsody is coming from the sale of products, which are in traditional physical stores not even available. This was made possible because of trends of democratization of production tools, which enabled volunteering and amateur work (Wikipedia, blogs), declining prices due to the democratization of distribution and the increasing integration of supply with demand. Integration is crucial, because consumers would be otherwise difficult to tackle with the expansion of the diversity of choice. With filters we can discover items that are more attractive than items with the lowest common denominator, occupying the narrow channels of traditional mass-market distribution. Without filters, there is a risk, that in the long tail there would not be anything else than noise, because it has a dynamic and wide range of quality. If you want something that is appealing to all, you have to make some compromises, that is why niche products are attractive only to a narrow range of tastes. Without search engines, recommendations, blogs and user ratings, users can lost themselves in a multitude of products.
Anderson also talks about fundamental changes that transform relations in advertising industry. The fact is, that advertising is loosing power, and there is increasing trust in individuals. Communication is now controlled by a society, as a top-down communication is becoming less popular, while bottom-up rumors are increasingly influential.
This new economic policy is not only subject in the media and entertainment industry. Anderson also shows principle of a long tail in others industries, e.g. in the sale of used items (eBay), kitchen mixers (KitchenAid) and many others. All industries slowly recognize that hits were wonderful, but next big market will be composed of niches. Of course, the hits will not go away, and the same applies to the stores with a limited space. They will retain on the surface, because of the convenience of instant gratification and other tangible benefits that are important when we are buying something in a traditional stores.
The long tail book is an interesting reading for anyone interested in future business and society in general. Understanding of upcoming consumer behavior on the markets with an unrestricted choice is crucial, and sales challenges are growing because of era where buyers have more and more power. Excellent added value of this book are picturesque interpretations of the cases from the real business world and this book is an excellent opportunity for both merchants and consumers to learn how to exploit numerous advantages of the digital age.
