Here at the SIIA Content Forum (where I'm speaking this afternoon), Chris Anderson, Editor-in-Chief of Wired Magazine and author of the upcoming book "The Long Tail: Why the Future of Business Is Selling Less of More" is presenting the luncheon keynote. My friend Ken Doctor is blogging next to me but the damn wireless here keeps crapping out on us so we may not be able to post till later in the day.
"The Long Tail" is a phrase that’s gotten huge viral juice since it was first used in a Wired Magazine article by Anderson in October 2004. He's now finishing up a book with the same title to be published in July 2006. It's cool to hear about this buzz term from the buzz agent himself.
"I have a background in physics and economics, so I came at this analysis through data," Anderson says. Companies like ebay, Google, Netflix and many others has vast amounts of data of consumer behavior. "Drawing from the data, the bell curve was the twentieth century and the powerlaw curve is the twenty-first." (A powerlaw curve is downward sloping to the right.)
What Anderson is saying for markets is that the old way of reaching the middle market is not the only way to make money now. Reaching the people who have specific demand for the less popular things way to the right of the powerlaw curve is good business. For example, Netflix rents many movies to people out at the long end of the tail of the curve. There are more movies online at Netflix delivered via the post office than a retailer (even Wal-Mart could possible stock in their shore). According to Anderson, "the average Blockbuster is 3,000 DVD titles while Netflix is 60,000 titles."
"The market for niches is anything but," Anderson says. Niche markets are big business. Getting it right will produce great companies and re-value archives of content. "Today’s hit is tomorrows niche."
Infofilter.net is a site for looking at data from companies that provide them via APIs (such as Amazon sales data). Amazon is great to analyze because Amazon has shown the power of findability. Amazon helps us to find, based on our express interest.
Anderson says Netflix buys less of the newer releases than customers would normally demand because they know that demand will drop quickly. So they tend to buy based on demand for some time into the future. Netflix pushes their older titles because demand is more steady and evidence shows that people like the older titles better than taking a chance on new ones.
Anderson says "Google is the classic long tail play." Google has finely sliced keywords to reach the long tail of demand. But Google also allows companies at the long tail to advertise when they could never afford to advertise before.
This is an interesting analysis that has implications for how marketers interact on the Web. Anderson's book sounds great. I would love to get an advance copy.
Interestingly, Anderson is a blogger who works for mega-publisher Conde Nast. His book on niches is being published by Disney. "I'm conflicted," he says. "I believe strongly in the peer production model through blogging. I've given away a bunch of data and given away chapters of the book for peer review. I'm a big believer of the open source book production model. I have more than 2,000 people who have given me free and extremely valuable contributions that has made the book better."