The Long Tail & Paradox of Choice

1. The Long Tail & Paradox of Choice Jonathan Wareham

2. The Long Tail: Introduction What is the Long Tail? • The long tail is the colloquial name for a long-known feature of statistical distributions (Zipf, Power laws, Pareto distributions and/or general Lévy distributions ). The feature is also known as "heavy tails," "power-law tails," or "Pareto tails."

3. The Long Tail: Introduction A brief history of the hit • New Technologies in the mid- to late 19th century laid the ground work for pop culture • Commercial printing technology • “Wet plate” technique for photography • 1877 – Edison invents the phonograph • Result: the first wave of pop culture • Newspapers and magazines • Novels • Printed sheet music • Records • Children’s books • Newspapers bring the latest fashions from New York, London and Paris • At the end of the 19th century, the moving picture gave the stars of stage a way to play many towns simultaneously and reach a much wider audience. Source: Anderson, C. (2006) “The Rise and Fall of the Hit”, Wired Magazine

4. The Long Tail: Introduction A brief history of the hit (continued) • Such potent carriers of culture had the effect of linking people across time and space, effectively synchronizing society. • Not only did your neighbors read the same news you read in the morning and know the same music and movies, people across the country did too. • In other words, while culture was synchronized, it was also homogenized. Source: Anderson, C. (2006) “The Rise and Fall of the Hit”, Wired Magazine

5. The Long Tail: Introduction Measuring the hit • Blockbuster movies • Billboard magazine Hot 100 songs • New York Times bestsellers in books • Forbes lists

6. The Long Tail: Introduction Driver of the hit culture: the economics of scarcity • An average movie theater needs at least 1,500 people over a 2-week run; that's the rent for a screen. • An average record store needs to sell at least 2 copies of a CD per year; that's the rent for a half inch of shelf space. • The same applies to DVD rental shops, videogame stores, booksellers, and newsstands. Source: Anderson, C. (2004) “The Long Tail”, Wired Magazine

7. The Long Tail: Introduction Example: Cinema • In 2004, nearly 6,000 movies were submitted to the Sundance Film Festival. • 255 were accepted. • 24 were picked up for distribution. • The other 231 may never be seen. • Who controls the tools of production and distribution??? Source: Anderson, C. (2004) “The Long Tail”, Wired Magazine

8. The Long Tail: Introduction The peak of the hit culture • Between 1990 and 2000, album sales had doubled, the fastest growth rate in the history of the industry. • Half of the top-grossing 100 albums ever were sold during that decade. Source: Anderson, C. (2006) “The Rise and Fall of the Hit”, Wired Magazine

9. The Long Tail: Introduction Decline of the hit • Total music sales fell during 2000, for only the second time in a decade. • Sales fell 2.5 percent in 2001, 6.8 percent in 2002, and just kept dropping. • By the end of 2005 (down another 8.3 percent), album sales in the US had declined 20 percent from their 1999 peak. Source: Anderson, C. (2006) “The Rise and Fall of the Hit”, Wired Magazine

10. The Long Tail: Introduction Not enough blockbusters Source: BoxOfficeMojo.com as posted 17/09/2006 on the Long Tail blog

11. The Long Tail: The Long Tail and the Internet What happened? The Internet • Record labels blame it on Napster and piracy, but it’s not that simple. • The Internet’s peer-to-peer architecture is optimized for a symmetrical traffic load, with as many senders as receivers and data transmissions spread out over geography and time. • In other words, it’s the opposite of broadcast. Source: Anderson, C. (2006) “The Rise and Fall of the Hit”, Wired Magazine

12. The Long Tail: The Long Tail and the Internet Inventories: physical retail vs. Internet retail Source: Anderson, C. (2006) “The Long Tail: Why the Future of Business is Selling Less of More”

13. The Long Tail: The Long Tail and the Internet Sales distribution: Head vs. Tail Source: Anderson, C. (2006) “The Long Tail: Why the Future of Business is Selling Less of More”

14. The Long Tail: The Long Tail and the Internet Search quality High Low Range of Quality/Satisfaction Source: Anderson, C. (2006) “The Long Tail: Why the Future of Business is Selling Less of More”

15. The Long Tail: Three Forces The Three Forces of the Long Tail • The Three Forces of the Long Tail • Six Themes • Force 1: Democratize the tools of production • Force 2: Democratize the tools of distribution • Force 3: Connect supply and demand

16. The Long Tail: Three Forces: Tools of Production Force 1: Democratize the tools of production • Especially using affordable digital technology that makes it economically feasible to make products, even in small quantities.  • This results in “more stuff, which lengthens the Tail”. Source: Anderson, C. (2006) “The Long Tail: Why the Future of Business is Selling Less of More”

17. The Long Tail: Three Forces: Tools of Production Examples of tools of production • Blogs – short for Weblog - free technology for creating an online journal to comment on topics like food, politics, technology or any other topic you can think of. • Photoblog – driven by cheap digital photography • Vlog – driven by cheap video recording technology • Podcast – driven by cheap audio and video recording technology • Example: Affiliate Blog by Shawn Collins • Open Source software. • e.g. Linux, Joomla, Simple Machines Forum

18. The Long Tail: Three Forces: Tools of Distribution Force 2: Democratize the tools of distribution • Internet aggregators create “infinite shelf space” businesses where virtually every product in a category can be economically accessed.  • This creates “more access to niches, which fattens the Tail”. Source: Anderson, C. (2006) “The Long Tail: Why the Future of Business is Selling Less of More”

19. The Long Tail: Three Forces: Tools of Distribution Examples of tools of distribution • Amazon • NetFlix • Rhapsody • iTunes But also: If you build it, they will come • Froogle • MySpace • YouTube • Flickr

20. The Long Tail: Three Forces: Tools of Distribution Examples of tools of distribution • Youtube – upload amateur videos. • Driver: cheap video recording technology • MySpace – social networking site focused on entertainment. • Driver: cheap audio and video recording technology, dynamic user interfaces • Wikipedia – Internet encyclopedia that allows users to freely edit its content.

21. The Long Tail: Three Forces: Connect Supply and Demand Force 3: Connect supply and demand • Emergence of businesses and taste makers  that act as filters, helping to cost-effectively and flexibly connect people with available goods, no matter how narrow the interest or specialized the product. • This “drives business from hits to niches”. Source: Anderson, C. (2006) “The Long Tail: Why the Future of Business is Selling Less of More”

22. The Long Tail: Three Forces: Connect Supply and Demand Examples of filters • Search engines (Google, Yahoo!, etc.) • Sorting (e.g. Froogle) • Ratings (e.g. Ciao) • Reviews/Editor Recommendations (e.g. Zdnet) • Peer recommendations (e.g. digg) • Customer Reviews (TripAdvisor.com) • Community (e.g. The Lonely Planet Forum) • RSS content syndication (e.g. NetVibes) • Tagging

23. Paid search Organicsearch

24. The Long Tail: The Paradox of Choice The Paradox of Choice The Paradox of Choice Video

25. The Long Tail: The Paradox of Choice Questions • Are you a maximizer or satisficer? • Provide 3 examples where filters work & individual choice succeeds • Name 3 examples where we should not make our own choices