Reading Reflection No. 2 - The Long Tail

1) In his work The Long Tail, Chris Anderson describes that companies today, due to the power of the internet and virtual customer connection, are able to profit even if they are selling very specialized items because their target market is now more easily identified than ever before. Anderson gives the example of iTunes selling well beyond the scope of the most played songs on the radio, and these other songs making up the majority of revenue for the organization. Anderson shows many graphics representing the distribution of purchases of an item type organized by their rank in popularity. One graphic of this in particular shows downloads of songs ranked by popularity and in this case, Walmart stores sells the most popular 25,000 songs. This segment includes the spike of the most popular songs’ sales entirely. However the extent of the rest of the songs available are sold on another platform called Rhapsody, an online audio retailer, and because their inventory is large enough, these sales become the “hidden majority” and actually surpass the value of the hit spike. Anderson defends that because there are so many niche items in a market, even with incredibly low sales per item, collectively this makes up incredible market share. 

2) How did the book, in your opinion, connect with and enhance what you are learning in ENT 3003?

This book has validated for me that there is a market for just about any product in today’s economy, due to the connection that the internet provides. Because there is capability to do business remotely now more than ever before, business can capture a small segment of a market in a way that never made sense with brick and mortar retail. This has also led to a change in customer preferences that reflect the accessibility to specialty product. Additionally, abolishing the physical shelf space that a product requires (and thus the expense), companies can support and profit from selling a wide variety of products. Even one sale of a song per quarter, Anderson says, makes it worth selling, as there is such a small expense associated with carrying it. Further, this phenomena seems to contradict the expectation that segment markets are either wide, representing a variety of products yet only carrying a few, or deep, representing a narrow scope of products with many different options. Alternatively, large organizations, like Amazon, can accommodate incredible volumes of product to sell, including specialty product, and in turn greatly increase their margins. 

3) If you had to design an exercise for this class, based on the book you read, what would that exercise involve?

If I had to design an exercise for this course, I would encourage students to analyze a similar data set to the one’s that Anderson evaluated in researching his theory. I would ask that they select a small market, such as fiction novels, and then research the difference between in revenue between a large online platform like Barnes & Noble and also a vast platform like Amazon self publishing, which has little buy in but still drives profit. Comparing these two would bring to light the demand for many niche products, as Anderson describes, and highlighting the theory in real markets. 

4) What was your biggest surprise or 'aha' moment when reading the book? In other words, what did you learn that differed most from your expectations?

The first few chapters of this book cited research from some of the largest grossing organizations in the world, like Amazon and Netflix. I found it difficult to credit that their success was because of this phenomenon directly, and not just another benefit of having such high margins across an incredibly large, established inventory. Alternatively, Anderson described that the principle of the long tail is actually beneficial for all as we become a society that shifts from “or” to “and” selection. Because there is cheaper and more efficient distribution, Anderson presents that a large variety of products can stay cheap for customers and allows them to avoid making the choice between popular items and their niche preferences. Ultimately, this seems to demonstrate that even small companies offering specialty products could benefit from the market that is the “long tail”.