Long Tail

Apes – the human beings ancestors had tails of many kinds, long, short, twisted and straight. During the evolution the tails disappeared, are we going to witness the same in today’s “Digital World”. Which tail is going to disappear now? Chris Anderson coined the term "The Long Tail," in his Wired magazine column and that is also the title of his book. The Long Tail describes the region of the item "popularity curve" comprising the vast population of least-popular items, whether it is song titles, books, or little-known brands. It is sharing personified, usually it involves downloading of anything digital from the Internet and from other places, paying for some of them, such as iTunes, but sharing and trading many others. With the digital revolution there lies the challenge to fundamental economic theory of Demand and Supply. Is the challenge real or its just another hype?

It is a world where everything digital is available at all times. We now have a low cost of maintaining and distributing inventory and it seems that everything is likely to remain available forever. If so much is free, how can one make money? In the Long Tail, money could be made by such things as avoiding inventory, producing to order, letting customers do the work, pricing creatively and flexibly to various customers, utilizing a variety of distribution methods, sharing information, trusting the market to do your job, and understanding the "power of free" combined with money-making services or products. Does the Long Tail represent what some would call a "paradigm shift"? Who will the Long Tail benefit most: consumers, producers, or intermediaries? Is it limited to things that can be digitized? These questions have no easy answers.

However, Chris Anderson's hypothesis is primarily based on the assumption that Internet is the key for making profits in the Long Tail world for the unpopular items. What if a significantly larger portion of the population doesn't access the internet for buying items? For the larger group that doesn't access the internet, only the most popular items appeal and are known to them, while the rest of the unpopular items don't even get noticed by such a population. A reliable publisher of statistics of internet usage around the globe shows that North America and Europe, which respectively have a population of 5 percent and 12.5 percent of the world, contribute 22 percent and 28 percent to the internet usage respectively. However, Asia, which accounts for 57 percent of the world population, contributes only 36.4 percent to internet usage. Clearly, a larger mass is not using the internet. In such countries where the internet is not widely used, people will not be aware of the unpopular items that are advertised mostly through internet, and will purchase only those items that prevail in the market.

Am I sounding contradictory? If yes, then please imagine an era say 50 years down the line where most probably 70 percent of world would be connected, can we ignore Long Tail then? “Click here" economics has arrived and we all can witness its impact. The Long Tail is evident and is sure to stay. With the reach of internet increasing, the Long Tail will multiply accordingly. Companies now must think twice before allowing that digital reproduction of their productions (of future products) and pilfering is always a threat and will remain so.

Adapted from the Harvard Business Review Article titled “What Happens When the Economics of Scarcity Meets the Economics of Abundance”

(Yadvinder Singh, MBA 3rd Sem)

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