The Long Tail - AbsoluteAstronomy.com

The Long Tail or long tail refers to the statistical property that a larger share of population rests within the tail of a probability distribution

Probability distribution

In probability theory, a probability mass, probability density, or probability distribution is a function that describes the probability of a random variable taking certain values....

than observed under a 'normal' or Gaussian distribution. A long tail distortion will arise with the inclusion of some unusually high (or low) values which increase (decrease) the mean

Mean

In statistics, mean has two related meanings:* the arithmetic mean .* the expected value of a random variable, which is also called the population mean....

, skewing

Skewness

In probability theory and statistics, skewness is a measure of the asymmetry of the probability distribution of a real-valued random variable. The skewness value can be positive or negative, or even undefined...

the distribution to the right (or left).

The term Long Tail has gained popularity in recent times as describing the retailing strategy of selling a large number of unique items with relatively small quantities sold of each – usually in addition to selling fewer popular items in large quantities. The Long Tail was popularized by Chris Anderson in an October 2004 Wired
Wired (magazine)
Wired is a full-color monthly American magazine and on-line periodical, published since January 1993, that reports on how new and developing technology affects culture, the economy, and politics...

magazine article, in which he mentioned Amazon.com

Amazon.com

Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...

and Netflix

Netflix

Netflix, Inc., is an American provider of on-demand internet streaming media in the United States, Canada, and Latin America and flat rate DVD-by-mail in the United States. The company was established in 1997 and is headquartered in Los Gatos, California...

as examples of businesses applying this strategy. Anderson elaborated the concept in his book The Long Tail: Why the Future of Business Is Selling Less of More (ISBN 1-4013-0237-8).

The distribution and inventory costs of businesses successfully applying this strategy allow them to realize significant profit out of selling small volumes of hard-to-find items to many customers instead of only selling large volumes of a reduced number of popular items. The total sales of this large number of "non-hit items" is called the Long Tail.

Given enough choice, a large population of customers, and negligible stocking and distribution costs, the selection and buying pattern of the population results in the demand across products having a power law

Power law

A power law is a special kind of mathematical relationship between two quantities. When the frequency of an event varies as a power of some attribute of that event , the frequency is said to follow a power law. For instance, the number of cities having a certain population size is found to vary...

distribution or Pareto distribution.

The Long Tail concept has found some ground for application, research, and experimentation. It is a term used in online business, mass media, micro-finance (Grameen Bank, for example), user-driven innovation (Eric von Hippel

Eric von Hippel

Eric von Hippel is an economist and a professor at the MIT Sloan School of Management, specializing in the nature and economics of distributed and open innovation. He is best known for his work developing the concept of user innovation – that end-users, rather than manufacturers, are...

), and social network mechanisms (e.g. crowdsourcing

Crowdsourcing

Crowdsourcing is the act of sourcing tasks traditionally performed by specific individuals to a group of people or community through an open call....

, crowdcasting

Crowdcasting

Crowdcasting is the intersection of broadcasting and crowdsourcing. The process of crowdcasting uses a combination of push and pull strategies to first engage an audience and build a network of participants and then harness the network for new insights. Those insights are then used to shape...

, peer-to-peer

Peer-to-peer (meme)

Peer-to-peer is not restricted to technology, but covers every social process with a peer-to-peer dynamic, whether these peers are humans or computers. Peer-to-peer as a term originated from the popular concept of P2P distributed application architecture that partitions tasks or workloads between...

), economic models, and marketing (viral marketing

Viral marketing

Viral marketing, viral advertising, or marketing buzz are buzzwords referring to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives through self-replicating viral processes, analogous to the spread of viruses...

).

A frequency distribution

Frequency distribution

In statistics, a frequency distribution is an arrangement of the values that one or more variables take in a sample. Each entry in the table contains the frequency or count of the occurrences of values within a particular group or interval, and in this way, the table summarizes the distribution of...

with a long tail has been studied by statisticians since at least 1946. The term has also been used in the finance and insurance business for many years (also referred to as fat tail

Fat tail

A fat-tailed distribution is a probability distribution that has the property, along with the heavy-tailed distributions, that they exhibit extremely large skewness or kurtosis. This comparison is often made relative to the ubiquitous normal distribution, which itself is an example of an...

, heavy tail or right-tail). The work of Benoît Mandelbrot

Benoît Mandelbrot

Benoît B. Mandelbrot was a French American mathematician. Born in Poland, he moved to France with his family when he was a child...

in the 1950s and later has led to him being referred to as "the father of long tails".

Statistical meaning

The long tail is the name for a long-known feature of some statistical distributions (such as Zipf, power law

Power law

s, Pareto distributions and general Lévy distributions). The feature is also known as heavy tails
Heavy-tailed distribution
In probability theory, heavy-tailed distributions are probability distributions whose tails are not exponentially bounded: that is, they have heavier tails than the exponential distribution...

, fat tail
Fat tail
A fat-tailed distribution is a probability distribution that has the property, along with the heavy-tailed distributions, that they exhibit extremely large skewness or kurtosis. This comparison is often made relative to the ubiquitous normal distribution, which itself is an example of an...

s, power-law tails, or Pareto tails. In "long-tailed" distributions a high-frequency or high-amplitude population is followed by a low-frequency or low-amplitude population which gradually "tails off" asymptotically. The events at the far end of the tail have a very low probability of occurrence.

As a rule of thumb, for such population distributions the majority of occurrences (more than half, and where the Pareto principle

Pareto principle

The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes.Business-management consultant Joseph M...

applies, 80%) are accounted for by the first 20% of items in the distribution. What is unusual about a long-tailed distribution is that the most frequently-occurring 20% of items represent less than 50% of occurrences; or in other words, the least-frequently-occurring 80% of items are more important as a proportion of the total population.

Power law

Power law

distributions or functions characterize an important number of behaviors from nature and human endeavor. This fact has given rise to a keen scientific and social interest in such distributions, and the relationships that create them. The observation of such a distribution often points to specific kinds of mechanisms, and can often indicate a deep connection with other, seemingly unrelated systems. Examples of behaviors that exhibit long-tailed distribution are the occurrence of certain words in a given language, the income distribution of a business or the intensity of earthquakes (see: Gutenberg-Richter law

Gutenberg-Richter law

In seismology, the Gutenberg–Richter law expresses the relationship between the magnitude and total number of earthquakes in any given region and time period of at least that magnitude.orWhere:...

).

Chris Anderson's and Clay Shirky

Clay Shirky

Clay Shirky is an American writer, consultant and teacher on the social and economic effects of Internet technologies. He has a joint appointment at New York University as a Distinguished Writer in Residence at the Arthur L. Carter Journalism Institute and Assistant Arts Professor in the New...

's articles highlight special cases in which we are able to modify the underlying relationships and evaluate the impact on the frequency of events. In those cases the infrequent, low-amplitude (or low-revenue) events — the long tail, represented here by the portion of the curve to the right of the 20th percentile — can become the largest area under the line. This suggests that a variation of one mechanism (internet access) or relationship (the cost of storage) can significantly shift the frequency of occurrence of certain events in the distribution. The shift has a crucial effect in probability and in the customer demographics of businesses like mass media

Mass media

Mass media refers collectively to all media technologies which are intended to reach a large audience via mass communication. Broadcast media transmit their information electronically and comprise of television, film and radio, movies, CDs, DVDs and some other gadgets like cameras or video consoles...

and online sellers.

However, the long tails characterizing distributions such as the Gutenberg-Richter law

Gutenberg-Richter law

In seismology, the Gutenberg–Richter law expresses the relationship between the magnitude and total number of earthquakes in any given region and time period of at least that magnitude.orWhere:...

or the words-occurrence Zipf's law, and those highlighted by Anderson and Shirky are of very different, if not opposite, nature: Anderson and Shirky refer to frequency-rank relations, whereas the Gutenberg-Richter law

Gutenberg-Richter law

In seismology, the Gutenberg–Richter law expresses the relationship between the magnitude and total number of earthquakes in any given region and time period of at least that magnitude.orWhere:...

and the Zipf's law are probability distributions. Therefore, in these latter cases "tails" correspond to large-intensity events such as large earthquakes and most popular words, who dominate the distributions. By contrast, the long tails in the frequency-rank plots highlighted by Anderson and Shirky would rather correspond to short tails in the associated probability distributions, and therefore illustrate an opposite phenomenon compared to the Gutenberg-Richter

Gutenberg-Richter law

In seismology, the Gutenberg–Richter law expresses the relationship between the magnitude and total number of earthquakes in any given region and time period of at least that magnitude.orWhere:...

and the Zipf's laws.

Chris Anderson and Clay Shirky

The phrase the Long Tail was first coined by Chris Anderson. The concept drew in part from a February 2003 essay by Clay Shirky

Clay Shirky

, "Power Laws, Weblogs and Inequality", which noted that a relative handful of weblogs have many links going into them but "the long tail" of millions of weblogs may have only a handful of links going into them. Anderson described the effects of the Long Tail on current and future business models beginning with a series of speeches in early 2004 and with the publication of a Wired magazine article in October 2004. Anderson later extended it into the book The Long Tail: Why the Future of Business is Selling Less of More (2006).

Anderson argues that products in low demand or that have a low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters, if the store or distribution channel is large enough. Anderson cites earlier research by Erik Brynjolfsson

Erik Brynjolfsson

Erik Brynjolfsson is the Schussel Family Professor of Management at the MIT Sloan School of Management, the Director of the MIT Center for Digital Business and a Research Associate at the National Bureau of Economic Research...

, Yu (Jeffrey) Hu

Yu (Jeffrey) Hu

Yu Hu is an assistant professor at Purdue University’s Krannert School of Management. Hu, Erik Brynjolfsson and Michael D. Smith published research on The Long Tail that used a log-linear curve to describe the relationship between Amazon.com sales and sales ranking.-Early life:Hu received his Ph.D...

, and Michael D. Smith

Michael D. Smith (economist)

Michael D. Smith is the Heinz Career Development Associate Professor of Information Technology and Marketing at the H. John Heinz III College at Carnegie Mellon University with joint-appointment at the Tepper School of BusinessSmith received his Ph.D...

, that showed that a significant portion of Amazon.com's sales come from obscure books that are not available in brick-and-mortar stores. The Long Tail is a potential market and, as the examples illustrate, the distribution and sales channel opportunities created by the Internet often enable businesses to tap that market successfully.

An Amazon employee described the Long Tail as follows: "We sold more books today that didn't sell at all yesterday than we sold today of all the books that did sell yesterday."

Anderson has explained the term as a reference to the tail of a demand curve

Demand curve

In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity, and the amount of it that consumers are willing and able to purchase at that given price. It is a graphic representation of a demand schedule...

. The term has since been rederived from an XY graph that is created when charting popularity to inventory. In the graph shown above, Amazon's book sales or Netflix's movie rentals would be represented along the vertical axis, while the book or movie ranks are along the horizontal axis. The total volume of low popularity items exceeds the volume of high popularity items.

Effects of online access

In his Wired

Wired (magazine)

Wired is a full-color monthly American magazine and on-line periodical, published since January 1993, that reports on how new and developing technology affects culture, the economy, and politics...

article, Chris Anderson cites earlier research, by Erik Brynjolfsson

Erik Brynjolfsson

, Yu (Jeffrey) Hu

Yu (Jeffrey) Hu

, and Michael D. Smith

Michael D. Smith (economist)

, who first used a log-linear curve on an XY graph to describe the relationship between Amazon.com

Amazon.com

sales and sales ranking. They found that a large proportion of Amazon.com

Amazon.com

's book sales come from obscure books that were not available in brick-and-mortar stores.

They then quantified the potential value of the Long Tail to consumers. In an article published in 2003, these authors showed that, while most of the discussion about the value of the Internet to consumers has revolved around lower prices, consumer benefit (a.k.a. consumer surplus) from access to increased product variety in online book stores is ten times larger than their benefit from access to lower prices online. Thus, the primary value of the internet to consumers comes from releasing new sources of value by providing access to products in the Long Tail.

The Longer Tail over time

A recent study by Erik Brynjolfsson

Erik Brynjolfsson

, Yu (Jeffrey) Hu

Yu (Jeffrey) Hu

, and Michael D. Smith

Michael D. Smith (economist)

finds that the Long Tail has grown longer over time, with niche books accounting for a larger share of total sales. Their analyses suggested that by 2008, niche books accounted for 36.7% of Amazon’s sales while the consumer surplus generated by niche books has increased at least fivefold from 2000 to 2008. In addition, their new methodology finds that, while the widely-used power laws are a good first approximation for the rank-sales relationship, the slope may not be constant for all book ranks, with the slope becoming progressively steeper for more obscure books.

Goodbye Pareto principle, welcome the new distribution

In a 2006 working paper titled "Goodbye Pareto Principle

Pareto principle

The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes.Business-management consultant Joseph M...

, Hello Long Tail", Erik Brynjolfsson

Erik Brynjolfsson

, Yu (Jeffrey) Hu

Yu (Jeffrey) Hu

, and Duncan Simester found that, by greatly lowering search costs, information technology in general and Internet markets in particular could substantially increase the collective share of hard-to-find products, thereby creating a longer tail in the distribution of sales.

They used a theoretical model to show how a reduction in search costs will affect the concentration in product sales. By analyzing data collected from a multi-channel retailing company, they showed empirical evidence that the Internet channel exhibits a significantly less concentrated sales distribution, when compared with traditional channels. An 80/20 rule fits the distribution of product sales in the catalog channel quite well, but in the Internet channel, this rule needs to be modified to a 72/28 rule in order to fit the distribution of product sales in that channel. The difference in the sales distribution is highly significant, even after controlling for consumer differences.

Demand-side and supply-side drivers

The key supply-side factor that determines whether a sales distribution has a Long Tail is the cost of inventory storage and distribution. Where inventory storage and distribution costs are insignificant, it becomes economically viable to sell relatively unpopular products; however, when storage and distribution costs are high, only the most popular products can be sold. For example, a traditional movie rental store has limited shelf space, which it pays for in the form of building overhead; to maximize its profits, it must stock only the most popular movies to ensure that no shelf space is wasted. Because Netflix

Netflix

stocks movies in centralized warehouses, its storage costs are far lower and its distribution costs are the same for a popular or unpopular movie. Netflix is therefore able to build a viable business stocking a far wider range of movies than a traditional movie rental store. Those economics of storage and distribution then enable the advantageous use of the Long Tail: Netflix finds that in aggregate, "unpopular" movies are rented more than popular movies.

An MIT Sloan Management Review
MIT Sloan Management Review
MIT Sloan Management Review is a web site and magazine focused on the management of innovation. Published at the MIT Sloan School of Management, MIT Sloan Management Review’s mission is to lead the conversation among thinkers, professors, and managers about the coming sea changes in management...

article titled "From Niches to Riches: Anatomy of the Long Tail" examined the Long Tail from both the supply side and the demand side and identifies several key drivers. On the supply side, the authors point out how e-tailers' expanded, centralized warehousing allows for more offerings, thus making it possible for them to cater to more varied tastes.

On the demand side, tools such as search engines, recommendation software, and sampling tools are allowing customers to find products outside their geographic area. The authors also look toward the future to discuss second-order, amplified effects of Long Tail, including the growth of markets serving smaller niches.

Networks, crowds and the Long Tail

The "crowds" of customers, users and small companies that inhabit the Long Tail distribution can perform collaborative and assignment work. Some relevant forms of these new production models are:

The peer-to-peer
Peer-to-peer (meme)
Peer-to-peer is not restricted to technology, but covers every social process with a peer-to-peer dynamic, whether these peers are humans or computers. Peer-to-peer as a term originated from the popular concept of P2P distributed application architecture that partitions tasks or workloads between...

collaboration groups that produce open-source software or create wiki
Wiki
A wiki is a website that allows the creation and editing of any number of interlinked web pages via a web browser using a simplified markup language or a WYSIWYG text editor. Wikis are typically powered by wiki software and are often used collaboratively by multiple users. Examples include...

s such as Wikipedia
Wikipedia
Wikipedia is a free, web-based, collaborative, multilingual encyclopedia project supported by the non-profit Wikimedia Foundation. Its 20 million articles have been written collaboratively by volunteers around the world. Almost all of its articles can be edited by anyone with access to the site,...

.
The crowdsourcing
Crowdsourcing
Crowdsourcing is the act of sourcing tasks traditionally performed by specific individuals to a group of people or community through an open call....

model, in which a company outsources work to a large group of market players using a collaborative online platform.
The model of crowdcasting
Crowdcasting
Crowdcasting is the intersection of broadcasting and crowdsourcing. The process of crowdcasting uses a combination of push and pull strategies to first engage an audience and build a network of participants and then harness the network for new insights. Those insights are then used to shape...

, is the process of building a network of users and then delivering challenges or tasks to be solved with the purpose of gaining insights or innovative ideas.
Work performed by individuals in commons-like, non-market networks, described in the work of Yochai Benkler
Yochai Benkler
Yochai Benkler is an Israeli-American professor of Law and author. Since 2007, he has been the Berkman Professor of Entrepreneurial Legal Studies at Harvard Law School. He is also a faculty co-director of the Berkman Center for Internet & Society at Harvard University.- Biography :In 1984, Benkler...

.

The demand-side factors that lead to the long tail can be amplified by the "networks of products" which are created by hyperlinked recommendations across products. An MIS Quarterly article by Gal Oestreicher-Singer and Arun Sundararajan

Arun Sundararajan

Arun Sundararajan is the NEC Faculty Fellow, Associate Professor of Information, Operations and Management Sciences and a Doctoral Coordinator at the Stern School of Business, New York University. For 2010-12, he is the Distinguished Academic Fellow at the Center for IT and the Networked...

shows that categories of books on Amazon.com

Amazon.com

which are more central and thus influenced more by their recommendation network have significantly more pronounced Long Tail distributions. Their data across 200 subject areas shows that a doubling of this influence leads to a 50% increase in revenues from the least popular one-fifth of books.

Turnover within the Long Tail

The Long Tail distribution applies at a given point in time, but over time the relative popularity of the sales of the individual products will change. Although the distribution of sales may appear to be similar over time, the positions of the individual items within it will vary. For example, new items constantly enter most fashion markets. A recent fashion-based model of consumer choice, which is capable of generating power law distributions of sales similar to those observed in practice, takes into account turnover in the relative sales of a given set of items, as well as innovation, in the sense that entirely new items become offered for sale.

There may be an optimal inventory size, given the balance between sales and the cost of keeping up with the turnover. An analysis based on this pure fashion model indicates that, even for digital retailers, the optimal inventory may in many cases be less than the millions of items that they can potentially offer. In other words, by proceeding further and further into the Long Tail, sales may become so small that the marginal cost of tracking them in rank order, even at a digital scale, might be optimised well before a million titles, and certainly before infinite titles. This model can provide further predictions into markets with long-tail distribution, such as the basis for a model for optimizing the number of each individual item ordered, given its current sales rank and the total number of different titles stocked.

Competitive impact

Before a Long Tail works, only the most popular products are generally offered. When the cost of inventory storage and distribution fall, a wide range of products become available. This can, in turn, have the effect of reducing demand for the most popular products. For example, Web content

Web content

Web content is the textual, visual or aural content that is encountered as part of the user experience on websites. It may include, among other things: text, images, sounds, videos and animations....

businesses with broad coverage, such as Yahoo!

Yahoo!

Yahoo! Inc. is an American multinational internet corporation headquartered in Sunnyvale, California, United States. The company is perhaps best known for its web portal, search engine , Yahoo! Directory, Yahoo! Mail, Yahoo! News, Yahoo! Groups, Yahoo! Answers, advertising, online mapping ,...

or CNET

CNET

CNET is a tech media website that publishes news articles, blogs, and podcasts on technology and consumer electronics. Originally founded in 1994 by Halsey Minor and Shelby Bonnie, it was the flagship brand of CNET Networks and became a brand of CBS Interactive through CNET Networks' acquisition...

, may be threatened by the rise of smaller Web sites that focus on niches of content, and cover that content better than the larger sites.

The competitive threat from these niche sites is reduced by the cost of establishing and maintaining them and the bother required for readers to track multiple small Web sites. These factors have been transformed by easy and cheap Web site software and the spread of RSS

RSS

-Mathematics:* Root-sum-square, the square root of the sum of the squares of the elements of a data set* Residual sum of squares in statistics-Technology:* RSS , "Really Simple Syndication" or "Rich Site Summary", a family of web feed formats...

. Similarly, mass-market distributors like Blockbuster may be threatened by distributors like Netflix

Netflix

, which supply the titles that Blockbuster doesn't offer because they are not already very popular.

Internet companies

Some of the most successful Internet businesses have
used the Long Tail as part of their business strategy. Examples include eBay

EBay

eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...

(auctions), Yahoo!

Yahoo!

and Google

Google

Google Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...

(web search), Amazon

Amazon.com

(retail), and iTunes Store

ITunes Store

The iTunes Store is a software-based online digital media store operated by Apple. Opening as the iTunes Music Store on April 28, 2003, with over 200,000 items to purchase, it is, as of April 2008, the number-one music vendor in the United States...

(music and podcast

Podcast

A podcast is a series of digital media files that are released episodically and often downloaded through web syndication...

s), amongst the major companies, along with smaller Internet companies like Audible

Audible.com

Audible.com is an Internet provider of spoken audio entertainment, information, and educational programming.Audible sells digital audiobooks, radio and TV programs, and audio versions of magazines and newspapers....

(audio books) and Netflix

Netflix

(video rental).

Video and multiplayer online games

The adoption of video games and massively multiplayer online game

Massively multiplayer online game

A massively multiplayer online game is a multiplayer video game which is capable of supporting hundreds or thousands of players simultaneously. By necessity, they are played on the Internet, and usually feature at least one persistent world. They are, however, not necessarily games played on...

s such as Second Life

Second Life

Second Life is an online virtual world developed by Linden Lab. It was launched on June 23, 2003. A number of free client programs, or Viewers, enable Second Life users, called Residents, to interact with each other through avatars...

as tools for education and training is starting to show a long-tailed pattern. It costs significantly less to modify a game than it has been to create unique training applications, such as those for training in business, commercial flight, and military missions. This has led some to envision a time in which game-based training devices or simulations will be available for thousands of different job descriptions.

Microfinance and microcredit

The banking business has used internet technology to reach an increasing number of customers. The most important shift in business model due to the Long Tail has come from the various forms of microfinance

Microfinance

Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....

developed.

As opposed to e-tailers, micro-finance is a distinctly low technology business. Its aim is to offer very small credits to lower-middle to lower class and poor people, that would otherwise be ignored by the traditional banking business. The banks that have followed this strategy of selling services to the low-frequency long tail of the sector have found out that it can be an important niche, long ignored by consumer banks. The recipients of small credits tend to be very good payers of loans, despite their non-existent credit history. They are also willing to pay higher interest rates than the standard bank or credit card customer. It also is a business model that fills an important developmental role in an economy.

Grameen Bank in Bangladesh

Bangladesh

Bangladesh , officially the People's Republic of Bangladesh is a sovereign state located in South Asia. It is bordered by India on all sides except for a small border with Burma to the far southeast and by the Bay of Bengal to the south...

has successfully followed this business model. In Mexico the banks Compartamos and Banco Azteca

Banco Azteca

Banco Azteca operates in Mexico, Panama, Guatemala, Honduras, Peru and Brazil and is already among the largest banks in Mexico in terms of coverage...

also service this customer demographic, with an emphasis on consumer credit. Kiva.org is an organization that provides micro credits to people worldwide, using a distinct direct business model.

User-driven innovation

According to the user-driven innovation

User innovation

User innovation refers to innovation by intermediate users or consumer users , rather than by suppliers ....

model, companies can rely on users of their products and services to do a significant part of the innovation

Innovation

Innovation is the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets, governments, and society...

work. Users want products that are customized to their needs. They are willing to tell the manufacturer what they really want and how it should work. Companies can make use of a series of tools, such as interactive and internet based technologies, to give their users a voice and to enable them to do innovation work that is useful to the company.

Given the diminishing cost of communication and information sharing (by analogy to the low cost of storage and distribution, in the case of e-tailers), long-tailed user driven innovation will gain importance for businesses.

In following a long-tailed innovation strategy, the company is using the model to tap into a large group of users that are in the low-intensity area of the distribution. It is their collaboration

Collaboration

Collaboration is working together to achieve a goal. It is a recursive process where two or more people or organizations work together to realize shared goals, — for example, an intriguing endeavor that is creative in nature—by sharing...

and aggregated work that results in an innovation effort. Social innovation

Social innovation

Social innovation refers to new strategies, concepts, ideas and organizations that meet social needs of all kinds - from working conditions and education to community development and health - and that extend and strengthen civil society....

communities formed by groups of users can perform rapidly the trial and error

Trial and error

Trial and error, or trial by error, is a general method of problem solving, fixing things, or for obtaining knowledge."Learning doesn't happen from failure itself but rather from analyzing the failure, making a change, and then trying again."...

process of innovation, share information, test and diffuse the results.

Eric von Hippel

Eric von Hippel

of MIT's Sloan School of Management defined the user-led innovation model in his book Democratizing Innovation. Among his conclusions is the insight that as innovation becomes more user-centered the information needs to flow freely, in a more democratic way, creating a "rich intellectual commons" and "attacking a major structure of the social division of labor".

Marketing

The drive to build a market and obtain revenue from the consumer demographic of the long tail has led businesses to implement a series of long-tail marketing

Marketing

Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...

techniques, most of them based on extensive use of internet technologies. Among the most representative are:

New media marketing
New Media Marketing
New media marketing is a relatively new concept used by businesses in developing an online community, which allows satisfied customers to congregate and extol the virtues of a particular brand...

: The building and managing of social networks and online or virtual communities to extend the reach of marketing to the low-frequency, low-intensity consumer in a cost effective way, often through blog
Blog
A blog is a type of website or part of a website supposed to be updated with new content from time to time. Blogs are usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video. Entries are commonly displayed in...

s, RSS feeds
RSS
-Mathematics:* Root-sum-square, the square root of the sum of the squares of the elements of a data set* Residual sum of squares in statistics-Technology:* RSS , "Really Simple Syndication" or "Rich Site Summary", a family of web feed formats...

and podcast
Podcast
A podcast is a series of digital media files that are released episodically and often downloaded through web syndication...

s.
Buzz marketing: The strategic use of word of mouth
Word of mouth
Word of mouth, or viva voce, is the passing of information from person to person by oral communication. Storytelling is the oldest form of word-of-mouth communication where one person tells others of something, whether a real event or something made up. Oral tradition is cultural material and...

and transmission of commercial information from person to person in an online or real-world environment.
Viral marketing
Viral marketing
Viral marketing, viral advertising, or marketing buzz are buzzwords referring to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives through self-replicating viral processes, analogous to the spread of viruses...

: The intentional spreading of marketing messages using preexisting social networks, with an emphasis on the casual, non-intentional and low cost, commonly through YouTube
YouTube
YouTube is a video-sharing website, created by three former PayPal employees in February 2005, on which users can upload, view and share videos....

videos, viral email
Viral email
A viral email is a certain kind of email which rapidly propagates from person to person, generally in a word-of-mouth manner...

s and standalone microsite
Microsite
A microsite is an Internet web design term referring to an individual web page or a small cluster of pages which are meant to function as a discreet entity within an existing website or to complement an offline activity...

s.
Pay per click
Pay per click
Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...

and search engine optimization
Search engine optimization
Search engine optimization is the process of improving the visibility of a website or a web page in search engines via the "natural" or un-paid search results...

: The marketing of websites on search engines such as Google
Google
Google Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...

, Yahoo
Yahoo! Search
Yahoo! Search is a web search engine, owned by Yahoo! Inc. and was , the 2nd largest search engine on the web by query volume, at 6.42%, after its competitor Google at 85.35% and before Baidu at 3.67%, according to Net Applications....

and Bing by focusing on long-tail keywords which have less competition.
Demand-side platforms/DSPs: Similar to how search engine marketing
Search engine marketing
Search engine marketing, , is a form of Internet marketing that seeks to promote websites by increasing their visibility in search engine result pages through the use of paid placement, contextual advertising, and paid inclusion...

monetizes the long tail of keywords, auction-oriented buying/selling mechanisms are also viable to help monetize the long tail of ad impressions available across niche publishers in the display advertising
Display advertising
Display advertising is a type of advertising that typically contains text , logos, photographs or other images, location maps, and similar items. In periodicals, display advertising can appear on the same page as, or on the page adjacent to, general editorial content...

realm. Publishers utilize these ad exchange
Ad exchange
Ad exchanges are technology platforms that facilitate the bidded buying and selling of online media advertising inventory from multiple ad networks. The approach is technology-driven as opposed to the historical approach of negotiating price on media inventory...

environments, such as Right Media
Right Media
Right Media, Inc. is an online advertising company that operates the Right Media Exchange , a marketplace that enables advertisers, publishers, and ad networks to trade digital media. Technology providers develop services for the Exchange via APIs....

or AdECN, to efficiently sell display inventory that might otherwise go unsold through direct sales force operations. As a result, by January 2011 between 20-25% of all US ad spending was derived from long tail advertisers.

Project Management

Budget, schedule and benefits are key measures of project performance. Cost overruns, schedule slippage, and benefits shortfalls are all functions with a long tail. The researchers showed that thick tails hide behind an acceptable average and median performance. As a key consequence performance management

Performance management

Performance management includes activities that ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service, as well as many...

systems need to focus not only on averages but also at the variability and measure the thickness of fat tails.

Cultural and political impact

The Long Tail has possible implications for culture

Culture

Culture is a term that has many different inter-related meanings. For example, in 1952, Alfred Kroeber and Clyde Kluckhohn compiled a list of 164 definitions of "culture" in Culture: A Critical Review of Concepts and Definitions...

and politics

Politics

Politics is a process by which groups of people make collective decisions. The term is generally applied to the art or science of running governmental or state affairs, including behavior within civil governments, but also applies to institutions, fields, and special interest groups such as the...

. Where the opportunity cost

Opportunity cost

Opportunity cost is the cost of any activity measured in terms of the value of the best alternative that is not chosen . It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices. The opportunity cost is also the...

of inventory storage and distribution is high, only the most popular products are sold. But where the Long Tail works, minority tastes become available and individuals are presented with a wider array of choices. The Long Tail presents opportunities for various suppliers to introduce products in the niche category. These encourage the diversification of products. These niche products open opportunities for suppliers while concomitantly satisfying the demands of many individuals — therefore lengthening the tail portion of the Long Tail. In situations where popularity is currently determined by the lowest common denominator, a Long Tail model may lead to improvement in a society's level of culture. The opportunities that arise because of the Long Tail greatly affect society's cultures because suppliers have unlimited capabilities due to infinite storage and demands that were unable to be met prior to the Long Tail are realized. At the end of the Long Tail, the conventional profit-making business model ceases to exist; instead, people tend to come up with products for varied reasons like expression rather than monetary benefit. In this way, the Long Tail opens up a large space for authentic works of creativity.

Cultural diversity

Television

Television is a telecommunication medium for transmitting and receiving moving images that can be monochrome or colored, with accompanying sound...

is a good example of this: Chris Anderson defines Long Tail TV in the context of "content that is not available through traditional distribution channels but could nevertheless find an audience." Thus, the advent of services such as Television on demand

Television on Demand

Television On Demand is an emerging new digital cable service offering. This service concept is based on perceived consumer desire to receive live and pre-recorded programming. TOD provides the end-user with programming, without having to wait for its syndicated air schedule times by major...

, Pay-per-view

Pay-per-view

Pay-per-view provides a service by which a television audience can purchase events to view via private telecast. The broadcaster shows the event at the same time to everyone ordering it...

and even premium cable subscription services such as HBO and Showtime open up the opportunity for niche content to reach the right audiences, in an otherwise mass medium. These may not always attract the highest level of viewership, but their business distribution models make that of less importance. As the opportunity cost goes down, the choice of TV programs grows and greater cultural diversity rises.

Distribution of independent content

Often presented as a phenomenon of interest primarily to mass market retailers and web-based businesses, the Long Tail also has implications for the producers of content, especially those whose products could not — for economic reasons — find a place in pre-Internet information distribution channels controlled by book publishers, record companies, movie studios, and television networks. Looked at from the producers' side, the Long Tail has made possible a flowering of creativity across all fields of human endeavour. One example of this is YouTube

YouTube

YouTube is a video-sharing website, created by three former PayPal employees in February 2005, on which users can upload, view and share videos....

, where thousands of diverse videos — whose content, production value or lack of popularity make them inappropriate for traditional television — are easily accessible to a wide range of viewers.

Contemporary literature

The intersection of viral marketing, online communities and new technologies that operate within the Long Tail of consumers and business is described in the novel by William Gibson

William Gibson

William Gibson is an American-Canadian science fiction author.William Gibson may also refer to:-Association football:*Will Gibson , Scottish footballer...

, Pattern Recognition
Pattern Recognition (novel)
Pattern Recognition is a novel by science fiction writer William Gibson published in 2003. Set in August and September 2002, the story follows Cayce Pollard, a 32-year-old marketing consultant who has a psychological sensitivity to corporate symbols...

.

Military applications and security

In military thinking, John Robb

John Robb (GG theorist)

John M. Robb Jr is a United states author, blogger and entrepreneur who writes mainly about Fourth Generation War and modern web technologies.In 2007 he published his book Brave New War, describing the "Global Guerrilla thesis" he has been developing over the last few years...

applies the Long Tail to the developments in insurgency and terrorist movements, showing how technology and networking allows the Long Tail of disgruntled groups and criminals to take on the nation state and have a chance to win.

Criticisms

A 2008 study by Anita Elberse

Anita Elberse

Anita Elberse, Associate Professor of Business Administration at Harvard Business School. She is a leading expert on marketing strategies for firms in the media and entertainment sector. She has published her research in top academic and practitioner journals in the fields of marketing, economics,...

, professor of business administration at Harvard Business School

Harvard Business School

Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...

, calls the Long Tail theory into question, citing sales data which shows that the Web magnifies the importance of blockbuster hits. On his blog, Anderson responded to the study, praising Elberse and the academic rigor with which she explores the issue but drawing a distinction between their respective interpretations of where the "head" and "tail" begin. Elberse defined head and tail using percentages, while Anderson uses absolute numbers. Similar results were published by Serguei Netessine and Tom F. Tan, who suggest that head and tail should be defined by percentages rather than absolute numbers.

Also in 2008, a sales analysis of an unnamed UK digital music service by economist Will Page

Will Page

Will Page is the Chief Economist at the PRS for Music, a non-profit collection society representing writers, composers and music publishers in the UK....

and high-tech entrepreneur Andrew Bud found that sales exhibited a log-normal distribution rather than a power law; they reported that 80% of the music tracks available sold no copies at all over a one-year period. Anderson responded by stating that the study's findings are difficult to assess without access to its data.

Statistical meaning

Chris Anderson and Clay Shirky

Effects of online access

The Longer Tail over time

Goodbye Pareto principle, welcome the new distribution

Demand-side and supply-side drivers

Networks, crowds and the Long Tail

Turnover within the Long Tail

Competitive impact

Internet companies

Video and multiplayer online games

Microfinance and microcredit

User-driven innovation

Marketing

Project Management

Cultural and political impact

Cultural diversity

Distribution of independent content

Contemporary literature

Military applications and security

Criticisms

See also