The Wrong Tale: A Checklist for Long-Tail Implementations
1. Make everything available.
2. Help me find it.
Chris Anderson, The Long Tail
I love authors like Malcolm Gladwell and Chris Anderson. They’re writer’s writers: digging through mounds of research, conducting interviews with famous people, crafting their text, and then publishing tomes with cool titles like The Tipping Point and The Long Tail. And they do this while holding down day jobs at pubs like the New Yorker and Wired.
Before I go any further, let me tell you that I highly recommend Chris’s current book, The Long Tail. My three reasons for this recommendation are:
First, it provides a fresh perspective that will help you understand success stories like Amazon, Google, Lego, RealNetworks, Netflix, and iTunes.
Second, it provides a framework that will help you more fully grasp the Dilbertian cluelessness of some companies in businesses like books, music, and movies.
Third, it may even help you create new companies and businesses that change the world. It’s one of those rare books like Geoffrey Moore’s Crossing the Chasm where you think to yourself, “This can help kick butt.”
Essentially the book explains how the market for lots of items that sell a few units is often as large as the market for a few items that sell a lot of units. Furthermore, the profitably of selling a few units of a lot of items may exceed the profitability of selling a lot of units of a few items. All this is possible because the Internet and other modern technologies have driven down the costs of production and distribution.
I love this “democratization of commerce” stuff. Other people will love the book too, so for quite a while you’ll find lots of positive stuff about Chris and his book. Just click here to see what I mean. From an author's perspective, there is no such thing as too much praise, but I'd like to address a different orientation: the tactical requirements of implementing a long-tail business.
“A very, very big number (the products in the Tail) multiplied by a relatively small number (the sales of each) is still equal to a very, very big number. And, again, that very, very big number is only getting bigger.”
The Long Tail is going to catalyze as many new businesses and new business units, God help us, as “Web 2.0” and “social networking.” The pitches for these businesses will go like this:
Big companies are only serving 50% of the market.
They’ll never serve the other 50% because they are too big, dumb, rich, and lazy. (Chris Anderson is going to make a shiitake load of money speaking to these big companies, though.)
50% of the market is such a big number that all we need to do is get 1% market share.
This line of reasoning is going to work for a while; it may even accelerate if an established company buys a long-tail company for $500 million or so (MyTail?). But it’s one thing to write about, or read about, a successful company after-the-fact and analyze how it achieved success. It’s another to build that successful company from scratch. Everyone knows that the innovator’s dilemma is to find a tipping point in order to cross the chasm. The question is not “why?” but “how?”.
This is a cynic’s checklist for the implementation of long-tail ideas. Unless you master these issues, you are telling the wrong tale. Chris discusses most of these items in his book. However, in the after-glow of reading all the long-tail success stories, most people will forget the tactical items it takes to succeed.
Low-cost production. It cannot cost the company a lot to make a product that only sells a few units a year, and a few sales must satisfy any single producer, writer, artist, musician, or photographer. There are several ways to attack this problem:
You build the product after you have it sold, so you’re out of pocket for only a short time—for example, “just in time” printing of niche books.
Your suppliers produce things for you and then “consign” it to you--Apple, for example, doesn’t pay for music tracks until after it sells it.
All you have to do is distribute what’s already there. Apple doesn’t commission the creation of any music nor does Handango pay for people to develop software, ringtones, and desktop patterns. Production costs, if there were any, are long sunk.
People create the product for sheer enjoyment and the glory of some attention. For example, the pro-mateur photographers of iStockphoto are probably more motivated by the joy of their hobby and the glory of “selling” a photo than the actual income they receive.
(Chris has writen a nice blog entry low-cost production called “Scaling Up Is Good, Scaling Down Is Even Better.” As Chris says, scaling down is a “core long-tail competency.”)
Undemanding, unselfish, unfinancially motivated, just-plain stupid, or just-plain smart producers. A sustainable population of low-cost producers must exist because while it might be great for the distributor of millions of items that only sell a few units, you also have to consideer the producer’s stand point. Apple can “stock” a lot of songs that hardly ever sell and achieve volume, what if you’re the musician that produced a song that sold once on the Apple site?
(On the other hand, there are the just-plain smart producers. They’re willing to give stuff away in order to build a following that enables them to ultimately sell things in large quantities. That is often sustainable—and quite sly.)
Near-zero inventory carrying costs. If you plan to sell a few units of lots of things it can’t cost you much to keep those things in inventory. This is separate from the cost of production. It might cost Ferrari a lot of money to make cars, but if it will consign them to you for free, what do you care?
Actually, you do care: there’s warehouse space, insurance, and shrinkage. Even digital content like music, movies, ringtones, and photographs require bandwidth and storage. Not only must the product be cheap to make, it must be cheap to keep in inventory.
Near-zero selling and marketing costs. Long-tail products must either “sell themselves” or external people must sell them for you. If you have to send one email or take one phone call to sell a Cecilio and Kapono ringtone, you’re dead. (Don’t know who Cecilio and Kapono are? That’s the point.) This is where two cool concepts butt heads: long-tail versus wisdom of the crowd. The former says a market of one is good. The latter says that when lots of people buy something, it’s probably good. How then does one person find something that’s good for her out of the millions of products to buy when there’s no crowd to follow?
Near-zero support and training costs. Do you see a pattern developing? One support call or email, and you’re dead too. Your offerings must either require near-zero support and training, or other people must support it for love and glory.
Fast fulfillment. This isn’t necessarily a long-tail issue as much as a common expectation these days. When I buy anything online, I expect instant delivery if it’s a file (that is, software, ringtones, desktops, and photographs). If it’s a physical product, then the company should ship it the next day, and I should have it within three days. Yes, this is unreasonable, but I want my taupe colored blender that fast.
Infinite selection. Your tail, indeed, had better be long. I will give you about two chances to prove to me that you are infinite: a magenta colored MacBook case, an Ethiopian wedding song, the ringtone from the Counter Terrorist Unit phones in 24. Because everything is, after all, everything. This is an impossible expectation to fulfill, but that’s not my problem.
Singleness of purpose. Don’t even think that about satisfying people in multiple segments—for example, music and books. Which is to say, “Two longs don’t make a right.” You should be so lucky to succeed in one segment. If you do, sell out and wait for the next book.
Highly optimistic, if not delusional, personalities. There’s an old joke that the vice president of marketing of a startup asks the programmer when the software will be finished, and the programmer answers, “Good, fast, or cheap. Pick any two.” Essentially a long-tail company is saying, “You can have all three plus throw in ‘infinite’ to boot.” That’s all you’re saying you’ll deliver, so understand what you’re getting into.
All truths are easy to understand
once they are discovered—
the trick is to discover them.
All truths are easy to understand
once they are discovered—
the trick is to exploit them.