Number of words – 849
Decision making is such a vital element in making progress. Availability of choice or the dearth of it is in turn the most important factor in decision making.
Maria Konnikova the American-Russian writer feels choices are bad to have, especially in the same value-zone. According to her, even after making a choice we feel the pain of the things not chosen. Instead of staying happy with what we have chosen we worry about something we did not choose. So is it really bad to have more choices?
Chris Anderson has something else to say in terms of choices. He highlights the digital economic culture in terms of endless choices and its co- relation with product demand.
We’ve seen the toppers, the chart busters, and the Market leaders over the decades ruling their field. Although the hegemony of the maestros is natural, there is a subtle change seen, especially in the digital economy.
Hits are ruling less. Number one is number one at the end of the day, but it does not sell as much as it used to. The intensity of hit, the topper makes, is reducing because of the fragmentation of the market into millions of small niches or pockets. A new market is coming in place- a market of multitude and niche products that is easier and cheaper to reach than ever before, thanks to the internet.
Why the name, “The long Tail”?
In the course of his research on modern technology trends, Chris Anderson made a shocking discovery. While interviewing Robbie Vann-Adibe, the CEO of Ecast, a digital Jukebox, Chris asked, “What percent of the 10,000 albums available, sold at least one track per quarter?”
The expected answer was 20%, as per the Pareto principle (80-20 rule, where 20% of the items are responsible for 80% of the entire sale). The actual answer was as high as 98%. As the company added more and more tracks to its collection, it continued to sell. And more the company added the more got sold. The demand for the music beyond the hits seemed to be limitless, In a world of almost no packaging cost, consumers exhibit consistent behavior. They look at almost everything. The market for non-hits, is as big as, if not bigger than the market for the hits.
This is opposite to the old model where there was limited amount of storage or airtime. For the retailers it makes sense to fill only those items that sell the best. Surfing on ‘You Tube” is a perfect example of the era of unlimited selection.
One example of this is the theory’s prediction that demands for products not available in traditional bricks and mortar stores is potentially as big as for those that are. But the same is true for video not available on broadcast, TV on any given day, and songs not played on radio. In other words, the potential aggregate size of the many small markets in goods that don’t individually sell well enough for traditional retail and broadcast distribution may someday rival that of the existing large market in goods that do cross that economic bar.
Is the long tail phenomenon applicable only to the internet market?
Although the research was carried out on the online products, it is now observed in just about all markets that there are far more niche goods than Hits.”Sabji Mandi”, Kumbh mela stalls, the traditional markets like the Main road market in Nasik are some examples that support the fact that in a place of plenty of choices even the otherwise less selling products sell.
When the variety gets expanded and the filters are in place, the demand curve flattens-the hits are more popular and the niches come in demand. There are many niche products in today’s market and together as group it competes the few giants.
The digital market is making rapid changes not just in its form, content and product offers but also in the economics of its market. The smart phone has become the prop of the rapid advancement as such. The common man is able to do something that only professionals used to do earlier, like creating quality videos, slow motion videos, podcast etc. The cost of consumption has declined because of easy and quick distribution network. We common people are shifting from passive consumers to active producers. The distribution has become democratized.
In nutshell..
The production has been democratized – movies, music, blog, podcast etc.
Distribution has been democratized – Amazon, Flipkart, Netflix, iTunes
There is a direct connection between demand and supply, thanks to Google.
In India where current active penetration stands only 28% we still have a long way to go. Nevertheless the rate at which we are entering the e-commerce market is high. We still have most of the commerce happening in the age old traditional way. The question is how long?
How much true is the long tail principle for the non-Internet based market? Is it seen happening in India in the education field as well? What can we do about it?
The answer is not away.
Let’s Think!!!
Excerpted from http://vinaywagh.blogspot.com/2018/05/v-behaviorurldefaultvmlo.html