Amazon and Netflix: What a long tail they have

On the weekend I was at home in country New South Wales. Some friends and I decided we wanted to watch a scary movie so our plan was to hire a DVD. My younger brother, who still lives in the country town, informed me that all 4 video stores had closed down within the past few years so there was nowhere for us to access the movies unless we wanted to pay full price at the supermarket or illegally download the file.

Okay, maybe I shouldn’t steal movies.

My experience raises the question of why these stores are closing down. My answer: the long tail.

Online platforms such as Amazon and Netflix make use of the long tail effect which means that physical space is no longer an issue for them (Anderson 2004). In a traditional book store or video store each square metre of physical space is valuable because the products much be displayed in a visually-appealing manner. This is no longer an issue on the internet. The shelf space for Amazon and Netflix is in cyberspace and thus, stretches to infinity. In turn, this means the long tail stretches to infinity.

The long tail is a reformation of a power law distribution known as the Pareto Principle. This power law distribution was conceptualised in the early twentieth century by Vilfredo Pareto (Flaum 2007). It states that an estimated 80% of the effects come from 20% of the causes (Flaum 2007). This power law distribution can be applied to a wide variety of things in society including distribution of wealth, medicine and business growth.

Amazon and Netflix have “discovered new markets and expanded existing ones” by overcoming the limitations of geography and scale (Anderson 2004). They give people a choice of more than just blockbusters or best-selling novels. The long tail connects niche audiences with niche products (Kelly 2008). While the best-sellers and blockbusters may still get the same numerical value of sales and views, the aggregate sales of the remaining products far outstrip the sales of the “popular” items (Anderson 2008).

But it is not all roses. Although convenience is great for consumers, there are issues of piracy and illegal downloading (as mentioned earlier) when the physical store is unavailable. Finally, as much as Amazon is amazing, I think it is much more satisfying to physically hold a book in my hands.

References

Anderson, C 2004, The Long Tail, Wired, 12 October, viewed 30 August 2014, <http://archive.wired.com/wired/archive/12.10/tail.html?pg=3&topic=tail&topic_set=>.

Anderson, C 2008, The Long Tail: Why The Future of Business is Selling Less of More, Hyperion eBooks, New York.

Flaum, S 2007, Pareto’s Principle, Pharmaceutical Executive, vol. 27, no.2.

Kelly, K 2008, Better Than Free, Edge, viewed 30 August 2014, <http://edge.org/conversation/better-than-free>.

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10 thoughts on “Amazon and Netflix: What a long tail they have

  1. Hi Anna, I enjoyed reading your post this week. Beginning with a real life example that you experienced firsthand was great. It also introduces a current conundrum people are being faced with today – how should we access content and what are the ethical concerns of doing so? More content and choice being available on online platforms such as Amazon and Netflix is shifting the way people consume content. This is a great point and you support it well with evidence from other sources.

  2. I really enjoyed this post! This week was so dense and a plethora of new key words and issues were thrown at us, so to read your story about the video store downfall that is so relatable to a fellow country NSW town, was just great!
    Your use and reflection of the Kelly and Anderson readings for the week was also well done. Thos articles can be hugely verbose and hard to follow, but your punchy sentences are easy to understand. (Thanks for helping me getter a better grasp on the Pareto principle!)
    I like your example of the video store. It really got me thinking about being a young child and seeing the transition from the video to the DVD, and then to Blu-Ray and digital copies, and now the online store. The Video Ezy and Blockbuster from my area are no obsolete! I know Blockbuster is bust (had to!) but it will be interesting to see if Video Ezy survives.

  3. I found your post very insightful, especially your point on physical space no longer posing an issue and your argument that the long tail stretches to infinity. Although I strongly relate to the frustration of not being able to access physical video stores anymore (my last close by one was shut down last week) it would have been interesting to see you discuss both benefits and detriments of the long tail. Having said that, i think you did a great job considering the word limit!

  4. Really enjoyed this one, it really shows how places like video and book stores are a dying breed as a result of digital platforms taking over. The endless shelf of an online shop is clearly outweighing the cost of physical space in a retail store. And better yet, it’s giving niche publishers and authors a chance for world exposure rather than collecting dust on a shelf. Online services such as Amazon and Netflix offer the same product as retail stores often at a cheaper price because of this. However, a physical copy of a product is a novelty item and something you pay for that you can actually hold in your hands. Opened a lot of questions in this post, good job!

  5. Hey there,
    This was a really easy and enjoyable blog post to read! Although there are no more blockbusters or video ezys, have you noticed the RedRoom machines popping up? A vending machine where you can borrow DVDs seems to be filling the gap quite nicely (Or you could still go the the library like my Nan).
    Your comment on the endless possibilities when it comes to “shelf space” was an interesting concept to consider as I’ve never thought about it like that. I think Netflix and Amazon show that there is a world of unlocked potential out there.
    Great use of the readings too, you really brought them to life.

  6. It is true that the Internet has brought much convenience to our lives. We literally don’t have to leave the house for anything. As much as the convenience is great, there are issues such as piracy and illegal downloading that has ripped the authors/ actors off their hard work and wages. Not everyone are willing to pay for Netflix or iTunes. These issues should be addressed and to be honest, it will take a lot of effort on us, the consumers, to turn things around.

  7. I really enjoyed your blog this week, your personal example really exemplifies how places like video shops and book stores are a dying industry as a direct result of digital platforms becoming an easier and cheaper alternative option. Your use and reflection of the Kelly and Anderson readings for the week was also well done. I also strongly agree with the above comment by Eunice Lee, as much as the Internet has brought us a lot of convenience, there are many issues regarding piracy and illegal downloading that rips off the work of authors/actors who have worked hard. I do however believe that some websites such as iTunes are trying to adapt to the changes that are occurring on the Internet, for example if you are a loyal customer on iTunes they will give away a free weekly song. However, if you are willing to go ahead and try download music or a movie for free, you are at risk of getting a virus on your laptop or computer. I sure know what I would prefer!

  8. Loved that you incorporated your own experience at the beginning. I personally found this week’s topic quite hard to grasp at first; with all the new terms being thrown at us. Though reading your blog has been insightful and I found it an easygoing read able to grasp some of the new key terms and concepts through you’re examples.

  9. Your story about the lack of demand for video stores in rural towns is super relatable! Surprisingly enough, where I’m from there is still two remaining stores & I guess I really can’t see the market for it. People who live in rural areas, like you mentioned, now have a vast array of options when it comes to media & technology i.e Foxtel, Netflix and Amazon. Perhaps the same as their urban/more central counterparts. Your post made me reflect on growing up, transitioning from VHS to DVD to file-sharing and learning about torrenting at a fairly young age. I also prefer to physically hold a book, there’s something way more satisfying about finishing it and putting it back on the shelf as opposed to turning off a Kindle.

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