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.
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>.