216 The secret to creating a thriving Long Tail business can be summarized to two imperatives: 1) Make everything available. 2) Help me find it.
…legal restrictions will continue to be the primary barrier to growing the Long Tail.
NINE RULES OF SUCCESSFUL LONG TAIL
AGGREGATORS:
Rule 1: Move inventory way in…or way out. (Lower your costs)
Eliminating atoms or the constraints of the broadcast spectrum is a powerful way to reduce costs, enabling entirely new markets of niches.
Rule 2: Let customers do the work.
…users happily do for free what companies would otherwise have to pay employees to do. It’s not outsourcing, it’s
crowdsourcing.
The advantage of
crowdsourcing is not just economic; customers can do a better job, too.
Collectively, customers have virtually unlimited time and energy; only peer production has the capacity to extend as far as the Long Tail can go. And in case of self-service, the work is being done by the people who care most about it, and best know their own needs.
Rule 3: One distribution method
doesn’t fit all. (Think Niche)
It may sound like metaphysics, but the best Long Tail markets transcend time and space.
Multiple distribution channels are the only way to reach the biggest potential market.
Rule 4: One product
doesn’t fit all.
Increasingly, the winning strategy is to separate content into its component parts so that people can consume it the way they want, as well as remix it with other content to create something new.
One size fits one; many sizes fit many.
Rule 5: One price
doesn’t fit all.
One of the best understood principles of microeconomics is the power of elastic pricing. Different people are willing to pay different prices for an number of reasons, from how much money they have to how much time they have.
In markets with room for abundant variety, however, variable pricing can be a powerful technique to maximize the value of a product and the size of the market.
Someday the labels will see the light and pricing will become more fluid, allowing retailers to draw consumers down the Tail with lower prices.
Rule 6: Share information (Lose Control)
The difference between an overwhelming shelf of look-alike products and the bliss of “rank by best-selling” is information.
All that data already exists; the question is how best to share it with customers. More information is better, but only when it’s presented in a way that helps order choice, not confuse it further.
Explaining why a consumer is getting a certain set of recommendations builds confidence in the system, and helps consumers use it better. Transparency can build trust at no cost.
Rule 7: Think “and,” not “or.”
One of the symptoms of scarcity thinking is assuming that markets are zero-sum.
But in markets with infinite capacity, the right strategy is almost always to offer it all.
Rule 8: Trust the market to do your job.
In scarce markets, you’
ve got to guess at what will sell. In abundant markets, you can simply throw everything out there and see what happens, letting the market sort it out. The difference between “
pre-filtering” and “post-filtering” is predicting versus measuring, and the latter is invariably more accurate. Online markets are nothing if not highly efficient measure of wisdom of crowds. Because they’re information-rich, it’s relatively easy for people to compare goods, and spread the word about what they like.
The lesson: Don’t predict; measure and respond.
Rule 9: Understand the power of free.
But one of the most powerful features of digital markets is that they put free within reach; because their costs are near zero, their prices can be, too.
Because digital services are so cheap to offer, the free customers cost the company so little that it can afford to convert only a tiny fraction of them to paying customers.
Samples, from thirty-second music clips to video previews, are possible because the cost of delivering bits on broadband pipes is so low.
