The Long Tail review
Alexandru Dumitrescu
Words: 3002
I. Book and Article Review
Chris Anderson was the chief editor at Wired from 2001 until 2012. He is well-known for his article “The Long Tail” from 2004 which was the starting point in writing “The Long Tail:
Why the Future of Business Is Selling Less of
More” in 2006. In 2007 “The Long Tail” is considered “the best business book of the year” by “UCLA Anderson School of Management” and he was given the Geral Loeb Award. Other works include “Free: The Future of a Radical
Price” (2009) and “Makers: The New Industrial
Revolution” (2012).
The book brings into discussion a very interesting concept, which can be summarized with the words from the author’s personal blog: “economy and culture is
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On the other hand there are skeptics about the value of truth of the theory. Wharton researchers
Serguei Netessine and his doctoral student Tom F. Tan have recently research the theory on Netflix’s data and their opinion is that focusing on niche products doesn’t necessarily bring more profit and this depends from case to case, the presence of Long Tail being “less universal than one may be led to believe”. But there is one difference between their research and the Anderson’s theory, which is where the head ends and where the tail begins, Chris
Anderson defining the tail in a different way.
The researchers also disagree on the 80-20% rule: top 20% of the movies generate 80% profit.
Anderson states that this rule is not available, as the demand is concentrated on the tail, while
Netessine and Tan have found out that the opposite is the truth, the demand for the top
20% was “increasing from 86% in 2000 to 90% in
2005.” Netessine agrees that this business model might work for a company only “based on pure digital distribution”[5].
A Harvard Business School associate professor,
Anita Elberse has the same opinion. Anderson is arguing again on the difference between how
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Also, if the customer likes the book, he or she might come back to buy a similar one. Another way Amazon takes advantage of the Long Tail is by selling rare books that no traditional bookstore has, making huge profits from this: 57% of the profit comes from selling these rare types of books [8]. A third advantage from exploiting the Long Tail is the Amazon Associates branch. Amazon has a lot of products, not only books and it can’t predict where or how to advertise, so a system was created that allows anyone to become an associate, post an Amazon
University of Bristol - Algorithmic and Economic Aspects of the Internet Page 3 of 6ad and if a sale is made, the associate takes 4% of the sale [9].
B. Movie industry – Netflix
Netflix has only 30% of its movie database consisting of new releases [10]. In the graph below taken from Chris Anderson’s blog [11], we can observe that the demand for Netflix movies is the highest in the middle of the curve, while 15% of the demand comes from the movies that are not found in the traditional market.
Fig. 2. Demand curve on Netflix
C. Video streaming - Google
On 15 October 2005, a business founded only eight months before, named YouTube,
A cultured man is a conquered man, and a conquered man will conquer. Though Bourdieu contradicts himself asserting cultural capital as primary while at the same time "subordinate to economic capital" (Swartz pg. 79), certain aspects of cultural capital remain superior to the general aspects of economic capital outlined in Swartz’ analysis of Bourdieu leaving it as the ultimately dominant form of capital. Particularly, the fact that cultural capital has a higher rate of accessibility to yield than economic capital makes it a much more lucrative form of capital to invest in for those with little capital to begin with. Cultural capital is a connection to what Bourdieu describes as culture "verbal facility, general cultural awareness, aesthetic preferences, information about the school system, and educational credentials" (Swartz pg. 76).
Netflix Corporation started its rental company in 2000 which expanded into the leading DVD and Online Video steaming company in world. This was the most innovative product to watch videos and movies on DVD and online. Netflix provided rental service for list of top movies and delivered them. The monthly subscription, flat rental system with no late fees, shipping fees was very different from the traditional video store. The price was a bit high but due to quality people didn’t mind to pay extra.
Litman and Kohl (1989) expanded the initial model by including more explanatory variables. They have found that some of the variables, such as Academy Award dummies or Christmas release, were no longer significant. There are numerous modifications of Litman and Kohl (1989) model all of which use either rental income or box-office revenue as a dependant variable and come to very similar conclusions. While being able to empirically support some of our guesses of what makes a movie successful, such general studies lack deep analysis. Variable-focused studies, on the other hand, explore the effect of some particular variables (Star Power, critics’ reviews, release dates, advertising, quality) on the movie success and can, therefore, offer a deeper insight into the mechanism behind a movie
I decided to report on this company because it is a creditable company that delivers thousands of titles providing the customers an easy way to find the correct book they are searching for. Before classifying Barnes & Nobles into one of the four types of market structures, it would be good to name the four types of market structures. These markets are perfect competition,
It is noticed that Netflix focuses on their business function heavily because of the growth they are facing in the market. The company is adopting all the possible and important characteristics and features through which business aspects can be improved. It is noticed that they focused on their supplier chain managed as they have signed an agreement of revenue sharing with extraordinary 50 distributors of film. This means that the company is making efforts to promote their rental DVDs service as making agreement with the big film distributors is the effective core competency of Netflix. Moreover, the company also focuses on their operation in the manner that they adopt latest technologies to make sure that functions becomes fast and efficient.
The business model of Amazon ensures that the product is available for the customer at the best possible price. The fast shipping strategies also ensure customer satisfaction. These aspects offer an excellent value proposition to the customer. Since Amazon is present globally and is successfully into business for a long time period, the strategies of Amazon are sustainable.
NETFLIX Introduction Netflix was established by Reed Hastings with an idea to offer a home movie service that would do a superior job at satisfying customers than the traditional retail rental model, eventually evolving a business model that was highly disruptive to retail video rental chains. The combination of a large national inventory, a recommendation system for viewers across a broad catalogue and a large customer base made Netflix a popular name among customers, especially as a distribution channel for lower-profile independent films. Over these years, its revenues have increased an average of 23.6% a year to $4.4 billion; its net income rose 12.5% a year to $112 million; and its stock price soared a whopping 1,503%. Business Model
Well-known adopters of this business model are Wal-Mart and Target. [SHORTENED TITLE UP TO 50 CHARACTERS]
Amazon was one of the top online bookstores, which soon converted to the top online retailer across the world, and currently, even though it has a lot of competition, Amazon has a strong base of loyal customers who repeatedly buy from the online retailer. It is often referred to as the online equivalent of Wal-Mart because of its reach and global footprint as well as its aggressive pricing strategies. Here is the SWOT analysis of Amazon. Amazon.com sells in 11 countries and ships internationally. It is one of the biggest retailers and is steadily growing every year.
Today, many people prefer to order products from Amazon instead of going to stores or malls. c. DESCRIPTION OF MY SUBJECT (AMAZON.COM): Amazon (Amazon.com) is the world’s largest online retailer and a prominent cloud services provider. The company was initially a book seller, then later it expanded to sell a wide variety of consumer goods and digital media as well as its own electronic devices, such as the Kindle e-book reader, Kindle Fire tablet and Fire TV, a streaming media adapter (Rouse, 2018).
The basic economic problem questions of what, how and for whom to produce that persist in the economy are answered through centrally planned, capitalist and mixed economic systems. Whereas an economic system is a system which facilitates the production of services and goods, also as solving the basic economic problem which is scarcity. Several historical events which have happen during the early and late 20th century of political, economic and social have led to the development of dominant economic systems prevalent today. Capitalist economy system is where the private players answered the basic economic problem and it’s a system where they is private ownership of resources whereas the centrally planned economic system is where the government is responsible for answering the basic economic questions of what to, how to and for whom to produce. As these historical events such as the hyperinflation event, stock market crash event, great
This distribution channel is declining within the retail bookselling industry due to the increasing popularity of online purchasing and new digital technologies. Online retailers offer a wider selection and lower prices while eBooks have begun to replace the need for physical books. These changes offer greater convenience, thus shifting consumer preferences. Consumers now find in-store purchasing less attractive, causing traditional Barnes & Noble brick-and-mortar stores to become increasingly out-of-fashion.
Only in this context does the reification produced a commodity relations assume decisive importance both for the objective evolution of society and for the stance adopted by men towards it…”(Lukacs 25) This quote essentially helps open reader’s understand to the concept of commodity. Furthermore it enhances the authors and the books overall ethos as it offers credibility to the argument and further persuades the reader by providing a strong bases for the
In this market, the long run average cost decreases as output increase making it very difficult for new companies to enter the market (textbook). Since the marginal cost per new subscriber is next to nothing, the average cost decreases with every extra subscriber. A new company would have a very difficult time because they would have similar cost, but many less subscribers making their average cost quite high. The two competitors that successfully entered the market after Netflix, did so with the financial backing of firms that were already successful and could absorb the initially high average cost. Another less important barrier is how well known and popular services like Netflix, Amazon Prime, and Hulu Plus already are.
Culture has its technology and it is this technology that enables man to transform his socio-physical environment and his future! In the words of Raymond Williams, ‘culture comprises the whole complex of