the longtail Theory looks at how the Internet is changing and breaking structures of economy

traditionally shops sell a lot of very little due to limitations of shelf space

they can't keep things that don't sell so they have a smaller variety but a lot in bulk

this is pitched at the head of the market

they sell only what is popular

this has changed since the growth of online shopping such as Amazon and media being digitized and
easily available through iTunes and Netflix

the Internet has given companies the opportunity to find a bigger variety of stock and gives consumers
the opportunity to find different things and access them easily

this is shown through the longtail

there is a wider range of products and they are more easily accessed

Amazon combines infinite shelf space with real-time information this means that they can look at trends
and have what is popular but also have more due to the infinite shelf space

iTunes Netflix and Amazon all have no shelf space to pay for meaning they could distribute what is not as
popular easily

this has given people the chance to find more obscure products and there has been a greater need
recently for something different and the more we explore alternatives the more we prefer them under
drawn to them

there are many genres of media that are neglected by traditional platforms that are now available on
online platforms

nearly everything and anything is worth offering for the chance that it will be found by a buyer

this means that online sites can afford to stock a larger variety and more unknown products as they are
more likely to be found by someone online and do not cost them shelf space like a traditional shop

the digital entertainment economy is going to be radically different from the mass-market this can be
shown through perrito's 8020 rule

Pareto found that 80% of effects were being determined by 20% of causes

in reference to the long tail this means only 20% of major studio films will be hits so traditionally only
that 20% will be popular and be shown

however now more films can be streamed online through Netflix meaning that there is more
variety
in the music business there is a standard pay on iTunes which causes controversy about whether this is
too low for a single track

it also gives people the opportunity to choose which tracks their purchase and the option to just buy
individual songs

on the longtail you can find everything due to back catalogue and accessibility things aren't as popular

how it affects online markets.

So the long tail basically was an idea that was developed by a guy called Chris Anderson some years ago,
and what it is is a way of understanding how the internet enables niche markets.

And when you understand how that works, you can tap those niche markets and make use of them.

So let's take a look at something like Waterstones.

Okay, here's Waterstones, a very famous High Street bookstore, and they stock a wide range of different
books.

So they'll stock books on gardening, and hobbies, and novels, and all sorts of different things but their
shelf space is ultimately limited.

So if I go into Waterstones and I want a book on gardening, I can find probably several books on
gardening, but I can't necessarily find hundreds of books on gardening on lots of different areas because
they haven't got room to stock all of that, and it's not financially viable to them.

If I go onto Amazon, then you can find pretty much anything that you want.

Amazon is an online model where space doesn't really matter anymore.

This is an Amazon bookstore, basically.

This is the warehouse where Amazon stores its products.

So you can see there that space isn't an issue.

That's not the problem.

So here's a book on Amazon called The Encyclopedia of Ornamental Grasses, so very niche, very specific
area of gardening.

And there'll be lots of different books on all of the different niche areas of gardening that you can get
through Amazon are like that.
If 1% of customers want to buy a book on ornamental grasses, then in a local area, that might just be five
people.

If 1% of a global market of customers want to buy a book on ornamental grasses, that could amount to
thousands and thousands of people, so it makes it worthwhile for Amazon to stock that book.

I've got an interesting statistic that illustrates this.

It's quite an old one, but in 2008, 36.7% of Amazon sales were made up of niche markets, niche book
markets.

If you look at this graph, this is what the long tail looks like and you can see here in the front part of the
graph, this is where Waterstones would stock most of their stuff.

So this is the bestseller list and all the things that would fit on the shelves at Waterstones, the things that
are popular that everyone wants to buy.

But this bit here is the bit that they can't stock.

This tail basically goes on forever into an ever-decreasing number of smaller niches, and this is where
Waterstones can't really compete because they physically can't stock that number of books.

Amazon don't have that problem.

So if you take that idea and you apply it to a search function like Amazon Search or Google Search, you
start to see how it works.

If you're trying to compete for sales on broad search terms, so on terms like coffee, or shoes, or
gardening, you're never going to be able to cut through the noise of everybody else competing for those
search terms.

And if we look back at our graph, this area here are those broad search terms.

If you look down into more increasingly niche search terms, so if you're selling products in those niche
areas, then the small number of people who are searching for terms like ornamental grasses will come
across your site.

There's less competition in this area and higher conversions, whereas in this area there's much greater
competition and much lower conversions.

Once you've opened that door in that niche area, you can steal attention away from the big players, and
that's valuable not just in terms of a sale but in terms of building your brand and your online presence,
as well.

If you can find that really, really specific thing about your business or that really, really niche item that
you sell and use that just to cut through that noise, then that could add some real benefit and some real
value to your business online.