The Long Tail
The phrase The Long Tail (as a proper noun with capitalized letters) was first coined by Chris Anderson in an October 2004 Wired magazine article [1] to describe the niche strategy of businesses, such as Amazon.com or Netflix, that sell a large number of unique items, each in relatively small quantities. [Wikipedia]The Long Tail: Why the Future of Business is Selling Less of MoreWe all remember King Gillette of razor blade fame. In his first he sold only 168 units of his new safety razor. His genius solution to the marketing problem was to give away his razors and to rely entirely on selling the blades.Back in 1969 the first Honeywell desk top model was a premium product stingy with computer power and bandwidth. The revolution occurred when the industry experienced a doubling of memory capacity and bandwidth every 18 months. Currently, any kid can buy a $100 laptop that out performs 1969's mainframe.Digital Services for FreeIn economics we say that price reduces to marginal cost. On the Internet, this means that Yahoo! can offer unlimited storage for free to its mail subscribers. [The cost of adding an additional customer is essentially zero.] Thus, the few customers who pay AVG for premium support the 200,000,000 who receive the basic service for free.Electricity for FreeRunning Your Car, Heating Your Home and Warming the Baby Bottle Without CostTrue for the digital industry, this principle applies to the costs of electricity. The costs of alternate energy sources [wind, solar and water power] occur with the original installation of the production facilities. Once they are in place, the marginal cost of a customer using an additional kilowatt hour is nothing. The price of electricity will not be worth measuring it.The flies in the ointment include the OPEC nations, private or public utilities. These villains administer prices to keep profits high. For example, they charge a much higher fee to ordinary consumers than they do to industrial ones.These criminals conduct all manner of political intrigue and murder to discourage the use of renewable energy sources. This effort has prompted the Americans to invade Afghanistan and Iraq to secure fossil fuel sources.The themes and interpretations written in this article are my own. Reading Chris Sanderson inspired me to offer these insights. Any mistakes are mine and not his.
Chris Anderson (canderson@wired.com) is the editor in chief of Wired and author of The Long Tail . His next book, FREE , will be published in 2009 by Hyperion
