The long tail

Great Wired article discussing the power of the long tail that make up purchasing for books, music, DVD and other media centric catalogs. The author believes that that long tail in media catalogs is likely a bigger market taken together than the “hits” that make up the top purchases. Jeff Bezos has know this for a long time. But this is the best article I’ve seen in describing the future in buying and how online distribution/technology changes the game. There’s also some great insights about the music business:

Imagine if prices declined the further you went down the Tail, with popularity (the market) effectively dictating pricing. All it would take is for the labels to lower the wholesale price for the vast majority of their content not in heavy rotation; even a two- or three-tiered pricing structure could work wonders. And because so much of that content is not available in record stores, the risk of channel conflict is greatly diminished. The lesson: Pull consumers down the tail with lower prices.

How low should the labels go? The answer comes by examining the psychology of the music consumer. The choice facing fans is not how many songs to buy from iTunes and Rhapsody, but how many songs to buy rather than download for free from Kazaa and other peer-to-peer networks. Intuitively, consumers know that free music is not really free: Aside from any legal risks, it’s a time-consuming hassle to build a collection that way. Labeling is inconsistent, quality varies, and an estimated 30 percent of tracks are defective in one way or another. As Steve Jobs put it at the iTunes Music Store launch, you may save a little money downloading from Kazaa, but “you’re working for under minimum wage.” And what’s true for music is doubly true for movies and games, where the quality of pirated products can be even more dismal, viruses are a risk, and downloads take so much longer.

So free has a cost: the psychological value of convenience. This is the “not worth it” moment where the wallet opens. The exact amount is an impossible calculus involving the bank balance of the average college student multiplied by their available free time. But imagine that for music, at least, it’s around 20 cents a track. That, in effect, is the dividing line between the commercial world of the Long Tail and the underground. Both worlds will continue to exist in parallel, but it’s crucial for Long Tail thinkers to exploit the opportunities between 20 and 99 cents to maximize their share. By offering fair pricing, ease of use, and consistent quality, you can compete with free.

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One Comment on “The long tail”

  1. Daniel says:

    I’d love $0.20/song downloads. As much as I’d love to believe that this would increase overall sales, I suspect that $0.50 or $0.75 is still within the majority of people’s psychological music budget. From selling CDs for years I’d say that $0.49 is like the sweet spot.
    People will jump at a $5-$6 album purchase.