Monday, April 11, 2011

Chapter 9 - The Short Head: The World the Shelf Created, for Better or Worse

Successful businesses distribute through on line markets and retail outlets that coexist to serve both the “hits” and the niches. Physical stores have to categorize their stock based on where they think the customer would most likely look for it, like a windbreaker in the “Jackets” section. Online stores can organize products in any way imaginable with a multitude of variables, making them more flexible.

Physical categorization systems are designed so that something can only fit into one category, like the Dewey Decimal System for library books. Eventually libraries created a cross-cataloging system so that patrons could search more variables than just subject, which only became more efficient with the internet. Besides the inflexibility of physical categorization, if something is placed in the wrong section, it can’t be found by someone looking for it.

One of the biggest disadvantages of physical shelf space is that they are bound by geography (products are only available to local audiences). However, online retailers have overcome the boundaries of physical space, tapping the Long Tail of distributed demand in faster and cheaper ways with greater varieties than ever before. The introduction of radio and television also extended demand down the long tail, but they were limited by broadcast slots and forced to focus on a certain number of hits to generate profits.

However, we are now beginning to unlearn the last century’s lessons in distribution scarcity (hit driven media), starting with new generations growing up online. The first wave of “digital natives” turned 18 in 2001, and are now migrating away from broadcast to the Internet, choosing infinite variety and easy ad-dodging online over TV and blockbusters. Hits are the exception, not the rule, and a problem we are faced with today is that many still see an entire industry through this narrow economic lens.

For example, Anderson discusses how Hollywood economics is different from Web video economics, yet when Congress extends copyright terms for another decade at the request of the Disney lobby (or some other large corporation), they’re only playing to the head of the Long Tail. What’s good for Disney is not necessarily what’s good for America; the problem is the Long Tail doesn’t have a lobby, so often they’re ignored.

Lastly, there are many mental traps that we fall into because of scarcity thinking (what the hit-driven, blockbuster industry relies on), and one of the most important is the notion that “too much choice” is overwhelming. (See chapter 10, for further discussion on debunking this myth).

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