First off, let me say that Wired editor, Chris Anderson is an excellent writer. He writes in a strong clear language, that is easy on the brain. That said, I’m gonna paraphrase him here, and recommend that you dig deep yourself, as The Long Tail practically reads itself.
So do you remember what the 1/x curve looks like? That’s essentially what the market dynamics look like if you were to plot a curve of sales on the Y axis and products on the X axis. High volume sellers on the left, represent a small fraction of the total sellers, but a large chunk of the sales in the traditional market. What Chris Anderson sheds light on here is that with the internet adding choices beyond what most retailers can carry, it is lengthening the sales of products to the consumer.
For the retailer that means that their total sales volume is going up significantly as they add products. This is true of online retailers as well as brick and mortar retailers. What limits the retailers traditionally has been the costs associated with inventory shelf space. Online retailers have a distinct advantage when it comes to selling items, as they can reach a much larger audience than the ones in driving distance of the store, so things that wouldn’t sell often enough for a given location, can sell well enough for the aggregation of all locations. This principal is then put on steroids by the fact that more and more of the products today are sold digitally, and therefore the shelf space for a given item is the cost of the disk storage to house it.
Anderson then goes on to discuss how folksonomies, recommendations, and other structures are helping to expose customers to items further and further down the tail, so that people make connections that they wouldn’t have been making otherwise. It turns out that while there is a long tail for books overall, there is also a long tail for books about economics. And while The Long Tail may be well behind Harry Potter, it could be a relative hit within the economics genre and many people who read the long tail may also be interested in Wikinomics as it was recommended to them, or had the same tag.
So What? …How different is the concept of finding a large source of untapped revenue by moving to smaller and smaller artists, than finding a large source of untapped revenue by moving to smaller and smaller clients? Where companies such as mine find risk of dealing with smaller clients, there are others stepping in to serve those clients. The perceived notion in my niche that the big consulting company must be more expensive over the little guy, really isn’t true. Additionally, the more small projects we can bring in, the greater exposure to more business practices which improves are institutional knowledge of the market, and also could lead to shorter projects, making each of our resources more valuable. So why not go after the smaller clients? There may actually be less risk with the smaller clients, as the potential for a large financial disaster is greatly reduced.