Guy Kawasaki offers a good counterbalance to the hype surrounding (or soon to surround) Chris Anderson’s new book, The Long Tail. The idea of the Long Tail is that, in a single market, the combined size of many niche products can be as big as from a single (or relatively few) mass-market products. Anderson’s original idea stemmed from comparing the sales of pop hits and artists to niche songs and singers on iTunes and Amazon. Of course, this was also how General Motors ate Henry Ford’s lunch in the 1920s, by introducing multiple makes and models against the mass market-driven Model T.
The threat: Big companies are caught between a rock and a hard place. On the mass market side, Walmart and others are squeezing their margins to nothing. On the other end, smaller companies are increasingly stealing away niche chunks of their more profitable, lower volume products.
The promise: Companies that master the long tail will see their revenues and share grow where those that can’t will watch theirs wither.
The grain of salt: The long tail may hold vast riches in many markets but, as Guy points out, before a company can exploit the long tail, they (and their market) must meet a serious set of requirements…read his post for these.
However, I think there is one area where the Long Tail still may hold promise for big companies: The back catalog. The hundreds, if not thousands, of SKUs that companies have maintained if only to avoid the trouble of formally killing them off. These are the countless products dating back decades which someone, somewhere still needs or wants.
It may be difficult for a company to find, contract for, or develop new products to build themselves a brand-spanking new long tail. But the ideas behind the long tail may still enable companies to find new value in their back catalogs in the same way that eBay has enabled so many of us to find new value in our attics and garages.
The trick will be finding those customers you had neglected before–the mom & pop shops, the weekend users, the 40-year old virgins, who still want whatever you first sold them 20 years ago.
Finally, and unrelated to the rest of the post, Guy utters a classic line:
“Everyone knows that the innovator’s dilemma is to find a tipping point in order to cross the chasm.”
Sums up management thinking in the 1990s.