Free The Long Tail by Chris Anderson Page B

the world’s most sophisticated supply chain to offer massive variety at low prices to tens of millions of customers around the world. Today anybody can reach a market every bit as big with a listing on eBay.
    The Internet simply makes it cheaper to reach more people, effectively increasing the liquidity of the market in the Tail. That, in turn, translates to more consumption, effectively raising the sales line and increasing the area under the curve.
    The third force is connecting supply and demand, introducing consumers to these new and newly available goods and driving demand down the Tail. This can take the form of anything from Google’s wisdom-of-crowds search to iTunes’ recommendations, along with word-of-mouth, from blogs to customer reviews. The effect of all this for consumers is to lower the “search costs” of finding niche content.

    In economics, search costs refer to anything that gets in the way of finding what you want. Some of those costs are non-monetary, such as wasted time, hassle, wrong turns, and confusion. Other costs actually have a dollar figure, such as mistaken purchases or paying too much for something because you couldn’t find a cheaper alternative. Anything that makes it easier to find what you want at the price you want lowers your search costs.
    We’ll go into this more later in the book, but other consumers are often the most useful guides because their incentives are best aligned with our own. Netflix and Google tap consumer wisdom collectively by watching what millions of them do and translating that into relevant search results or recommendations.
    Consumers also act as guides individually when they post user reviews or blog about their likes and dislikes. Because it’s now so easy to tap this grassroots information when you’re looking for something new, you’re more likely to find what you want faster than ever. That has the economic effect of encouraging you to search farther outside the world you already know, which drives demand down into the niches.
    The other thing that happens when consumers talk amongst themselves is that they discover that, collectively, their tastes are far more diverse than the marketing plans being fired at them suggest. Their interests splinter into narrower and narrower communities of affinity, going deeper and deeper into their chosen subject matter, as is always the case when like minds gather. Encouraged by the company, virtual or not, they explore the unknown together, venturing farther from the beaten path.
    The explosion of these technologies that connect consumers is what drives demand from the head to the tail. In other words, the third force further increases demand for the niches and flattens the curve, shifting its center of gravity to the right.
     

    Think of each of these three forces as representing a new set of opportunities in the emerging Long Tail marketplace. The democratized tools of production are leading to a huge increase in the numbers of producers. Hyperefficient digital economics are leading to new markets and marketplaces. And finally, the ability to tap the distributed intelligence of millions of consumers to match people with the stuff that suits them best is leading to the rise of all sorts of new recommendation and marketing methods, essentially serving as the new tastemakers.
    In a nutshell, all of that looks like this:

    The next three chapters will explore these new business opportunities in detail.

THE NEW PRODUCERS

    NEVER UNDERESTIMATE THE POWER OF A MILLION AMATEURS WITH KEYS TO THE FACTORY

    On the night of February 23, 1987, the underground Kamiokande II observatory in Japan detected eleven neutrinos in a burst lasting thirteen seconds. Although eleven neutrinos may not sound like a lot, the observatory usually detects only one or two an hour, and rarely in a pack. So this was something special. But what it actually meant would have to wait a few hours, for other observations to be