Wednesday, August 02, 2006

Day of the Longtail

Wikipedia says:
The phrase The Long Tail (as a proper noun with capitalized letters) was first coined by Chris Anderson in a 2004 article in Wired magazine to describe certain business and economic models such as or Netflix.
That's kinda dry and academic. Here's a much more visceral explanation of the concept: Day of the Longtail [Note: Long Tail has now morphed into one word: Longtail. English is a wonderful language.]

In Swamp Fox Insights, I made this observation about's business model:
Most customer-intimate strategies have been based on expensive products or local customer bases. has created a global, customer-intimate store selling $15 books over the Internet. Customers log onto with a standard Internet browser preinstalled on every new PC sold today. If the customer has previously registered, Amazon automatically senses who they are. Within seconds, the customer can find and order a book from his desk with one-click, as Amazon already knows the customer's credit card number and shipping address, and receive the book at his door a day or two later.

Jeff Bezos, Amazon's founder, set out from the beginning to build one of the most recognized and trusted consumer brands on the Internet. Already Amazon has extended its brand from books to music to other consumer product categories, as Amazon leverages the recognition and credibility it has with a large and growing on-line customer base.

Perhaps the most powerful element of Amazon's business model is what occurs over time. Amazon's system learns from its customers. As the customer buys more books, a purchasing history is created, which Amazon uses to customize a product offering by searching its catalog of millions of books to make a personalized recommendation of a few books the customer may be interested in. Every time a purchase is made, Amazon's system learns something new and can adjust its customized product offering for that customer. While others can duplicate Amazon's infrastructure, they cannot easily duplicate this critical mass of intimate knowledge of specific customers. Given similar pricing, it is not in a customer's interest to switch bookstores because the preciseness of the personal recommendations of any one bookstore would be diminished. The most valuable asset that Amazon is creating may be this deep base of customer knowledge.
Alas, I didn't come up with a catchy phrase like "The Long Tail" to describe the phenomena, and not quite as many people have read Swamp Fox Insights as have read Anderson's Wired article.

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