The Long Tail and the Economics of Abundance

Chris Anderson’s best-selling book, The Long Tail, is predicated in large part on the assumption that as inventory and delivery costs approach zero, and with highly sophisticated search able to help people find what people want, choice becomes practically unlimited and niche content becomes economically viable.

He goes into this concept in more depth in a new post on his blog entitled “The Economics of Abundance,” in which he reviews (and links to reviews of) a presentation he made on the topic. The review by David Hornik has a particularly appropriate paragraph:

The same businesses that are the poster children for the Long Tail, are the poster children for the Economy of Abundance. And the same businesses that are the victims of the Long Tail are the poster children for the Economy of Scarcity. With bandwidth and storage approaching free, iTunes can offer three million songs (P2P offers nine million). In contrast, with limited shelf space, Tower Records can only offer fifty- or sixty-thousand tracks. The end result, consumer choose abundance over scarcity (something for everyone) — Tower Records gets liquidated while iTunes grows dramatically. Television is undergoing a similar transformation, from scarcity to abundance. TV initially consisted of only the major networks. Consumers were limited to 3 choices in any given time slot. With cable the number of channels was dramatically increased and a broader range of content became available (Food Channel, Discovery Channel, ESPN, CNN, etc.). To many, 250 channels may constitute sufficient abundance as to approach infinite choice in their minds. But the true television of abundance is YouTube. With unlimited bandwidth and unlimited storage, television is subject to microprogramming — millions of shows, viewable on demand at any time. Now not only should NBC be worried, so too should be Comcast.

I highly recommend both the post by Chris and those to which he links. I also would add that there is a point at which content creation costs (not just storage and distribution) approach zero. When content is being created for TV, for instance, putting it on YouTube, or creating a video Podcast, is almost free. And instead of being time-bound and limited to scarce airwaves and cable channels, it can be available as long as you want it to be…and as long as potential viewers want to see it.

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Author: Lee Aase

Husband of one, father of six, grandfather of 15. Chancellor Emeritus, SMUG. Emeritus staff of Mayo Clinic. Founder of HELPcare and Administrator for HELPcare Clinic.

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