Many of you may now be familiar with Chris Anderson’s Longtail (you sure will be by the time his book comes out in 6 months). The Longtail theory argues that the steep reduction in production, distribution and marketing cost allows profits to be made from products way after their launch, or initial ‘hit’.
Companies like Netflix and Rhapsody allow niches to be mined for long after a product’s launch in a way that Walmart can’t operate. Walmart stocks hits – Netflix and Rhapsody stocks hits and every other song and movie; providing greater choice and longer life for product sales.
What the web also also is amplified word of mouth: ants with loud speakers in the form of bloggers, tastemakers and trusted reviewers. Information power is replacing brand power. Increasingly brands involve people as well as products and companies. Brands are increasingly.
Will online overcome bricks and mortar. Anderson quotes Amazon’s Bezos by saying that the maximum level of online sales will peak at 15% of all sales. No matter, hits won’t go away but Niche’s will become more important.
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