Thursday, February 15, 2007

Long Tails Again



I believe most of you know of the "long tail" article by Chris Anderson which shows a power distribution of sorts for a frequency versus rank (like items sold versus their popularity), etc

Consider the following graph for top selling books of 2005 and you see half a dozen books garnered something like 70% of the market share.


While long tails can be applied to any industry from entertainment to user-attention as follows, It just struck me that instead of the niche market if you aim to be one of the popularly ranked companies, then you automatically get business. Let me put it this way:If you plot the number of companies in a given sector (like books in the adjacent example) then the revenues of the companies would follow a long tail (atleast internet based service firms) . So in essence 80% of all spending in a given sector always ends up filling the coffers of the top5 or 6 companies in that. Whatever may be your sector, if you are one of these, you are done! In my sector it means, you gotta be a billion dollar company :)

2 comments:

Murali Krishna said...

Interesting!!

I wonder what does one have to do to get to be the top 5 or 6?? Any ideas on that?? I think its time we went into business together. I dont mind 30% of the market. :)

Chill madi..

Paddy said...

>Interesting!!

Coming from you, I would be hard pressed to know what exactly is the mood-o-meter is telling me.


>I wonder what does one have to do to >get to be the top 5 or 6?? Any ideas >on that??

As you can see this is only valid for long tail distributions (booksellers,internet services,search terms). Not for everything. Take this example, you have 15000 networks comprising of the internet. What percentage of neworks do you need to own to get 90% coverage? Approximately 11000 if you do the math and this one doesnt follow long tail because the world's largest network could only own 5% of the network.

>I think its time we went into >business together. I dont mind 30% >of the market. :)

Not a problem. Whats the idea?