Chapter 16 - The Long Tail

Question 1

What is meant by the long tail?

Answer 1

It is a business concept, which states that goods in low demand individually make up for a collectivity of substantial sales. (Why the future of business is selling less than more)

Question 2

What big corporation bases its business model on the long tail concept?

Answer 2

Amazon

Amazon offers top-selling books (head) (about 100.000 books) which make up for 63% of revenues, and books low in demand (tail) (about 2.2 million books), which make up for 37% of revenues.

Question 3

Why does the digital economy facilitate a long tail business model?

Answer 3

Since marginal costs to store a product are equal to zero, digital stores can afford to store any kind of product, irrespective of their demand. This allows to get advantage from the whole and collective sales granted by offering products which are low in demand individually.

Question 4

Provide examples of businesses based on long tail.

Answer 4

1. Amazon
2. Wikipedia (authors)
3. Spotify
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