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March 05, 2007

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Shahar Even-Dar Mandel

I guess it's impossible to send a trackback from blogger after failing for the second time. So let's pretend this is a trackback.

Howard Scott

Certainly in the UK I don't understand how they even bother with this. In my local blockbuster the only DVDs they have are mainstream ones, and they tend to stock hundreds of them whenever the latest blockbuster comes out. I don't see any DVDs in there that are "off the beaten track". Surely DVD is a lost cause anyway and the olg longtail effect will come into place with downloads and IPTV? Infact why is everyone so concerned about blueray or HD-DVD when downloads are going to be everywhere in a matter of years (if not months?). Howard. www.adventuresdm.com

Amy

I believe that the focus of the article was actually on in-store browsing/purchasing experience. My main interest in 'sub-petite' clothing is in permanent long-tail territory, so I certainly understand the squeeze that bricks and mortar stores have. But the fact remains, there is something about the physical shopping experience that cannot be replicated online. Sometimes you just want to browse with your fingers. Tactile, immediate experience is still the best decider - even for something (potentially) completely digital as a DVD.

Kevin Hillstrom

Your last sentence "traditional retail sucks at giving us massive variety and serving minority taste" accurately states the difference between in-store and online retailing.

Online is the place where your hypotheses can be realized, because there is a minimal fixed-cost component to online retailing. Adding marginally popular DVDs to the merchandise assortment on http://bestbuy.com could work.

In retail, you are so limited by the amount of space in the store, and you are so challenged by the fixed costs associated with running a store. This combination requires you to 'turn over' your inventory rapidly. In other words, you must sell merchandise very quickly, before it 'spoils', if you will. If you don't sell merchandise quickly, you take markdowns, which quickly erode profit. In retail, you just can't stock stuff that doesn't sell rapidly, it must also sell in large quantities.

That type of retail strategy provides substantial short-term profits, and drives weaker competitors out of the market.

Long-term, the retailer pays for this strategy, because customers become trained to only expect stuff with mass appeal, and are trained to shop online/elsewhere for stuff that isn't popular to a wide audience.

The big box retailer can combat this problem by developing a strategy for utilizing the online channel to meet customer needs not served by the in-store experience.

It is very hard to do that with a 'retail' mentality, with employees trained to think about maximizing sales per square foot.

Richard Rowan

Chris,
Good point. Could you ask Bryan why he left out infinite shelf space?
Thank you.
Dick Rowan

james

the nyt loves these articles about how brutal economics are killing (indie flimmaker, independent record store.) they always ignore the effect that digital distribution has on promoting wider variety.

blooflame

How do we convince the content owners to provide their niche content, however?

My favorite example being the Max Headroom series: look at any of the Max Headroom sites on the 'Net and you can easily see that there's a demand for it; yet for some reason black-and-white cowboy shows (not that there's anything wrong with them, I like them as well) are deemed more important to release on DVD.

Erika

Digital distribution (IPTV) truly opens doors and levels the playing field for niche audiences and filmmakers alike. We have just launched a new IPTV movie channel offering Asian movies on-demand, Firecracker TV (www.firecrackertv.com). We began in 2004 as an online magazine (with support from the UK Film Council), we have also been running a film festival in London. Firecracker TV now exists alongside our editorial and gives us a chance to show films that would not otherwise have any chance of distribution and our magazine complements this by providing some interesting and valuable editorial to sit alongside the movies... take a look, and see what you think! It's an exciting initiaive and we'd love to hear your feedback. We have licensed the films for viewers in the UK & Ireland, North America, Australia and New Zealand (as our editorial/subtitles are in English) so there's a real chance through Firecracker TV to build something meaningful.

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Long Tail explains why we send those videos back without watching them, but it isn't because we're really sheep at heart. Quite the opposite. Some videos never get watched, even though they garnered some interest, because we had other videos that were even more interesting. The abundance of options in our wired world has made our time more efficient and consequently, our contributions more pertinent.
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Where this also has implications, and something I've spent a lot of time thinking about, is in how you compensate a sales team for growing the free customer base. If your free product can not be sold only through marketing and you need a direct sales team, you need to essentially pay commissions on the "yet-to-be-earned" revenue. Compensation should be based on the projected lifetime value of a customer, and also the effort to grab that customer. As the acquisition gets easier (more and more customers on the system), and the increased value of each new customer goes down, the amount of compensation in theory will also go down. However, not all customers are created equal in value and you also do not want to continually de-motivate a sales team by paying less and less for each additional customer brought onto the system.

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Tidbits

The Long Tail by Chris Anderson

Notes and sources for the book

FREE was available in all digital forms--ebook, web book, and audiobook--for free shortly after the hardcover was published on July 7th. The ebook and web book were free for a limited time and limited to certain geographic regions as determined by each national publisher; the unabridged MP3 audiobook (get zip file here) will remain free forever, available in all regions.

Order the hardcover now!