The theory of the Long Tail has arisen my interests. It is easy to understand that as the cost of production, distribution and the match between supply and demand reduces in the Internet context, the niche market can accumulate to make great profits. But what we discovered in the week3 readings is that the economic benefits of this theory didn’t appear for some online news sites. This article points out that this may come down to the interactive performance and the revenue model of advertising. But for tentatively further thinking, I would like to focus on the principle of niche market. I think this theory may not be a departure from the Pareto principle.
First, we can easily find that, to make the
niche market gain enough profits, the diverse niche market need to be
accumulated to a “mass” market. A single niche market is not enough. That is to
say, to support a system that can contain the whole “tail” of the markets,
there still exists the economies of scales——a platform.
A platform can operate at little cost of production and fixed cost of
distribution. A news institution only being a content producer can not gain
much profits. The solution is to become a platform but platforms have the
characteristic of monopoly considering its technology barrier and the usage
habits of users. It is difficult for news sites to compete with mature
platforms. In the context of Internet, based on the theory of the Long Tail,
their competitive advantages——unique information have
no longer been advantages.
Second, on earning profits, it actually
needs a comparative perspective. It is a common economic phenomenon that when
the productivity of an entire industry improved, the old products become
cheaper. It is the same in the information industry. When the cost of gaining
information reduced, the value of information generally declined. It is not to
say that the information is no longer important, it is to say that since there
are too many ways to get information, users may have less willingness to pay
for the information no matter in the tangible or intangible form. Though news
sites can get more traffic through offering more information to the niche
market, the reward is limited. That may be what the theory of the Long Tail has
neglected. In a common industry, when the old products became cheap, companies
need to innovate and produce more efficient products. In the information
industry, there are needs to produce more significant contents. But usually in today’s
society, what is significant is still defined by the majority. It is the result
of the social structure nowadays, maybe the underlying logic of all the
economic patterns today (Or maybe they have a relationship of mutual
determination). Though the abundant minorities see their preferences as
significant things, they still have the need to follow some common key
information. It is the same in the attention market——as
the attention resources and the traffic become more adequate in the whole
market, the companies which place advertisements in fact get more bargaining
power towards those news sites.
Based on the analysis above, I would like
to see the Long Tail effect as an inevitable economic process. I don’t think it
is quite a new phenomenon of the digital era though it is first proposed
because of the success of Amazon and Netflix. It is emphasized because it is
more obvious in the information field. But let us think about all the other
industries, do they not have a process that produce most products to meet most
needs, and then they reach saturation, and then companies have to design more
delicate and subtle ideas to reach more potential minor consumers, with the
productivity and the supply chain more perfect day by day, and then almost all
needs in this level are fulfilled, companies continue to innovate and serve for
the majority in a higher level……it is like an economic cycle. But undeniably,
in the context of Internet, the niche market is the most comprehensive and
profitable.
There is an interesting point that in the old industrial age, for the high cost of infrastructure and manpower, it is difficult to explore the complete picture of niche market which is visible in the digital age. In the old industries, there is seldom a convergent institution to converge the niche market while the big platform can make it to earn profits. It seems the “mass”(big platform like Amazon and Netflix) makes the niche market alive while the old retail model (seems more “niche”) failed. That’s why I think this topic worth me reflecting more.
For the participants in the information industry today, what they need to reflect may not only be the diversity, but also the innovation in a higher level.
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