Defining the Long Tail

Posted on 3/16/2009 by Jim Pickerell | Printable Version | Comments (4)

“The long tail” is a phrase first coined by Chris Anderson in an October 2004 Wired magazine article. The concept describes a new way to look at markets and is illustrative of the business strategy of Internet companies, including and Netflix, that sell a large number of unique items, each in relatively small quantities, to a very large base of customers. This buying pattern creates what is called a power-law distribution curve—or a long tail. In this series of articles, Selling Stock will examine how the long-tail strategy applies to the stock-photo industry.

Anderson points out that in 2004, Barnes & Noble limited the books it offered customers to 130,000 titles. During that same period, more than half of Amazon’s book sales came from outside its top-selling 130,000 titles. Similarly, Blockbuster carried fewer than 3,000 DVD titles, but one fifth of Netflix’s rentals were for titles outside its top 3,000. Thus, limiting product offerings often creates a long tail of underserved customers who want something different.

Even Wal-Mart, which many believe stocks everything, must sell at least 100,000 copies of a CD to cover its retail overhead and make a sufficient profit. Less than 1% of all CDs do that kind of volume. If you want any of the other 99%, you must go somewhere other than Wal-Mart to find them.

Brick-and-mortar operations find it necessary to limit the items they carry to those in high demand due to display, distribution and inventory costs. To some extent, small local specialty shops get around this problem and carry a greater variety of products in their area of specialization, but they are generally limited to serving a very small percentage of total potential customers for the products they stock. Internet companies can economically justify maintaining a much greater variety of products because they do not have the same display, distribution and inventory problems as brick-and-mortar companies.

Due to comparatively low display, distribution and inventory costs, Internet businesses can realize significant profit from selling small quantities of very specialized items to many customers, rather than just concentrating on the high demand items which may not be what many customers actually want. Some customers may settle for something they don’t really want because the right item is too difficult to find, but they are happier when they don’t have to make that choice.

The long tail also applies to customers with limited budgets. Just using the Internet to make a greater variety of products easy to find may not be enough. The price may be prohibitive. Often, there are many more customers who would purchase the product if it were available at a lower price. Traditional stock-photo sellers generally ignore such customers, arguing that the cost of servicing them is too great. While these customers can be difficult and costly to locate, in aggregate they often represent a significant additional revenue opportunity.

To combat this problem, it has become common in the stock-photo industry to price items at levels that even the smallest user can afford. Microstock companies focus more on growing traffic and increasing market size—the long tail—than on maximizing revenue from any individual customer. A downside to this strategy is that traditional buyers are offered images for much less than they have formerly been willing to pay. But in theory, the increased volume of low priced sales will more than make up for any loss in revenue from those customers who could afford to pay more.

Another long tail challenge is in identifying these new potential customers. “If you build it, they will come” does not necessarily work. Low prices are not enough, if you have no plan for reaching out to new customers and letting them know the offer exists. Marketing to existing customers just lowers revenue without in any way helping you identify a new and totally different customer base. Alamy learned this the hard way when it introduced Novel Use. The company had a good product, and it was priced at a level a certain segment of users could afford, but Alamy had no plan as to how to tell these potential customers that the product existed. For the most part, these customers are not the same people who have traditionally purchased stock photos.

More on pricing and marketing issues in tomorrow’s “Pricing for the Long Tail.”

Copyright © 2009 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to:  


  • Paul Melcher Posted Mar 16, 2009
    The "Long Tail" does not imply lower pricing. Amazon does not have sales on Long Tail items. They are, actually, more expensive than their bestselling siblings. It is a common misunderstanding to confuse Long Tail with low pricing : they are not at all linked. It also a misunderstanding to beleive that microstock companies make more money with their Long Tail items than with its best sellers.
    The Long Tail is about inventory, not pricing.

  • Ray Laskowitz Posted Mar 16, 2009
    Jim, you'd better have a look at this. As Paul Melcher says, you may be going down the wrong path.

  • Leslie Hughes Posted Mar 16, 2009
    Agree with Paul and Ray - The Long Tail is simply the concept of "selling less of more" and how that is enabled by an online marketplace. There is a great article here by Chris Anderson on selling or marketing in the internet economy for free. There is a big push right now for internet companies to actually have to come up with business models that actually make money rather than just have an exit strategy. ( Hmmm - there is a novel concept.. )

  • Ellen Boughn Posted Mar 17, 2009
    Jim is basically correct especially with his caveat that to obtain the long tail effect in the stock photo marketplace, prices had to be lowered. Amazon and Netflix are able to sell obscure products at the same price as blockbusters because they are reaching out to the same readers and movie watchers that also license their best sellers.

    The twist in the long tail that applies to stock is that the microstock pricing model was necessary to reach NEW buyers. Instead of a purely b2b business, it is more of a b2b/b2consumer play. The long tail is whipping up business from the B2B sector because of VARIETY not price. Once the idea of letting creative research and previous sales reports drive editor image selections, variety of image choice went out the window. Buyer demand for images that were not based on best sellers, didn't go away.

    Alamy stepped away from that thinking by not editing for content and they were successful. But by not being part of a peer to peer, social network, Alamy doesn't have the volume of business that is required to sustain micropayment licenses. Snapvillage is road kill for the same reason.

    The stock business is multi-dimensional. The smart photographer grows his own long tail (THAT's a visual!) by getting appropriate work in all the business models, including micro and direct sales. And now is free to create some exciting non-market driven work that now has a venue for the occasional person who needs it.

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